U.S. regulators approve broker disclosure rules

U.S. regulators adopted model legislation on broker disclosure over the holidays, meeting with a lukewarm reception from brokers.
The Independent Insurance Agents & Brokers of America (IIABA) says it credits the National Association of Insurance Commissioners (NAIC) for its work on the model legislation, but still sees several issues within the new rules.
The model, which would amend the existing Producer Licensing Model Act, puts new disclosure requirements in place relative to brokers’ relationships with insurers, specifically with regards to compensation. It requires brokers to disclose the amount of compensation and the formula by which it is calculated, or a reasonable estimate thereof.
Among the concerns listed by the broker association is the need for distinction between brokers and agents; ensuring disclosure requirements can be met reasonably and are not unduly onerous, and other technical issues. Brokers also want clarification that the new rules do not apply to renewal and residual market business.
“Although additional work will be needed on the model, we share the ultimate goal of the NAIC, which is to produce disclosure that is of value to consumers,” says IIABA CEO Robert Rusbuldt.
He notes that the debate over the actual implementation of new laws will be at the state level now, as state insurance commissioners and legislatures debate the final form their specific regulations will take.