The state Senate and House of Representatives have approved bills to require insurance brokers to get their customers’ “documented acknowledgment” that they know of any compensation the broker is getting from the carrier or a third party.
The legislation, backed by the state Department of Business Regulation, is based on a model law drafted by the National Association of Insurance Commissioners. But unlike the NAIC version, it specifically applies only to new policies, not to renewals.
Seifert Systems Invests in Energy Efficiency to Strengthen Operations
For manufacturers, energy is more than just another operating expense. It plays a critical role…
Learn More
Consumer advocates across the United States pushed for broker disclosure laws after New York Attorney General Eliot Spitzer’s probe of Marsh & McLennan and other brokerages uncovered a wide range of potential conflicts of interests and allegations of outright fraud.
Some pushed to go much further, and ban broker incentives paid by carriers; Rhode Island Secretary of State Matt Brown initially spoke in those terms. But when NAIC took on the issue, the focus shifted to disclosure, and under pressure from the Independent Insurance Agents & Brokers of America (IIABA), the proposed requirements narrowed even more.
Consumer advocates had wanted the NAIC to also require brokers to disclose all quotes they receive, for example, and to recognize a fiduciary responsibility from brokers to their customers.
But the model bill didn’t include those items, and neither did the Rhode Island bills.
Given the relatively limited scope of the NAIC proposal, the IIABA and the local Independent Insurance Agents of Rhode Island supported the legislation, requesting only that some language be “clarified” to minimize the burden on their profession or the public.
If signed by Gov. Donald Carcieri, the mandates would become effective Jan. 1.
