Just days after the state’s attorney general recommended stringent disclosure rules for insurance agents and brokers, Connecticut Gov. M. Jodi Rell has introduced her own bill patterned after the model act designed by the National Association of Insurance Commissioners.
The plan offered by Rell, a Republican, was introduced by Republican leaders in the House and Senate.
Rell’s proposal requires an insurance agent or broker receiving compensation from an insurer or other third party to first obtain the customer’s written consent for the compensation. The agent or broker also must disclose the amount of compensation from the insurer or other third party for an insurance policy, unless the amount is not known at the time of disclosure. In that circumstance, the agent or broker must disclose the method for calculating compensation and, if possible, a reasonable estimate of the amount, according to Rell’s proposal.
Dennis Schain, a spokesman for Rell, said the governor’s proposal “addresses many of the issues and areas of concern, but we’re certainly open to hearing more from the legislature.”
But Attorney General Richard Blumenthal, who investigated allegations of price fixing and incentive fees, criticized Rell’s plan as a “shadow of what should be adopted. It’s riddled with exceptions that essentially swallow the rules,” he said.
Bluenthal’s own disclosure proposal requires that insurance agents disclose in writing whether they are acting on behalf of insurers. Brokers and agents also would be required to disclose details of quotes from insurers and reasons for a broker’s recommendation.
Blumenthal’s plan would give consumers the choice of being a broker’s sole source of compensation during transactions. The provision is intended to eliminate under some circumstances a broker’s income from insurance companies.
Blumenthal has also proposed a constitutional amendment making the insurance commissioner an elected official. The governor now appoints the commissioner.
Rell’s proposal does not apply to agents or brokers who are not compensated by the customer, and excludes customers who are only participants or beneficiaries of an employee benefit plan or those who are covered by a group or blanket insurance policy.
Sen. Joseph J. Crisco, co-chairman of the General Assembly’s Insurance and Real Estate Committee, said a third bill will likely be drafted based on recommendations by the National Conference of Insurance Legislators. A draft by that association has called for disclosure of compensation from any entity other than the insured in a broker-agent relationship and establishment of a fiduciary duty for insurance brokers to ensure that brokers protect the best interests of their clients.
Crisco, D-Woodbridge, said members of the committee would submit one bill to the legislature following a public hearing, which has not been scheduled yet.
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