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NAMIC Says NAIC Broker Dealer Model Laudable But Still Too Broad

INDIANAPOLIS (Jan. 20, 2005)––NAIC efforts to address concerns surrounding broker compensation continue to be over-broad, going beyond the single problem that has been defined, according to comments filed Wednesday by the National Association of Mutual Insurance Companies (NAMIC).

The assertion was lodged by NAMIC Director of Legal and Regulatory Affairs, Peter A. Bisbecos in response to the NAIC’s Jan. 7, 2005, request for comment on an amendment to the Producer Licensing Model Act (PLMA). The NAIC is now considering new (section B) amendments to the PLMA in addition to (section A) amendments approved on Dec. 29, 2004.

NAMIC stressed that the solution to the one defined problem to date--when a producer receives compensation from both parties—is appropriate. “NAMIC agrees that the burden of disclosing that a producer is compensated by both parties is balanced with the value that such disclosure adds to the insurance buying process,” wrote Bisbecos. “To date, other problems remain the product of allusion, and should not be the subject of legislation.”

The latest proposed amendment to the NAIC’s PLMA, would make the Act less clear by adding disclosure requirements that vary in content from section A’s requirements, are triggered by different circumstances, and could potentially apply to any producer. Section B requirements add burden without value to the sale of insurance.

“While we can appreciate the NAIC’s desire to provide a product for this year’s legislative sessions, the necessary haste has made it impossible to identify and resolve the ambiguities that are inevitable in the legislative drafting process,” Bisbecos wrote. “Therefore, it is imperative that the NAIC’s early efforts are tightly focused to compensate for the problems inherent in abbreviated public debate. Attempting to resolve undefined problems with hastily drafted legislation is bad public policy.”

In conclusion, NAMIC urged the NAIC to:

  1. Suspend further consideration of section B. Absent specific evidence, supporting this measure is unjustified.
  2. Clarify the many ambiguities in section A.
  3. Provide clear guidance on how to comply with section A’s varying requirements.

Bisbecos’ testimony can be read at NAMIC Online

Posted: Thursday, January 20, 2005 12:00:00 AM. Modified: Thursday, September 08, 2005 1:48:09 PM.

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