AG, GOV. DIFFER ON DISCLOSURE:

Connecticut Attorney General Richard Blumenthal has proposed the election of the state’s insurance commissioner and mandatory rules of disclosure for insurance brokers and agents. Under Blumenthal’s legislation, the elected commissioner would replace one who is now appointed by the governor. The rest of his legislation would require greater disclosure by brokers and agents about their fiduciary duty to consumers, similar to real estate agents. Insurance agents would be required to disclose in writing whether they are acting on behalf of the insurer. The disclosure would have to describe completely the terms and amount of any compensation. Brokers and agents would also be required to disclose the details of all quotes from insurers, and the reasons for the broker’s recommendation. A consumer would have the option to be a broker’s sole source of compensation for any business on behalf of that consumer.

Meanwhile, Gov. M. Jodi Rell and appointed Insurance Commissioner Susan Cogswell are supporting the efforts of the National Association of Insurance Commissioners to address the broker compensation issue. Rell and Republican leaders have filed their own bill that mirrors the NAIC model compensation disclosure act, which currently does not include fiduciary duty or full quote disclosure as called for by Blumenthal. The Rell proposal forbids an insurance agent or broker from receiving compensation from an insurer or other third party without first obtaining the customer’s written consent for the compensation. The agent or broker also must disclose the amount of compensation from the insurer or other third party for an insurance policy, unless the amount is not known at the time of disclosure. In that circumstance, the agent or broker must disclose the method for calculating compensation and, if possible, a reasonable estimate of the amount.