Nevada insurers say some changes needed

Chris Jones

Wednesday, June 19, 2002 | 11:37 a.m.

A coalition of Nevada insurance companies, reacting to a lawsuit challenging regulation of out-of-state insurers, says some changes in state regulations may be appropriate.

On June 11, the Council of Insurance Agents and Brokers of Washington D.C sued state Insurance Commissioner Alice Molasky-Arman in U.S. District Court in Las Vegas.

The council, which represents about 300 of the nation's largest property casualty insurance agencies and brokerage firms, hopes to overturn state laws that require all non-resident insurance agents and brokers to obtain a countersignature by a local insurance agent for most insurance contracts, as well as requiring the payment of a commission equivalent to at least 5 percent of the insurance premium to the countersigning agent, the suit said.

The suit said enforcing these statutes violates the Commerce Clause, the Equal Protection Clause and the Privileges and Immunities Clause of the U.S. Constitution, which limit the power of the states to interfere with interstate commerce.

The suit said the Nevada laws not only "impose an additional burdensome requirement on non-resident agents and precludes them from engaging in business with persons of their own choice," but also "unjustifiably reduces the amount of commission that a non-resident agent or broker can collect."

Jamie Johnson, president of the Nevada Insurance Council, a non-profit trade organization that promotes consumer education on behalf of Nevada's property and casualty insurance companies, said members of his organization have mixed feelings about Nevada's current system and how it might be affected by the lawsuit.

Johnson said he supports the state's efforts to regulate and track out of state brokers attempting to do business in Nevada, but he conceded changes in technology could have made some existing regulations obsolete.

"The NIC endorses policies and statues that provide consumers with representation by insurance companies licensed to do business in Nevada, and provisions for maintenance of records and local services are necessary to protect the interests of consumers," Johnson said.

"Existing state laws were developed long before the advent of Internet commerce and may require revision. However, NIC encourages practices that will allow legitimate, financially stable insurers an opportunity to provide insurance coverage for Nevadans."

Joel Wood, the national council's senior vice president of government affairs, said five states continue to require countersignatures, but only Nevada and Florida require non-resident agents to pay money to local countersigning agents. He said the council hopes to achieve uniformity in state insurance licensing laws.

The Nevada Attorney General's office, which represents Molasky-Arman, has declined comment on the lawsuit.