The National Conference of Insurance Legislators is weighing in on the broker compensation issue.[@@]
The Albany, N.Y., group has proposed model legislation that responds to the investigations conducted by New York Attorney General Eliot Spitzer.
The measure is more comprehensive than a comparable proposal put out by the National Association of Insurance Commissioners, Kansas City, Mo., Nov. 15. The NAIC proposal focuses mainly on disclosure.
Incoming NCOIL president Rep. Craig Eiland, a Democratic member of the Texas House, drafted the proposal for discussion purposes only. He plans to meet with NAIC officials in December at the group’s winter meeting. The NAIC has scheduled a public hearing on its members’ proposal for the first day of the hearing.
In addition to requiring full disclosure, the NCOIL measure would require a broker to have a fiduciary relationship with a client.
Another provision of the NCOIL measure calls for something akin to a suitability requirement. Brokers would have to pick the best available insurance products for their clients.
John Washburn, a former NAIC president who represented the Council of Insurance Agents and Brokers, Washington, at the NCOIL meeting, said the suitability section of the proposed NCOIL model would set “an impossible standard to meet and would also lead to endless litigation.”