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Regulation and Compliance > State Regulation

CIAB Sues Over Countersignature Laws

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NU Online News Service, June 11, 6:13 p.m. — Washington

The Council of Insurance Agents and Brokers, Washington, has filed lawsuits against the states of Florida and Nevada seeking to have their countersignature laws declared unconstitutional.

The lawsuits, which were filed in federal district courts in each state, charge that countersignature laws violate constitutional protections that prohibit states from discriminating against residents and businesses of other states.

Ken Crerar, president of CIAB, said at a press briefing that the decision to file the lawsuits reflects frustration over agent licensing reform efforts dating back more than 60 years.

While states are starting to make progress, Crerar said, countersignature laws represent the most egregious protection measures still on the books in some states.

He called countersignature requirements “pure profit” for agents who reside in the relevant states, because they receive a fee without having to do any work.

In Florida and Nevada, the system leads to millions of dollars a year in unnecessary costs, Crerar said.

Nicole Allen, director of government relations for CIAB, said that in Florida, non-resident agents must pay up to 50% of their commissions to resident agents simply to get their signatures on policies.

In Nevada, she said, the fee is 5% of premium or 25% of commission.

Crerar added that in both states, the insurance departments rigorously enforce the countersignature laws, and have audited insurance agencies to assure the fees are paid.

Generally, he said, advocates of countersignature laws justify them in the name of consumer protection. But Crerar scoffed at that justification.

In an interstate system, he said, agent licensing itself is the consumer protection.

Joel Wood, senior vice president of government affairs for CIAB, said that while legislative efforts are under way to establish a system of reciprocity for agent and broker licensing, and hundreds if not thousands of changes in state laws are being made, it is frustrating that two states continue to have countersignature laws outstanding.

Allen noted that in addition to Florida and Nevada, Alabama, South Dakota and West Virginia also have countersignature laws.

Crerar said CIAB filed the lawsuits against the Florida and Nevada laws because they are the two most egregious.

The lawsuit asks the respective federal courts to issue permanent injunctions enjoining the state insurance commissioners in Florida and Nevada from enforcing the countersignature laws.


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