Nevada has become the first state to set new broker compensation disclosure rules in the wake of the brokerage fee scandal.[@@]
The Nevada regulation defines a broker as any producer who is not an agent and, in effect, seems to apply to any producer who is compensated by the insured. Producers who were compensated by the insured would be the only persons expected to report under the new Nevada fee disclosure rules.
Other states also are starting to act on the broker comp issue.
In Arkansas, lawmakers have introduced a bill that is similar to a disclosure model that the National Association of Insurance Commissioners, Kansas City, Mo., developed in December 2004. After a long debate, the NAIC ended up including both agents and brokers in its model, even though some regulators noted that brokers, not agents, are at the heart of the current scandal.
In California, regulators have proposed a rule that would impose a fiduciary duty on brokers to act in customers’ best interest and require brokers to seek the “best available insurers” for their customers.
In Connecticut, Gov. Jodi Rell, a Republican, has introduced a bill that is similar to the NAIC model. Rell’s bill will face competition from one introduced by the state’s attorney general, Richard Blumenthal, who is a Democrat. Insurers believe the Blumenthal bill would be more onerous, according to Mike Koziol, a vice president at the Property Casualty Insurers Association of America, Des Plaines, Ill.