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PIA Praises NAIC Vote to Exclude Producer Compensation from MLR

In a victory for consumers as well as agents and brokers, a health task force of the National Association of Insurance Commissioners (NAIC) has voted...
July 6, 2011

In a victory for consumers as well as agents and brokers, a health task force of the National Association of Insurance Commissioners (NAIC) has voted to endorse legislation that would exempt producer compensation from medical loss ratio (MLR) calculations.

After months of study, the NAIC's Professional Health Insurance Advisors Task Force voted overwhelmingly to endorse H.R. 1206, the Professional Health Insurance Advisors Act of 2011, a bill by Rep. Mike Rogers (R-Mich.) that would exclude agent and broker commissions from medical loss ratio (MLR) calculations under the new healthcare law. The task force action came in the form of a recommendation to the NAIC Executive Committee, which created the panel. It must ultimately be approved by the entire NAIC board.

"This action is good news for America's health insurance consumers and good news for the Main Street independent insurance agents that consumers rely on," said PIA National Executive Vice President & CEO Leonard C. Brevik. "The members of this NAIC task force are to be congratulated for standing up for this vital legislation. Now, it is incumbent upon the NAIC Executive Committee and the full NAIC membership to embrace without delay this recommendation from the task force they created."

PIA is actively supporting passage of H.R. 1206 with a nationwide grassroots action campaign. In addition, PIA has submitted testimony urging the department of Health and Human Services (HHS) to calculate producer compensation outside of the MLR when it issues final regulations. Since interim regulations were issued by HHS lumping agent and broker commissions into overall administrative expenses that are limited to 15 percent or 20 percent, many carriers have responded by slashing commissions by up to 50 percent.

What It Means to Agents:  This is a victory for both the customers of Main Street insurance agents, and agents themselves. But the battle is not yet over.

See PIA's comments in: NAIC Task Force Supports Removal of Agent Commissions from MLRs (National Underwriter 7/1/11)
 
Read more on PIA's praise of the NAIC: Insurance Agents Cheer NAIC Vote on MLR (Insurance Journal 7/1/11)

Read more PIA comments on NAIC vote: Agents Celebrate New NAIC Vote on Medical Loss Ratios (BestWire 7/1/11)

See PIA's press release on the NAIC MLR decision: PIA Praises NAIC Health Task Force (PIA 6/30/11)

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