The National Association of Insurance Commissioners (NAIC) announced that it has recently formed the NAIC Executive Task Force on Broker Activities to gather facts and coordinate activities to address alleged criminal misconduct and violations of existing insurance laws involving insurance companies and insurance brokers. The task force is comprised of 13 member states: California, Connecticut, Georgia, Illinois, Maine, Missouri, Montana, New Jersey, New York, Oregon, Pennsylvania, South Carolina and Texas.
“The Executive Task Force on Broker Activities is working to develop the facts and coordinate the efforts of state regulators on this critical issue,” said NAIC President and Pennsylvania Insurance Commissioner Diane Koken.
In making this announcement, Koken said the new Task Force will pursue a three-pronged action plan designed to coordinate multi-state interest and inquiries, leverage state expertise and resources, and engage consumers. The NAIC members adopted this strategy during a series of conference calls over the past several days:
1. Greater Transparency on Broker Compensation: The Task Force will develop a model act for brokers’ disclosure of compensation.
2. Full Inquiry and Coordination: The Task Force will develop and coordinate implementation of a uniform inquiry “template” for states to use to query their significant domestic insurers and top brokers doing business in their respective state. Relying on market analysis tools, NAIC members will gather the facts in standardized fashion, analyze the issues, and determine next steps, which could include a variety of regulatory intervention techniques from insurer and broker interviews to targeted on-site examinations.
3. Fraud Reporting: As an immediate means to empower consumers, the NAIC will launch an online fraud reporting mechanism that will allow for the anonymous reporting of “tips” of unscrupulous business practices for investigation by the states.
“The idea that any insurance consumer, whether corporate or personal, was misled, defrauded, or abused simply reinforces the need for a strong system of coordinated state insurance regulation,” Koken said. “This Task Force and three-pronged approach is evidence of our commitment, and it’s just one step in an ongoing process to ensure a safer marketplace where consumers at all levels are protected.”
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