NAIC Disclosure Requirements - Update 2

 

           Two previous posts on this blog (NAIC Disclosure Requirements and NAIC Disclosure Requirements – Update 1) provide background on developments by the National Association of Insurance Commissioners (NAIC) to draft a Compensation Disclosure Amendment to the Producer Licensing Model Act. If and when enacted by specific states, this Compensation Disclosure Amendment will substantially change standard business practices by requiring insurance producers (including structured settlement salespersons) to make disclosures concerning their compensation to their customers.

           On December 29, 2004, the NAIC adopted a Compensation Disclosure Amendment but decided to defer consideration of one important subsection (subsection B). This new Compensation Disclosure Amendment can now be downloaded from the NAIC website which also includes background information and comments concerning earlier drafts as well as the following invitation to submit written comments relating to proposed subsection B:

“On December 29, 2004, the National Association of Insurance Commissioners adopted a Compensation Disclosure Amendment to the Producer Licensing Model Act. This language is posted on the NAIC home page at www.naic.org. "

“At the time of adopting the Compensation Disclosure Amendment, the members of the NAIC decided to defer consideration of a proposed subsection B in the Amendment (a copy of the proposed subsection B is contained in the attachment below), and directed the NAIC's Executive Task Force on Broker Activities to further consider proposed subsection B and the development of additional requirements, such as the possible recognition of a fiduciary responsibility for producers, whether to require the disclosure of all quotes received by a broker, and whether to require disclosures relating to agent-owned reinsurance arrangements. "

“The NAIC Executive Task Force on Broker Activities is now inviting all interested parties to submit written comments with regard to (1) adding proposed subsection B to the Compensation Disclosure Amendment, and (2) recommendations for specific revisions to proposed subsection B.”

“Written comments should be submitted to the NAIC no later than 12:00 Noon Eastern, Wednesday, January 19, 2004, attention: Ms. Becky McElduff, Staff Counsel, at [email protected] or 2301 McGee Street, Suite 800, Kansas City, MO 64108-2604. "

            A subsequent post on this blog will evaluate the impact the NAIC Compensation Disclosure Amendment (including proposed subsection B) will have on structured settlements and personal injury settlement planning.