NAMIC Rips NAIC Broker Disclosure Plan
National Underwriter News
March 25, 2005
NU Online News Service, March 25, 2005 The National Association of Mutual Insurance Companies said it opposes the National Association of Insurance Commissioners amendment to broker compensation disclosure rules, calling it "confusing and ambiguous."
The Indianapolis-based carrier association said it had sent a letter noting its misgivings to NAIC President Diane Koken, who also chairs the executive task force on broker activities.
"Overall, we continue to view the Compensation Disclosure Amendment, as adopted [in December], as being overbroad, confusing and ambiguous, and of limited value to the consumers it is intended to protect," wrote NAMIC State Affairs Manager Christian John Rataj.
His letter also addressed supplemental questions NAIC has asked about additional amendments to the disclosure act. NAMIC contends that any model act adopted by the NAIC should:
•"Be grounded in logic and reason, not fear and speculation.
•"Be realistic in scope and practical in application.
•"Be narrowly tailored to the objective of preventing conflicts of interest
•"Be mindful of the fact that a well-drafted regulation should always balance the needs of the consumer with the needs of the insurance industry."
NAMIC said its hope is that the NAIC will consider narrowing the scope of the amendment so that it addresses only "actual" conflict-of-interest situations, such as when a producer is being compensated by both the customer and the insurer or another source.
Short of those changes, however, NAMIC urged the NAIC to adopt the March 5, 2005 NCOIL Producer Compensation Disclosure Model Amendment to the Producer Licensing Model Act, and add no additional disclosure requirements to the amendment. That proposal limits itself to producers compensated by both the insured and insurers.