No Further Changes Seen In Producer Comp Rules

Poolman noted during his comments that he did not support recent changes in compensation disclosure regulations in the Producer Licensing Model Act approved by the NAIC. One of the reasons he didn’t support the amendments to the Model Act, he said, was that some of the underwriters and members of such trade groups as the Independent Insurance Agents and Brokers of America had agreed voluntarily to transparency.

He also stated that he didn’t support the changes because bid-rigging by major brokers uncovered and being prosecuted by New York Attorney General Eliot Spitzer were illegal per se, didn’t touch on the issue of contingency commissions, and prosecution of such wrongdoing did not require new laws.

J. Bruce Ferguson, senior vice president, state relations, at the ACLI, said that “some of the dire predictions” associated with the Spitzer probe, including claims of “widespread corruption” by insurance producers, “have not come true.” But he did say the changes to the Model Act approved by the NAIC as a result of the Spitzer probe “are designed to bring transparency to the broker compensation process.”

Poolman also noted that “AG also stands for aspiring governor.” Moreover, he said, that in his state “you start banning contingency commissions, and some of the smaller rural agencies will go out of business and the existing producer distribution system dries up.”

“I don’t believe this issue has shelf life,” said North Dakota Insurance Commissioner Jim Poolman.