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NAIC Approves Producer Disclosure Amendments

Measures Too Broad, Says NAMIC

INDIANAPOLIS (December 29, 2004)--The NAIC today amended its Producer Licensing Model Act in response to concerns about broker compensation irregularities. According to a NAMIC official, the amendments are overly broad because they go beyond addressing the fundamental issue, which is the potential conflict that arises when a producer receives compensation from the customer and the insurer.

"While the NAIC has improved the amendments since their initial introduction, they remain too broad in that they require pre-sale disclosure from all producers" said Peter Bisbecos, NAMIC's Director of Legal and Regulatory Affairs. NAMIC had asked the NAIC to limit the amendments to producers who receive compensation from the insurer and the customer, as that creates the potential for a conflict of interest. "Disclosure by producers who are only compensated by the insurer adds no value to the insurance buying process and should not be required," Bisbecos noted.

The NAIC chose not to vote on section B of the proposed amendments, instead referring it to the NAIC Executive Task Force on Broker Compensation for further consideration not to exceed 90 days. NAMIC had asked that this section be stricken completely, as it requires disclosure of information different from section, A which could only result in confusion. "We are gratified that the NAIC recognized the need for more deliberation by removing a portion of the amendments for further consideration," concluded Bisbecos.

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For further information contact:
Robert Detlefsen at rdetlefsen@namic.org
or (317) 875-5250