WASHINGTON–Government inaction has knocked out Puerto Rico's law requiring nonresident insurance brokers to obtain the countersignature of a local resident agent to write commercial insurance.
The countersignature statute went off the books when the Commonwealth missed the deadline to file an appeal of an April 3 ruling by the 1st U.S. Circuit Court of Appeals throwing out the law.
The Council of Insurance Agents and Brokers said a lower court finding against the countersignature law, issued in March 2005, now is in effect, and nonresident commercial insurance brokers no longer need the countersignature of a Puerto Rico resident agent to write business on the island.
In addition to requiring the countersignature of a resident insurance agent on policies, the invalid Puerto Rico countersignature law also had prohibited nonresident licensee solicitation of Puerto Rico-based business and inspection of risks located in the Commonwealth.
The ban on business solicitation and inspection of risks meant that licensed nonresident brokers could place business only for non-Puerto Rico-based businesses, CIAB officials said.
Puerto Rico joins Florida, South Dakota and West Virginia as jurisdictions that no longer require the payment of a fee and countersignature of resident agents for out-of-state insurance brokers.
The CIAB has won favorable decisions by federal courts in Florida and South Dakota, and West Virginia's legislature rescinded the statute rather than defend it in court.
Federal court judges in both Nevada and the Virgin Islands also have ruled in favor of CIAB in countersignature challenges in those jurisdictions, but the decisions are not yet final because the appeals process is still under way.
The Nevada decision came down in 2004, while the Virgin Islands case was decided on June 23, 2006, in a ruling from the bench by U.S. District Court Judge Curtis Gomez.
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