The best news last month came at the spring meeting of the National Conference of Insurance Legislators, where members approved a revised broker disclosure model. Among other things, it would exempt from the NAIC's disclosure requirements "a producer whose sole compensation for the placement (of insurance) is derived from commissions, salaries, and other remuneration from the insurer." Thus, it would spare most agents and brokers. It also would make the requirements inapplicable to the placement of insurance in secondary or residual markets, as well as to insurance renewals.

"Although not perfect, these positive changes and significant modifications improve the work product developed in late December by the NAIC," said C. Wesley Bissett, IIABA's senior vice president of governmental affairs.

PIA also called NCOIL's model on broker disclosure a significant improvement. It "concentrates on areas where conflicts of interest have been demonstrated to exist and avoids causing problems where they do not," said Timothy K. Kovac, PIA's director of business and compliance affairs.

About a week after NCOIL's spring meeting, agents associations had another opportunity to present their views, this time at an NAIC hearing. It was held to gather response to several NAIC questions that seemed to indicate commissioners' interest in expanding rather than restricting the disclosure amendment. In their responses, agents associations not only said an expansion would be misguided, but also took the opportunity to clear up misunderstandings about different types of producers and bonus compensation.

In his response to the questions, for instance, IIABA's Bissett pointed out that placement service agreements, which pay upfront, volume-based bonus compensation and which investigators have criticized as kickbacks, are utterly alien to most agents and brokers.

"PSAs are not and have never been paid to Main Street insurance agencies," said Bissett, "and they are only paid to brokers with significant size and marketplace clout."

"Retail independent insurance agents are not Marsh," said Kenneth Auerbach, Esq., chairman of PIA's National Business Issues Committee. "I don't have the market position to leverage insurers," he said, adding, "I don't need additional regulation to remind me to comply with the law."

Indicating that agents' testimony is starting to get through to the NAIC, Oregon Insurance Administrator Joel Ario suggested that the NCOIL model perhaps could be combined with the NAIC model to create one set of compensation-disclosure requirements for the largest commercial-lines brokers and another set for everyone else, a suggestion PIA welcomed.

The NAIC was to accept supplemental comments from producer groups until the last week of March, according to a PIA press release, and then conduct a conference call for members to discuss whether or not to make more changes to the disclosure amendment and come up with a plan of action. Let's hope they now understand why it would be unfair to agents and brokers to apply the same broad brush to all producers and bonus compensation contracts.

Note: If insurance commissioners-or anyone else-would like to gain an in-depth understanding of agents' contingency contracts, I invite them to read "A Study Raises Questions About Contingencies" in this month's issue of American Agent & Broker. While the article, written by "For the Manager" columnist Chris Burand, contains some surprising conclusions about the relationship between contingencies and insurer profitability, it also points out the utter absurdity of claiming profit-based contingencies significantly influence where agents place their customers' business.