As commissioners and attorneys general in state after state announced their own probes of insurance practices, the National Association of Insurance Commissioners (NAIC) revealed it is working on a coordinated response.
“State insurance regulators are actively pursuing all of the facts, assessing the adequacy of current laws or regulations, and will determine appropriate collaborative action involving all states in a very short period of time,” said Diane Koken, NAIC president and Pennsylvania Insurance Commissioner.
“Brokers and insurance companies that have been abusing the system for personal gain will be identified and appropriate actions will be taken to see that all consumers’ concerns are addressed. We intend to coordinate directly with law enforcement officials in identifying and terminating this activity, as well as developing new regulations as needed to better monitor all sales activities.”
She encouraged risk managers to assess whether they have been subject to these practices and, if so, to contact their state insurance departments.
The NAIC is expected to develop a model state disclosure law governing commission arrangements.
Prevent future abuse
In addition, state regulators said they would form a commissioner-level entity whose sole focus will be to prevent future abuses and protect consumers at all levels.”We’re developing a steering committee that will utilize our established interstate collaboration and exam procedures, allowing us to work in concert, across state lines when needed, to keep improper sales activities from taking place in any line of insurance,” said Koken.
Their efforts are likely to expand beyond commercial property casualty brokerage.
“While most of the publicity has centered on abuse in the sale of commercial lines policies, it is important to note that regulators intend to look closely at the sales of personal lines policies as well, including the sale of employee benefits packages through the workplace. We’re getting to the bottom of this,” Koken claimed.
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