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Agent group criticizes proposed settlement

Posted On: Oct. 29, 2006 12:00 AM CST

ALEXANDRIA, Va.—The Independent Insurance Agents & Brokers of America Inc. has filed a reply brief refuting the opposition filed to its amicus brief concerning Zurich American Insurance Co.'s proposed class action settlement over its broker compensation practices.

The Alexandria, Va.-based IIABA filed an amicus brief in the U.S. District Court for the District of New Jersey last month opposing certain aspects of Zurich's multistate settlement reached in March. Specifically, the IIABA stated concerns about the mandatory disclosure statement contained in the settlement, which it says will inhibit communication with customers and increase customer confusion regarding incentive compensation. The IIABA said it believes that Zurich, not the agents and brokers, should have the responsibility for providing policyholders with any required compensation disclosure form.

Class plaintiffs and 10 attorneys general filed a brief opposing the IIABA's brief, stating that it was filed prematurely and should have been reserved for the final fairness hearings.

But the IIABA was not party to the settlement negotiations with Schaumburg, Ill.-based Zurich and therefore had no opportunity to raise concerns over the mandatory disclosure form contained in the multistate settlement, the association said in a statement announcing the brief's filing earlier this month.

The IIABA's amicus brief "provides the court with important information about the negative consequences consumers and insurance brokers and agents will experience if the court approves the portion of the proposed Zurich settlement requiring brokers and agents to provide their customers with Zurich's mandatory disclosure form," IIABA President Alex Soto said.

A similar brief was filed last month in opposition to the National Assn. of Professional Insurance Agents' similar amicus brief opposing certain aspects of the Zurich settlement (BI, Oct. 2).

The PIA on Oct. 6 filed a reply brief with the court again asking for it to delay preliminary approval of the class settlement until "flaws" in the mandatory disclosure statement are corrected.

The PIA also objects to the curtailing of certain contingent commission payments contained in Zurich's and other proposed settlements, which the association said would create "disparate impact on PIA members' livelihoods."