Virginia insurance agents might not have to worry about a new far-reaching compensation disclosure law as do agents in some other states, but they should pay attention to laws already on the books, the state’s chief licensing officer recently warned.
“We will be looking, challenging those here to make sure their contracts contain all the elements of Virginia’s disclosure law,” Brian P. Gaudiose, deputy commissioner for agent regulation, told members of the Independent Insurance Agents of Virginia at the group’s recent annual meeting in Leesburg.
Gaudiose noted that following the charges leveled by New York Attorney General Eliot Spitzer against mega-brokers Marsh, Aon and others, regulators in some other states now feel that stronger disclosure rules might be needed for all agents, including so-called Main Street independent agents.
“There is a body of regulators at the NAIC (National Association of Insurance Commissioners) that feels that there is a legitimate concern and that all agents might be swept under the disclosure rule. Why do they feel that way? Because other professions need to disclose and therefore they feel it’s reasonable that insurance agents and brokers do as well,” he explained.
Gaudiose does not think that a sweeping disclosure measure will sell in Virginia, nor is one needed. “I really don’t expect that to be asked here in Virginia, but it’s important to understand that that’s what the debate is centered on. If it were to develop here in Virginia, I believe we have a disclosure code here for financial disclosure.”
Virginia licenses insurance agents and insurance consultants, not brokers per se, except for surplus lines. Agents may charge certain administrative fees in addition to receiving any commission that is built into the premium on a policy. However, agents are required to disclose any fees and obtain the policyholder’s consent in writing. This disclosure must also contain a statement that the “agent is entitled to receive a commission from the insurer for selling, soliciting, or negotiating the insurance.”
The law further requires that agents maintain a schedule of fees and documentation for services in their office and make this available to customers upon request.
While Gaudiose believes that Virginia’s disclosure laws are sufficient, he stressed that his department is determined to make sure they are taken seriously.
“We have a good disclosure law. It’s easy to understand; it’s well written; it’s enforceable and I think it’s balanced,” he told the agents, before issuing his admonition. “We also hope we have compliance with our law. I have concerns that maybe the collective we haven’t focused on this enough. Maybe all the i’s are dotted and the t’s crossed, and maybe not. We want 100 percent compliance.”
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