The National Conference of Insurance Legislators has put off a vote on an explosive resolution accusing state attorneys general of evading the legislative process by negotiating settlements banning broker contingent commissions nationwide.

The resolution considered here at NCOIL's recent spring meeting was aimed primarily at the agreements negotiated between three state attorneys general with Marsh, Willis, Aon and other brokerages following the 2004 scandal over volume-based bonus compensation.

At that time, New York's attorney general, Eliot Spitzer (now the state's governor), charged that hidden contingency fees collected from insurers were part of a scheme to rig bids and steer clients to the benefit of the broker, rather than the buyer.

Georgia Rep. Rich Golick, R-Smyrna, sponsored the resolution, charging that “a small group of attorneys generals and insurance regulators have recently undermined and evaded the legislative process by using legal settlements with insurers and large brokers to unilaterally implement public policy measures.”

Texas Rep. Craig Eiland, D-Galveston, who chairs NCOIL's State Federal Relations Committee, said he wanted to put off the issue because Rep. Golick was not at the meeting.

His move came despite the urgings of Wes Bissett, senior vice president of the Independent Insurance Agents and Brokers of America, who asked the panel to reconsider any postponement because the matter was urgent.

“Some of the settlements reached by some AGs and regulators with big insurance companies and the largest brokers include provisions that are essentially lawmaking,” according to Mr. Bissett. A prohibition on insurance companies paying contingent commissions “is the kind of measure that ought to be approved and adopted by a legislative body.”

In addition to Mr. Spitzer, Connecticut Attorney General Richard Blumenthal and Illinois Attorney General Lisa Madigan have entered into global settlements with brokers who agreed to stop accepting the fees for various lines of business.

“The main settlements have been negotiated by three attorneys general, yet they have been applied nationwide and there has been no opportunity for comment,” said Mr. Bissett.

Rep. Eiland said he preferred to put off the issue until representatives of the attorneys general, through the National Association of Attorneys General, can comment.

In addition, he noted that NAAG and NCOIL have been partners in some regulatory reform efforts and wanted to make sure careful thought was given before any move that might antagonize them.

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