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November 09, 2004 at 07:00 PM
Life insurance agents should not be required to disclose to consumers the commissions they receive, the largest life insurance agents’ trade group has determined.[@@]
An internal committee of the trade group, the National Association of Insurance and Financial Advisors, Falls Church, Va., made the decision to stick with its decade-old policy on this controversial issue in a meeting Monday, according to David Woods, chief executive officer of the group.
Specifically, the internal committee decided that:
- NAIFA is in favor of an appropriate disclosure during a sales process that explains to the customer the relationship between the agents or brokers and the insurers they represent.
- NAIFA is in favor of total cost disclosure but is opposed to any mandated disclosure of an agent’s life insurance commissions during the sales process.
- NAIFA is opposed to any requirement that imposes on the agent or broker a requirement to submit to a customer only proposals from a “best available insurer.”
“The consumer is entitled to know the total cost of the product he or she is buying,” Woods says. However, he adds, “disclosing to consumers the components of those would be harmful.” He says, “Once you start disclosing all the components, the question is, ?How thin do you slice that’?”
Although the NAIFA committee did not discuss anti-rebating laws at its meeting, the association’s stance in support of such laws would continue, Woods says. Anti-rebating laws, which are on the books in 48 states, bar insurance agents from returning to consumers any portion of the commissions paid by underwriters to agents.
