|CT Attorney General Calls for Voters to Elect Insurance Commissioner|
And For Brokers to Disclose Fees and Quotes
The Insurance Journal
February 8, 2005
Connecticut Attorney General Richard Blumenthal has proposed the statewide election of the state's insurance commissioner and mandatory rules of disclosure for insurance brokers and agents.
Joined at a Capitol press conference by Senate President Pro Tem Donald E. Williams Jr., D-Brooklyn, Senate Majority Leader Martin M. Looney, D-New Haven, and state Sen. Joseph J. Crisco Jr., D-Woodbridge, Blumenthal called for strengthened accountability and transparency in the insurance industry. He submitted a reform package to the legislature's Insurance and Real Estate Committee, which is co-chaired by Crisco.
Under Blumenthal's proposal, the insurance commissioner who is now appointed by the governor would become a statewide elected office. Blumenthal is proposing this change as a constitutional amendment.
The rest of his legislation would require greater disclosure by brokers and agents about their fiduciary duty to consumers, similar to real estate agents. Insurance agents would be required to disclose in writing whether they are acting on behalf of the insurer. The disclosure would have to describe completely the terms and amount of any compensation. Brokers and agents would also be required to disclose the details of all quotes from insurers, and the reasons for the broker's recommendation.
Under Blumenthal's proposal, a consumer would have the option to be a broker's sole source of compensation for any business on behalf of that consumer.
"My ongoing investigation and action against abuses has exposed twin evils in the insurance industry: secrecy and special payments," Blumenthal said. "Tougher rules are necessary, but not enough. We need better enforcement. An elected commissioner accountable directly to the people can fight abuses that raise insurance costs for everyone. Stronger legal standards can help stop a culture of concealed kickbacks where business is steered in exchange for bonuses, not the best deal for consumers."
Blumenthal added, "The commissioner's reporting responsibility should be directly to the people - not industry interests or other officials who appoint the commissioner. And consumers and taxpayers should hold their commissioner accountable."
Insurance Commissioner Susan Cogswell told Insurance Journal she supports the ongoing efforts of the National Association of Insurance Commissioners to investigate and resolve the brokerage controversy. She also supports the NAIC model compensation disclosure act, which currently does not include fiduciary duty or full quote disclosure as would be required under Blumenthal's measure. She said more investigation and discussion are needed on those proposals.
© 2005 by Wells Publishing, Inc.