The NAIC should narrowly tailor its proposed broker compensation remedy to those situations in which consumers are served by producers who are compensated by both companies and the consumer, according to testimony by an official of the nation's largest property/casualty trade association.
Roger H. Schmelzer, senior vice president of State and Regulatory Affairs at the National Association of Mutual Insurance Companies (NAMIC) testified at a public hearing of the NAIC's Broker Activities Task Force that his organization prefers the NCOIL model because it is narrowly tailored and represents good public policy.
"The problem to be addressed is one of 'secret' deals," said Schmelzer. "The NAIC must define what it means by conflict of interest and distinguish between legal and theoretical conflicts of interest."
After defining its terms, "The NAIC should craft its remedy against the backdrop of laws already in place: the body of criminal law, tort law, contract law, and licensure law," said Schmelzer.
Schmelzer advised the NAIC to look at Nevada's temporary regulations that distinguish between standard and nonstandard compensation.
"The implications for contingent commissions are unclear;" concluded Schmelzer, "but the issue should be looked at from a marketplace perspective."
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Rick Nelson, APR
Public Affairs Manager
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Founded in 1895, NAMIC is a full-service national trade association with more than 1,400 member companies that underwrite 43 percent ($196 billion) of the property/casualty insurance premium in the United States. NAMIC members account for 44 percent of the homeowners market, 38 percent of the automobile market, 39 percent of the workers’ compensation market, and 31 percent of the commercial property and liability market. NAMIC benefits member companies through advocacy, public policy and member services. Information about the association, its member companies and the property/casualty insurance industry can be found at NAMIC Online, www.namic.org.