ENEWS - February 24, 2005

NAPSLO ISSUES STATEMENT ON CONTINGENCY ARRANGEMENTS
Following the recent settlement by Marsh and McLennan Companies, Inc. with New York Attorney General Eliot Spitzer and Acting Insurance Superintendent Howard Mills, NAPSLO President Richard Polizzi outlined the Association's position on contingent compensation arrangements within the Wholesale community.

"In a wholesale insurance transaction, the wholesaler is simply responding to a request from a retail producer to find and present an offer of coverage acceptable to the retail producer's customer," Mr. Polizzi said. "That decision to purchase the offered coverage is not related to, and is independent of, the existence of any contingency arrangement the wholesaler may have with a carrier. Simply stated, the wholesaler is not party to the decision to purchase coverage offered by the retail producer. That is solely between the retail producer and the insured."

Although Marsh agreed not to accept any contingent commissions from any insurer as part of the settlement, the agreement does not mean that a contingency arrangement is no longer a legally acceptable method of compensating any licensed insurance producer in any circumstance. New York Attorney General Eliot Spitzer, himself, in a recent appearance before the National Press Club in Washington, D.C., while acknowledging that there are "many spectacular" people in the insurance industry, stated that he recognized that there are "contexts in other parts of the insurance sector where those contingencies are appropriate, where they did not subvert decision making."

NAPSLO agrees with this conclusion, and believes that in a wholesale insurance transaction where the contingent agreement between the wholesaler 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 and legal method of compensating wholesalers.

SOUTH CAROLINA GUARANTY FUND DISCUSSIONS
Thanks to efforts by NAPSLO and other industry associations, discussions by the South Carolina Wind and Hail Underwriting Association and the South Carolina Department of Insurance regarding instituting a guaranty fund for coastal risks written by excess and surplus lines carriers are not moving forward at this time.

The South Carolina Association notified NAPSLO that while the topic has been discussed by an industry/DOI Task Force, it does not see the topic "moving forward at this time." NAPSLO provided the South Carolina Association with its view and information on guaranty funds and the group did not move to recommend instituting a guaranty fund. Currently only New Jersey has a guaranty fund for excess and surplus lines risks.

Since then, the South Carolina Consumer Advocates office has entered the fray and requested the DOI consider establishing a guaranty fund account for coastal property risks written by surplus lines firms.

REGISTRATION UNDERWAY FOR AAMGA TECHNOLOGY CONFERENCE
Programs on disaster recovery, open source developments, roundtable sessions, new products and services, and the London/ACORD data standards, and the annual business trade mart and showcase will be part of the AAMGA's Automation Conference, set for March 12-15, 2005, at the new Hyatt Hotel in Philadelphia at Penn's Landing.

NAPSLO is sponsoring the keynote address by Wally Marciniak who will present Microsoft's electronic processing solutions working in partnership with ACORD. The Technology Conference is being combined with the AAMGA's University Weekend East. Both are open to representatives of AAMGA and NAPSLO member firms.

Registration materials are available on the AAMGA website at www.aamga.o rg.

MEMBERSHIP DIRECTORIES MAILED, PDF COPY ON WEB SITE
The 2005 NAPSLO Membership Directories are being mailed to NAPSLO members and a copy also may be downloaded from the Members Section of the NAPSLO web site at www.napslo.org. Login Number and Password needed to access the directory.

UPCOMING NAPSLO EVENTS
NAPSLO E&S School - June 25-28, 2005 - St. Louis, Missouri
NAPSLO Annual Convention - September 14-18, 2005 - San Francisco, California