NCOIL Approves Producer Compensation Disclosure Model Act
The approval of a revised producer compensation disclosure model act and a resolution calling on commissioners to oppose the application of Sarbanes-Oxley financial reporting requirements on nonpublicly traded insurance companies highlighted the March 3-6 National Conference of Insurance Legisla-tors Spring Conference in Hilton Head, S.C.
NCOIL Chairman Craig Eiland, a member of the Texas House of Representatives, called upon his fellow legislators to take an active role in introducing and passing NCOIL regulatory reform models in their states.
Citing efforts by Congress to develop federal insurance regulatory standards, Eiland stressed the importance of moving forward with effective regulatory modernization at the state level.
The Des Plaines, Ill.-based Property Casualty Insurers Association of America commended NCOIL’s leadership for calling on states to adopt competition-driven regulatory modernization model acts.
“PCI is pleased that Rep. Eiland has raised the battle cry with his colleagues to move beyond development of model laws to actual introduction and passage across the nation,” said Robert Zeman, PCI’s senior vice president of insurance regulatory.
“Approval in the states of adopted NCOIL models, in particular the organization’s competitive rating model, would be a significant first step toward much needed modernization.”
NCOIL addressed several major issues including producer compensation, application of the SOX Act, terrorism insurance, use of loss-history databases, and regulatory modernization.
The legislators’ group approved a revised producer compensation disclosure model act that deletes the requirement for written consent from consumers and excludes producers whose sole compensation for the placement of business is from salaries and commissions, largely sparing agents who do not charge their clients fees.
The National Association of Insurance Consumers was scheduled to take up the issue during mid-March meetings in Salt Lake City, Utah. In another development, the NCOIL Executive Committee approved a resolution opposing the NAIC effort to impose the financial reporting requirements of the Sarbanes-Oxley Act to nonpublicly traded insurers.
“This is extremely good news, especially coming before renewed debate on this issue at the upcoming NAIC meeting,” Zeman said.
“State legislators have sent a strong messages that applying SOX to non-publicly traded insurers is not necessary from a regulatory perspective and that the cost of such a requirement would far outweigh any possible benefit.”
NCOIL deferred action on regulations governing the use of loss-history databases such as the Claims Loss Underwriting Exchange (CLUE) until its July meeting.