Insurers To NAIC: Target Changes On Broker Comp
In advance of a public hearing that the National Association of Insurance Commissioners will hold to get feedback on its plan to halt abuses in how commissions are levied on consumers, interviews found that one of the comments likely to be repeated is that the NAIC needs to keep any action targeted on the actual problem.
The NAIC is having its winter meeting this week in New Orleans. A public hearing was planned for Dec. 4 to discuss a plan that a task force of commissioners developed in mid-November after attorneys general including New Yorks Eliot Spitzer and Connecticuts Richard Blumenthal launched an investigation into the practices of insurance brokers and companies. California Insurance Commissioner John Garamendi and New York Insurance Superintendent Greg Serio also are conducting investigations on the matter.
What Your Peers Are Reading
Allegations include conflicts of interest as well as bid-rigging. The inquiries started with commercial lines of insurance and spread to include group life and health contracts.
The commissioners response includes sending out inquiries to companies requesting information on commissions and bidding practices, amending guidelines in the Producer Licensing model act, and establishing a consumer outreach program where potential abuses could be reported.
Among those testifying at the hearing will be the American Council of Life Insurers and the National Association of Insurance and Financial Advisors, both in Washington; the National Association of Mutual Insurance Companies, Indianapolis; and, the Property Casualty Insurers Association of America, Des Plaines, Ill. At press time, all were finalizing their comments in preparation for the hearing.
Bruce Ferguson, ACLI senior vice president-state relations, noted the scope of the response, which covers all lines and types of insurance. A “one size fits all” approach can be very complicated because of the different ways insurance is sold in the property-casualty and life markets and the different types of producers such as captive and independent agents, he notes.
The ACLI is encouraging the NAIC to focus on the fact pattern in the Garamendi and Spitzer investigations, he adds.
Ferguson also says that if states send out inquiries to companies and producers, they should follow a uniform template so that there will not be duplication of efforts as these entities seek to respond to state regulators. The template developed by the NAIC is a “laudable goal” and should be adhered to, he adds.
To date, however, the result is somewhat mixed, he continues, with a handful of states including Illinois, Ohio and North Carolina deviating somewhat from the NAIC template, while states such as Delaware and Iowa are using it.
NAIFA is preparing comments that it will present at the hearing, says Jim Edwards, NAIFA spokesman. “We dont support the proposal in its current form and will make suggestions [at the hearing].”