The National Association of Insurance Commissioners (NAIC) distributed a revised version of its draft Producer Compensation Disclosure Amendments to the Producer Licensing Model Act on Thursday and insurers claim the model still lacks resolution to their concerns.
“As we have said repeatedly during the debate over this issue, any proposed legislative or regulatory solution to producer compensation disclosure should focus on addressing the problems that have been identified as a result of the investigation by New York Attorney General Eliot Spitzer,” said Robert Zeman, senior vice president, insurance regulatory affairs of the Property Casualty Insurers Association of America. “Those problems – allegation of illegal bid rigging and market manipulation – have been focused on a few large commercial lines brokers, not the broad cross section of insurance agents that serve America’s mainstream marketplace.
Zeman said the PCI appreciates regulator’s willingness to listen to member concerns about the proposed model, however, they believe there are still lingering problems with the revised draft.
“Chief among these is that the model casts a wide net that encompasses all agents and brokers and mandates costly and unnecessary disclosure requirements of every insurance producer – brokers, captive agents, independent agents, and salaried sales representatives of direct response companies,” Zeman said. According to Zeman, the revised draft eliminates an important exemption contained in prior drafts for ‘nominal fees’ paid by the insured, but provides an improved exemption for those acting as ‘intermediaries.’
“The NAIC model should be flexible enough to address the variety of business models that insurers use to market their products and services to personal and commercial insurers,” Zeman stated. “Moreover, it should deliver consumers valuable information that they need to make an informed purchasing decision. The revised draft, with its continuing reliance on written consent requirements, mandated disclosure of specific methods for calculating compensation arrangements, and broad applicability to all insurance producers, does not meet these goals.”
The NAIC’s Executive/Plenary group is scheduled to vote on the model on Dec. 29. PCI says it will address the issue again with state legislatures when they convene for the 2005 legislative sessions.
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