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The decades-long battle over countersignatures is nearly over. Chalk up a major victory for the Council of Insurance Agents & Brokers.
Recently, the 9th Circuit Court of Appeals struck down Nevada’s countersignature laws as unconstitutional barriers to competition, a victory for the Council. The appeals court ruling affirmed an earlier decision by a district court.
Nevada is the last battleground in the Council’s efforts to eliminate countersignature requirements in U.S. states and territories. The state can seek a review of the decision with the 9th Circuit Court of Appeals or the U.S. Supreme Court during the next 90 days, but the countersignature fight now is nearly over, according to Ken A. Crerar, president of the Council.
“We have challenged these countersignature laws across the country, and at every turn, we have run into resistance from local agent groups who are trying to protect themselves from competition and have used every tool they could to try to stop us,” Crerar explained. “This Nevada decision makes it clear there is no room for offensive, protectionist barriers to competition in this country.”
A countersignature statute mandates that an agent or broker in one state who writes a policy in another state must pay a percentage of the premium to a resident agent in order to put that policy into effect, even if little or no work was required on the part of the resident agent.
The catch, of course, is that the resident agent’s “stamp” does not come cheaply. In Nevada, for instance, the payment requirement is 5 percent of the premium regardless of the fee or commission earned by the agent who actually wrote the policy.
”We have saved our members millions of dollars with earlier rulings in Florida, South Dakota, and Puerto Rico, as well as West Virginia, where the legislature repealed the countersignature law rather than fight,” Crerar said. “Once the Nevada ruling is final, our members will enjoy even more savings because that statute was the most egregious of all.”
Nevada was one of two suits the Council filed in June 2002 to challenge the countersignature laws then in effect in a number of states, Puerto Rico, and the Virgin Islands. Since then, the Council has won in every state and territory where it filed a challenge.
In Nevada, a federal judge initially threw out the statute as unconstitutional nearly four years ago. The law remained on the books while the state appealed.
The issue is still alive—barely—in the Virgin Islands. A U.S. District Court has ruled in the Council’s favor there, but a federal judge is still considering a technical change to the written ruling.
Until the Nevada and Virgin Islands rulings are final, agents and brokers need to abide by the countersignature laws, the Council said. |
