WASHINGTON, D.C., Oct. 6 - A U.S. district court’s decision that two Florida laws denying equal treatment to nonresident Florida-licensed agents are unconstitutional will result in an additional breakdown of artificial barriers to licensing and regulatory uniformity in the states, says the Independent Insurance Agents & Brokers of America (IIABA).
Last week, Judge Robert L. Hinkle of the U.S. District Court for the Northern District of Florida ruled that the Florida countersignature statute and a ban prohibiting nonresident agents to be licensed as surplus lines providers violate the Privileges and Immunities Clause and the Equal Protection Clause of the U.S. Constitution and thus are unconstitutional. The case was brought by the Council of Insurance Agents & Brokers.
In his order, Judge Hinkle enjoined Florida Insurance Commissioner Tom Gallagher from enforcing the laws, ruling that the state cannot deny Florida-licensed nonresident agents the same rights and privileges that resident agents possess. “In sum, no purpose is served by denying to Florida-licensed agents who live outside Florida the same rights and privileges afforded to Florida-licensed agents who reside within the state. The discrimination against nonresident agents is unconstitutional,” wrote Hinkle in his ruling on the countersignature law and the surplus lines license ban.
IIABA, which has a longstanding Board policy opposing countersignature laws, said the decision will give some impetus to the ongoing march toward creating reciprocity in agent and broker licensing in all 51 states and creating more uniformity in the state insurance regulatory system.
“Our overarching goal is to create a more responsive and uniform regulatory system, and this decision is a step that will buttress that effort,” says IIABA President Louise “BeBe” Canter, CPCU, ARM. “Agents and brokers across the nation do not want provisions that hinder the adoption of reciprocal agent licensing by the states. To achieve our objective of having all 50 states and the District of Columbia adopt licensing reforms, we must cast aside these vestiges of days gone by.
“Since the adoption of our Board policy in 1972, IIABA has been a leader in the drive to eliminate state countersignature laws. In the last eight years alone, IIABA worked with a dozen states to repeal their countersignature laws through legislative action,” explains Canter. “We believe all countersignature laws should be a thing of the past, and we will not rest until all states or Congress enact licensing reforms that foster 100 percent true reciprocity as called for in the licensing standards in the Gramm-Leach-Bliley Act (GLBA).”
The GLBA of 1999 requires a majority of states to adopt reciprocal licensing reform. To date, 41 states have enacted these reforms, leaving 10 to act.
IIABA also is addressing broad-based insurance regulatory reform with members of Congress on Capitol Hill, points out IIABA CEO Robert A. Rusbuldt.
“We are actively urging Congress to take legislative action that will eliminate existing barriers to interstate business, including countersignature laws, and create national uniformity in a variety of important areas,” explains Rusbuldt. “Clearly, there are still a limited number of these barriers remaining despite the significant progress that has been accomplished in the last several years.”
The Big “I” is advocating a middle-ground reform package that espouses the adoption of targeted federal tools to reform state-based insurance oversight rather than replace it with a federal chartering system and accompanying dual regulatory structure.
IIABA’s middle-ground reform proposal, which has garnered the attention of key regulators, congressional leaders and industry leaders, uses legislative tools, such as national standards, national reciprocity and multi-state uniformity, to achieve the targeted reforms necessary to streamline state insurance regulation for agents, brokers and insurers.
By addressing reform this way, the Big “I” believes that greater uniformity, efficiency and responsiveness in the state-based system will be created and elimination of unnecessary or inconsistent regulatory requirements can be accomplished. The IIABA plan also includes a provision that would eliminate countersignature laws.
“This decision by the U.S. district court undoubtedly will have an effect on the several states that have countersignature laws on the books,” says Rusbuldt. “IIABA looks forward to working with the individual state commissioners and regulators, the National Association of Insurance Commissioners, Congress and our colleagues in the insurance industry to truly reform the state-based system in a way that works for consumers and the industry.”
Founded in 1896, IIABA is the nation’s oldest and largest national association of independent insurance agents and brokers, representing a network of more than 300,000 agents, brokers and their employees nationally. Its members are businesses that offer customers a choice of policies from a variety of insurance companies. Independent agents and brokers offer all lines of insurance—property, casualty, life, health, employee benefit plans and retirement products. Web address: www.independentagent.com.