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.

Register or login for access to this item and much more

All Digital Insurance content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access