NAIFA Eyes New NAIC Comp Disclosure Draft

A section of the current draft says:

This subsection shall not apply to an insurance producer who:

(a) does not receive compensation from the customer for the placement of insurance and

(b) discloses to the customer prior to the purchase of insurance that the insurance producer acts on behalf of an insurer that has appointed the producer in connection with that placement of insurance and that the producer may provide services to the customer on behalf of the insurer.

In most cases, the producer disclosure rules will require insurance producers to disclose in advance to any customers from whom they receive compensation that they also are receiving some payments from the insurance underwriters with whom the producers are placing the business. It also requires the producers to get written acknowledgments that they have told the customers of such dual compensation arrangements.

But the new rules also say that a person will not be considered a “customer” for purposes of the regulation if the person is “merely a participant or beneficiary” of an employee benefit plan or covered by a group or blanket insurance policy or group annuity contract that was sold, solicited or negotiated by the insurance producer or affiliate.