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PIA Asks U.S. District Court to Delay Approval of Class Settlement Involving Insurers

WASHINGTON, October 12, 2006 - The National Association of Professional Insurance Agents (PIA National) has asked the U.S. District Court for the District...
October 12, 2006

Main Street Agents Ask Court for Hearing to Fix Flawed Disclosure Statement

WASHINGTON, October 12, 2006  - The National Association of Professional Insurance Agents (PIA National) has asked the U.S. District Court for the District of New Jersey to delay preliminary approval of a class settlement with Zurich Insurers until flaws in a mandatory disclosure statement are corrected.

In a reply brief filed with the Court on October 6, 2006, PIA National answered the objections of ten state Attorneys General who are formally opposing PIA's effort to get the Court to consider its brief of amicus curiae that the association filed on September 15, 2006.

"Main Street insurance agents did not commit the alleged abuses that led to these proposed settlements," said PIA National Executive Vice President & CEO Len Brevik. "But this settlement agreement attempts to impose a remedy for wrongdoing on Main Street agents, who did nothing wrong. That's just not right."

"Agents were shut out of the negotiating process that led to these proposed settlements, and now the Attorneys General don't want the Court to hear our concerns," Brevik said. "That is unfair and unconscionable."

In addition to the flawed disclosure statement, PIA objects to this and similar proposed settlements because they would create disparate impact on PIA members' livelihoods by prohibiting the payment by carriers of certain contingency payments.

Arguments filed on September 26, 2006 by the Attorneys General asking that the Court deny PIA's request to file the amicus brief "lack merit and appear designed to evade PIA's legitimate concerns," according to the PIA reply brief.  PIA reiterates that it was unfairly shut out of all negotiations and now, the Attorneys General "seek to silence the agents and brokers most directly affected" by provisions of the proposed settlement.

PIA also countered the criticism offered by the Attorneys General that its filing is premature, noting that the proposed disclosure form "is a part of this class settlement for which preliminary approval is now sought; the time to address its fatal deficiencies is now."  PIA noted that the plaintiffs in the case "want to have it both ways" by asking the court to ignore that insurance is regulated primarily by the respective states and thereby approving a purported "nationwide" settlement, while at the same time asking the court to defer PIA's objections until after provisions it objects to are approved.

As part of the proposed settlement of the class action filed in August 2005, which was prompted by investigations of alleged bid-rigging conducted by several State Attorneys General, professional independent insurance agents would be required to use a court-mandated Mandatory Disclosure Statement that is inaccurate, violates existing state and common law and is rife with serious and fatal flaws.

The PIA reply brief notes the disclosure form as it is now constituted not only would affect the legal rights and interests of PIA members, but would mislead class members regarding the legal relationships of agents and brokers to insurance carriers like the Zurich Insurers and to class members themselves.  PIA's members, who are small and midsize insurance agents and brokers across the country, will suffer substantial harm from its use as currently constituted.

While these ten Attorneys General in their brief contend that the issues being decided by the Court are few and limited in scope, a September 26 letter to Judge Faith S. Hochberg from attorneys for Zurich contradicts them. The letter confirms PIA's assertion that what is being asked of the Court is approval of a broad, global settlement that folds all details of existing proposed agreements into a comprehensive settlement, including a selective ban on the payment of certain contingent commissions. 

"It would appear that the Settling AGs exceeded the considered judgment of most state regulators," notes the PIA reply. "AGs are not the primary insurance regulators in their states - the insurance commissioners and supervisors are - and the vast majority of insurance commissioners have refused to join the Multi-State Agreement.  In fact, the Georgia Commissioner, the Honorable John W. Oxendine, recently declared that Georgia will have no part in this ongoing crusade because he felt it 'served no worthwhile purpose.'"

Founded in 1931, and celebrating its 75th anniversary in 2006, PIA is a national trade association that represents member insurance agents and their employees who sell and service all kinds of insurance, but specialize in coverage of automobiles, homes and businesses. PIA members are Local Agents Serving Main Street America.

Reply Brief of Amicus Curiae (PDF file)
National Association of Professional Insurance Agents
United States District Court, District of New Jersey
Filed: October 6, 2006

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