The NAMIC comment was filed Wednesday by Peter A. Bisbecos, NAMIC legal and regulatory affairs director, in response to the NAIC's Jan. 7 request for comment on the amendment to the Producer Licensing Model Act. The NAIC is now considering new (Section B) amendments to the model act in addition to (Section A) amendments approved Dec. 29, 2005.

NAMIC said the solution to the one defined problem to date?when a producer receives compensation from both parties?is appropriate. "NAMIC agrees that the burden of disclosing that a producer is compensated by both parties is balanced with the value that such disclosure adds to the insurance buying process," wrote Mr. Bisbecos.

"To date, other problems remain the product of allusion and should not be the subject of legislation," he added.

The Independent Insurance Agents & Brokers of America and National Association of Professional Insurance Agents have previously told the NAIC that the disclosure provision is to broad and too vague.

The latest proposed amendment to the NAIC's producer model act would make the act less clear by adding disclosure requirements that vary in content from section A's requirements, are triggered by different circumstances, and could potentially apply to any producer, NAMIC said.

In NAMIC's view, Section B requirements add "burden without value to the sale of insurance."

"While we can appreciate the NAIC's desire to provide a product for this year's legislative sessions, the necessary haste has made it impossible to identify and resolve the ambiguities that are inevitable in the legislative drafting process," Mr. Bisbecos wrote.

He said it is "imperative that the NAIC's early efforts are tightly focused to compensate for the problems inherent in abbreviated public debate. Attempting to resolve undefined problems with hastily drafted legislation is bad public policy."

NAMIC urged the NAIC to suspend further consideration of Section B, saying that, absent specific evidence, supporting this measure is unjustified.

The group also called on the NAIC to clarify "the many ambiguities in Section A" and provide clear guidance on how to comply with Section A's varying requirements.

NAMIC said Mr. Bisbecos' testimony is online at
http://www.namic.org/pdf/050119NAICBrokerComment.pdf.
Mike Koziol, assistant vice president and counsel for the PCI, in his criticism advised the NAIC that the Section B amendment should not be added to the model.

He wrote the regulators that, in certain circumstances such as broker relationships, disclosure of compensation can be important, "but in the case of agents, when representation is clear and consumers understand that the insurer compensates the agent, there is no conflict, real or perceived?"

In such a case, he said, "there is no need for any disclosure to the consumer. And representation is crystal clear in situations where the transaction is with a direct writer, either via Internet or telephone."

He added that PCI opposes imposing fiduciary duties on producers. "Any law imposing a fiduciary duty on agents and brokers would transform insurers and producers from a competitive industry into personal financial guardians of the insured, a result that goes well beyond anything required by law or common sense."

"The fiduciary duty as proposed by the NAIC and other proposals requires brokers to select the ?best available insurer' based on ?coverage, service, financial security and price.' Unfortunately, these extremely subjective terms will be impossible to interpret and will give rise to future litigation.

Mr. Koziol said, "A model imposing a fiduciary duty on brokers easily can be stretched to impose it on agents, which is wholly inappropriate."

PCI opposed a requirement that a broker disclose all quotes. "Customers are not bound to retain any specific broker and can demand to see all quotes from their broker simply by asking. Brokers that do not operate the way customers expect them to will soon find themselves out of business," PCI said.

The group also objected to any attempt to require disclosure of producer-owned reinsurance arrangements. "Such arrangements are best left to the parties," said Mr. Koziol.