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Member, Beacon International Group, Ltd.
WASHINGTON--The Council of Insurance Agents & Brokers is suing insurance regulators in Florida and Nevada, seeking to have those states' broker countersignature laws overturned.
The CIAB says that the laws in Florida and Nevada are the "most egregious" examples of how countersignature laws increase the cost of placing insurance but add little in terms of consumer protection.
Such laws require brokers or agents not licensed in a state to have a licensed producer countersign any policies the unlicensed brokers place for risks based in that state.
Although three other states--Alabama, South Dakota and West Virginia--have similar rules, Florida and Nevada impose significant fee-sharing requirements in addition to the countersignature regulation, according to the CIAB.
Florida requires that unlicensed brokers pay 50% of their fee or commission to a Florida broker, and Nevada requires that out-of-state brokers pay the licensed broker 5% of the premiums or 25% of the commission, according to the CIAB.
"We are talking about millions of dollars in costs," said CIAB President Ken A. Crerar.
The suits, which have been filed in federal courts in Las Vegas and Tallahassee, Fla., charge that the laws are unconstitutional because they provide resident agents and brokers with an unfair competitive advantage over insurance agents and brokers who do not reside in the states.
For procedural reasons, the suits name the Florida and Nevada insurance commissioners. If the actions are successful, the states' legislatures will have to revise the laws, a CIAB spokesman said.