State insurance commissioners are preparing inquiry letters to brokers and companies to address allegations about bid-rigging and problems with undisclosed broker compensation arrangements.[@@]

Commissioners also are preparing to address the allegations with a new model act.

The inquiry letters, one for brokers and one for companies, will be sent out by state insurance departments, Diane Koken, Pennsylvania insurance commissioner and president of the National Association of Insurance Commissioners, Kansas City, Mo., said today in an interview.

The letters and the model act were developed Thursday during a meeting in Chicago. All NAIC officers were present and all members of a 13-member task force were represented. Other state representatives were also in attendance, Koken added.

The letters focus on “inappropriate solicitation practices that may have occurred” among both producers and companies as well as any ongoing internal investigations that have been started or investigations that have been completed.

A new model that is an amendment to the current Producer Licensing Model Act will be released publicly next week, according to Koken. The model is “relatively short” but could be expanded depending upon feedback from the full body of state insurance commissioners as well as interested parties, she said. A public hearing will be held during the winter NAIC meeting, which is scheduled to start Dec. 4.

It is important to get the model completed by year-end so that all states can get the model introduced in their legislatures quickly, Koken said. Koken added that the goal is to get the model enacted with as much uniformity as possible.

The meeting was attended only by U.S. insurance regulators, although Koken said all input will be welcomed during the public hearing.

Koken reported that a number of state insurance commissioners are in regular contact with their state attorneys general on the issue. New York Superintendent Gregory Serio and the New York StateInsurance Department are working with New York Attorney General Eliot Spitzer, Koken said.

Spitzer launched the investigation that has engulfed brokers and insurers and could extend to reinsurers.

The 2 prongs of the NAIC effort, the letters and the model act, will be joined by a third prong, an online fraud-prevention Web site, Koken said. NAIC officials want to get the site up by Jan. 1, 2005.