NAPSLO SUBMITS TESTIMONY TO NAIC ON COMPENSATION DISCLOSURE AMENDMENT 

NAPSLO recently sponded to questions by the NAIC Executive Task Force regarding the Compensation Disclosure Amendment to the Producer Licensing Model Act (PLMA) The NAIC Executive Committee on Broker Activities meets Monday, March 14 in a public hearing on the Proposed Model Language Regarding Broker Disclosures. A copy of NAPSLO's statement is available to download.

In its response, NAPSLO said that it supports the exemption for wholesale intermediaries since the wholesale producer does not deal directly with the insured. 

NAPSLO also said it believes that in a wholesale insurance transaction where the contingent agreement between the wholesale intermediary and the insurer does not compromise the independent decision of the retail producer’s ability to act in the best interest of the customer, contingency agreements are a proper method of compensating wholesale intermediaries.

NAPSLO further stated it believes that disclosure requirements in the NAIC model amendment are consistent with traditional approaches to dealing with conflicts of interest, provide sufficient safeguards, and that no additional requirements are necessary.

In a response to a question on whether there is a need to include information on producer compensation on all quote letters and declaration page, NAPSLO disagreed, saying "The benefit that would be derived by the consumer in making this decision through knowing what portion of the price or premium is producer compensation is questionable." 

NAPSLO representatives attended the recent NCOIL meeting and met with state legislators on the NCOIL Producer Compensation Disclosure model, which, as adopted, tracks the NAIC model amendent but also includes provisions to protect from disclosure small fees charged by producers (if recognized by statute/regulation) and provides a specific exemption for producers compensated solely by the insurer as well as for wholesalers.