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NAMIC Urges NAIC to Tailor Broker Compensation Remedy to Actual Problem

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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For further information, contact
Bob Detlefsen
Public Affairs Manager
(317) 875-5250 ext. 1054
rdetlefsen@namic.org