NAIFA Reaffirms Stance Against Disclosure Of Commissions
Life insurance agents should not be required to disclose to consumers the commission they receive when selling a life insurance product, the largest life insurance agents trade group has determined in deciding to stick with its existing policy on this issue.
An internal committee of the trade group, the National Association of Insurance and Financial Advisors, made the decision to stick with its current policy at a meeting earlier this month, according to David Woods, CEO of NAIFA.
NAIFA reaffirmed its policy as a Senate committee and a high-level National Association of Insurance Commissioners task force both were examining whether rules and laws dealing with an agents or brokers duty to their customers should be changed.
The NAIFA committee studying the issue decided to stick to existing policy as the fallout from the investigation by New York Attorney General Eliot Spitzer into whether insurance brokerages appropriately served their customers continued to grow.
While NAIFA decided to stick with existing policy, the American Council of Life Insurers is studying the issue. ACLI President and CEO Frank Keating said that because of the pressure from multiple investigations, a task force of member-company CEOs is studying the issue. “Our general position has been in favor of disclosure and transparency,” Keating said.
“We want to do the right thing for policyholders,” Keating said. “Because the investigation by Mr. Spitzer and others is broad and deep, we want to ensure we have all the facts before we make a proposal for reform.”
Keating said the task force will disclose the new policy “within a reasonable period of time.”
NAIFA and the ACLI were asked about their policies against the background of a hearing on the issue that will be held Nov. 16 by a panel of the Senate Governmental Affairs Committee, plans being discussed within the House Financial Services Committee to hold a “roundtable” on the issue in January, and a meeting held recently by an Executive NAIC Task Force on Broker Activities to discuss how regulators should deal with the issue.
NAIC President Diane Koken is heading the 12-member task force created to gather the facts, coordinate state activities, and address alleged misconduct and violations of existing state laws suggested by the investigations launched in April into broker commissions by Spitzer.
One of the task forces duties, NAIC said, is to develop a model act for brokers disclosure of compensation.