Broker Group Makes a Federal Case of Countersignature Laws

The Washington, D.C.-based Council of Insurance Agents and Brokers (CIAB) has filed suit in South Dakota, West Virginia and the U.S. Virgin Islands challenging statutes that preclude out-of-state insurance brokers from conducting business in their jurisdictions without the countersignature of a resident agent.

Scott Sinder, the CIAB’s general counsel, said the lawsuits were filed in U.S. District Courts in each of the locales. Each suit argues that that jurisdiction’s countersignature provisions violate the Privilege and Immunities Clause of the U.S. Constitution.

The Council represents the nation’s largest commercial insurance brokers who write 80 percent of the commercial property/casualty business and administer billions of dollars of benefits accounts annually.

Last year, the Council successfully challenged the countersignature requirements in Florida. U.S. District Judge Robert L. Hinkle agreed with the Council that Florida’s law was unconstitutional and granted a summary judgment in the case on Sept. 30, 2003. The Council also filed a similar suit against the state of Nevada and is awaiting a second hearing in that case.

With the three latest lawsuits, the Council has brought legal action in every state that has the controversial countersignature requirement on the books.

The Council has long argued against countersignature requirements which add costs to consumers without adding value to the insurance product. In some cases, out-of-state brokers have been required not only to obtain the signature of a resident agent but also to share commissions on their business with the resident agent despite the fact that no work was done by the countersigner.