The disconnect continues at the National Association of Insurance Commissioners (NAIC). The NAIC task force that has supposedly been working to enhance transparency continues to meet behind closed doors.

The Broker Activities Task Force had been meeting in secret leading up to their March 20, 2006 press release announcing the results of their settlement negotiations regarding alleged bid rigging by a few large brokerage firms. Michael T. McRaith, Director of the Illinois Division of Insurance and Chairman of the Task Force, said at the time, “These efforts have resulted in an agreement that prioritizes consumer protection with sensible business reforms.” 

What the Chairman of the NAIC Task Force said regarding business reforms is extremely troubling, because such reforms do not belong in a settlement unless they are specific to the subject of the agreement as part of their punishment.  Unfortunately for all the law-abiding Main Street agents who were never even in a position to rig bids, the NAIC and certain Attorneys General did not mean just business reforms for those suspected of illegal activities, but fundamental business practice changes industry wide.

But the full NAIC has never openly debated or adopted this as a strategy. Further troubling is that the NAIC is trumpeting this “policy” on broker activities through a Task Force that is completely at odds with a less-restrictive proposed policy that, when voted on in public by the full NAIC, was soundly defeated.  As of March 2007, the failed amendment was still listed on the NAIC website with no indication that it had been overwhelmingly defeated over two years ago.

What It Means to Agents:  One is led to suspect that the NAIC Broker Activities Task Force is trying to advance an even more restrictive policy goal secretly through the settlement process, because they could not get it done through normal channels. To make matters even worse, it now appears that the Task Force is expanding its goal to not only cover disclosure reforms nationwide, but also alter and even ban the payments of contingent commissions in the insurance industry. But there’s no way to know for sure, because the meetings are secret.

The activity of this Task Force taking place behind closed doors makes a complete travesty of the NAIC’s so-called “open meetings policy,” which states that even though they don’t believe they are required to hold open meetings, they “are committed to conducting business openly.” Despite their own policy prominently displayed on their website, it was not until the June 2006 meeting that the Broker Activities Task Force met openly, briefly, before once again going into executive session. PIA was able to provide comments at the just-completed 2007 NAIC Winter meeting, and we were optimistic that perhaps the NAIC was beginning to live up to its open meetings commitments. However, during the most recent NAIC meeting this spring, the Broker Activities Task Force again met entirely in closed session.

March 20, 2007