A federal judge has overturned the state’s countersignature law that barred out-of-state insurance brokers from doing business in the state without involving an admitted agent.[@@]

Nevada officials plan to appeal the decision.

Nevada District Court Judge James Mahan ruled the state’s countersignature law “was not related to competence,” and the law “presumes that someone who is a nonresident is not competent.”

“There was no rational basis” for the additional requirement in Nevada law that its resident agents receive 5% of the commission from the business that is placed as a result of their countersignature, Judge Mahan said.

The judge has not yet rendered a written decision.

The suit was brought by the Council of Insurance Agents and Brokers, Washington, and Rebecca Restrepo, who runs the Sacramento, Calif., office of ABD Insurance and Financial Services.

The CIAB said its counsel has been asked to submit a proposed order in the case to the court for remedy, which would include ordering the state’s Department of Insurance not to enforce the countersignature law.

The CIAB’s counsel, Scott Sinder of Collier Shannon Scott PLLC in Washington, said that once the decision is filed, the state will have 30 days to file a notice of appeal to the 9th U.S. Circuit Court of Appeals.

A staff official of the state’s Division of Insurance, Peggy Dehl, said the state plans to appeal.

The Nevada Independent Insurance Agents, which filed a friend of the court brief, argued in favor of the countersignature provision, saying it is a protection for consumers. Its lawyers argued that Nevada changes its laws frequently and out-of-state brokers, and especially brokers based overseas, could not possibly be cognizant of all the changes.

A representative from NIIA was not available for comment.