The Council of Insurance Agents & Brokers (CIAB) said today its six-year legal battle to wipe all countersignature statutes off the books is finally over, but President Ken Crerar served notice that the association’s fight against protectionist barriers in the insurance marketplace has only just begun. The last holdout state clinging to the countersignature requirement, Nevada, fell into The Council’s win column today, which was the deadline for the state to file a petition of appeal with the U.S. Supreme Court of a previous federal court ruling holding the countersignature law to be unconstitutional. Officials from the state Department of Insurance indicated that no appeal petition would be filed.
Countersignature laws awarded resident agents a percentage of the commission for business placed by out-of-state brokers even though there was no work involved, just their signature on a form. Nevada had been unable to enforce the countersignature requirement on non-resident brokers since April of this year. That was when the 9th Circuit Court of Appeals in San Francisco upheld the earlier ruling in favor of The Council by U.S. District Judge James C. Mahan, who found “no rational basis” for the countersignature requirement.
“July 9 is the true Independence Day this year for Council members,” Crerar said. “Although our members spent millions to eradicate these statutes, they stand to realize millions more that will flow to their agency’s bottom lines now that they are finally free of countersignature commission-sharing.”
“This is the end of an absurd protectionist requirement that served only the self interests of small protectionist agents and not their clients,” Crerar continued. “But it also is time for this industry to look at itself and see what else is out there that serves no purpose other than protecting weaker operations by posing barriers to business. That includes excess and surplus lines, anti-rebating laws and anything else that does nothing to support our clients and everything to skew the market.”
“This victory is the beginning,” he declared. “This isn’t the end.”
Nevada and Florida were the first states The Council sued to eliminate countersignature requirements in 2002. U.S. District Judge Robert Hinkle threw out the Florida statute in 2003, and The Council then filed suit against all the remaining states and territories with similar statutes – West Virginia, South Dakota, the U.S. Virgin Islands and Puerto Rico – seeking a similar result.
The West Virginia legislature repealed that state’s countersignature statues rather than seek to defend them in court, so that lawsuit was dropped. In the other jurisdictions, U.S. District Court judges ruled in favor of The Council’s summary judgment requests, saying the countersignature laws were clearly unconstitutional.
The Council was represented in all the federal court cases by its general counsel, Scott Sinder of the Washington law firm Steptoe & Johnson.
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