The National Association of Insurance Commissioners (NAIC) in November drafted amendments to the Producer Licensing Model Act. One area addressed is broker compensation.Specifically, the Kansas City, Mo.-based NAIC is proposing that insurance producers-and any business entity related to them-legally permitted to receive compensation from an insured can not receive compensation from an insurer unless the producer has: obtained the insured's written consent; and disclosed the amount of the compensation from the insurer-including commissions-and the method of calculating it.
In addition, all producers must disclose the following information, if applicable, to a client before a purchase:
* That the producer will receive compensation from an insurer for the sale.
* That the compensation may differ depending on the product and the insurer.
* That the producer may receive additional compensation from the insurer based on other factors such as premium volume and loss or claims experience.
Note: At press time, the NAIC was soliciting comments to its proposals. A revised draft was expected in the middle of December.
