National Flood Insurance Program; Rebating Agents' Commissions

Summary

The Federal Insurance Administration (FIA) gives notice that it has rescinded Policy Issuance 5-95, Rebating Agents' Commissions, issued on October 4, 1995, and requests public comments on rebating of insurance agents' commissions to consumers under the National Flood Insurance Program (NFIP).

Full text

SUMMARY: The Federal Insurance Administration (FIA) gives notice that 
it has rescinded Policy Issuance 5-95, Rebating Agents' Commissions, issued on October 4, 1995, and requests 
public comments on rebating of insurance agents' commissions to 
consumers under the National Flood Insurance Program (NFIP).

DATES: We invite your comments which should be submitted within March 
14, 1996.

ADDRESSES: Please submit your comments to the Rules Docket Clerk, 
Office of the General Counsel, Federal Emergency Management Agency, 500 
C Street SW., Washington, DC 20472, (facsimile) (202) 646-4536.

FOR FURTHER INFORMATION CONTACT: Charles M. Plaxico, Jr., Chief, Claims 
and Underwriting Division, the Federal Insurance Administration, 500 C 
Street SW., Washington, DC 20472, (202) 646-3422.

SUPPLEMENTARY INFORMATION: Where the practice is permitted by State 
law, licensed insurance agents may rebate a portion of the commission 
they earn for the sale of a given policy to the insured. This practice 
typically is used as a sales incentive and marketing tool. While the 
practice is prohibited in most States, a few States permit the 
practice. With more insurance producers and agents beginning to sell 
flood insurance policies, FIA wants the comments of as large a number 
of interested parties as possible in order to set policy on this issue.
    During the past year, FIA received a number of inquiries from 
producers and Write Your Own (WYO) Companies concerning the rebating of 
insurance agents' commissions on NFIP policies. FIA consulted with the 
following three committees that advise the FIA on insurance-related 
issues: the Flood Insurance Producers National Committee; the Insurance 
Institute for Property Loss Reduction Flood Insurance Committee; and 
the Write Your Own Marketing Committee. The Insurance Institute for 
Property Loss Reduction Flood Insurance Committee did not comment as a 
committee, but two member companies on that committee responded as 
individual companies.
    On October 4, 1995, FIA issued National Flood Insurance Program 
(NFIP) Policy Issuance 5-95 which prohibited, under the NFIP, the 
practice of agents' rebating commissions to consumers. We now rescind 
Policy Issuance 5-95. Since October 4 interested parties from within 
and outside the insurance industry have expressed divergent views on 
how FIA should treat the issue of rebating agents' commissions. In 
light of the diversity of opinion on this issue, FIA has decided to 
increase the circle of its advisers and to solicit comments and 
recommendations from a wider audience than before on the most 
appropriate policy on the rebating issue.\1\

    \1\ Not published in the Federal Register.

    Dated: December 12, 1995.
Elaine A. McReynolds,
Federal Insurance Administrator.
[FR Doc. 95-30612 Filed 12-14-95; 8:45 am]
BILLING CODE 6718-03-P  

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