HLS 12RS-1469 ORIGINAL
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Regular Session, 2012
HOUSE BILL NO. 1032
BY REPRESENTATIVE TALBOT
INSURERS/AGENTS: Provides relative to producer compensation
AN ACT1
To amend and reenact R.S. 22:34, 46(13), 855(H)(introductory paragraph), and 1964(8) and2
to enact R.S. 22:855(H)(1) and (2), relative to producer compensation; to allow3
insurance producers to enter into contracts which provide for fees in lieu of4
commission; to clarify the definition of "premium"; to allow for the exclusion of5
commissions from quotes of an insurance premium; to provide for unfair or6
deceptive acts relating to rebates; and to provide for related matters.7
Be it enacted by the Legislature of Louisiana:8
Section 1. R.S. 22:34, 46(13), 855(H)(introductory paragraph), and 1964(8) are9
hereby amended and reenacted and R.S. 22:855(H)(1) and (2) are hereby enacted to read as10
follows: 11
§34. Discrimination prohibited 12
A. No insurer shall make or permit any unfair discrimination in favor of13
particular individuals or persons, or between insureds or subjects of insurance having14
substantially like insuring risk, and exposure factors, or expense elements, in the15
terms or conditions of any insurance contract, or in the rate or amount of premium16
charged therefor, or in the benefits payable or in any other rights or privileges17
accruing thereunder. This provision shall not prohibit fair discrimination by a life18
insurer as between individuals having unequal life expectancies.19 HLS 12RS-1469 ORIGINAL
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B. The provisions of this Section shall not prohibit an insurer or health1
maintenance organization from excluding commission from a premium calculation2
when quoting a premium rate and administering a product. Neither shall the3
provisions of this Section prohibit a producer from entering into an agreement with4
an insured, employer, benefit plan sponsor, or other person through which such5
person agrees to pay the producer a fee in lieu of commissions for the procurement6
of insurance. Such actions by insurers, health maintenance organizations, producers,7
or other persons shall not be construed to be discrimination.8
* * *9
§46. General definitions10
In this Code, unless the context otherwise requires, the following definitions11
shall be applicable:12
* * *13
(13) "Premium" means all sums charged, received, or deposited as14
consideration for the purchase or continuance of insurance for a definitely stated15
term, and shall include any assessment, membership, policy, survey, inspection,16
service, or similar fee or charge made by an insurer as a part of the consideration for17
the purchase or continuance of insurance. The term premium, as used in R.S.18
22:885(B) and 887(D), shall not include any assessment, membership, policy,19
survey, inspection, service, or similar fee or charge made by an insurer as part of the20
consideration for the purchase or continuance of insurance. The term premium shall21
not include producer commission when the insurer pays no commission for sale of22
a product or when a producer accepts a fee from an insured, employer, benefit plan23
sponsor, or other person in lieu of commission.24
* * *25
§855. Quoted premium shall include all charges; dollar amount required26
* * *27
H. The provisions of this Section shall apply to all policies except life28
annuity, health and accident, and reinsurance policies. Notwithstanding any other29 HLS 12RS-1469 ORIGINAL
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provisions of this Title, the following shall be considered valid and acceptable when1
related to lines of insurance mentioned in this Subsection:2
(1) The policy of an insurer or health maintenance organization to exclude3
commissions when quoting a premium rate and administering a product.4
(2) The practice of a producer to enter into an agreement with an insured,5
employer, benefit plan sponsor, or other person through which such person agrees6
to pay the producer a fee in lieu of commissions for the procurement of insurance.7
* * *8
§1964. Methods, acts, and practices which are defined herein as unfair or deceptive9
The following are declared to be unfair methods of competition and unfair10
or deceptive acts or practices in the business of insurance:11
* * *12
(8)(a) Rebates. Except as otherwise expressly provided by law, knowingly13
permitting or offering to make or making any contract of insurance including life14
insurance, life annuity or health and accident insurance, or agreement as to such15
contract other than as plainly expressed in the contract issued thereon, or paying or16
allowing, or giving or offering to pay, allow, or give, directly or indirectly, as17
inducement to such insurance, or annuity, any rebate of premiums payable on the18
contract, or any special favor or advantage in the dividends or other benefits thereon,19
or any valuable consideration or inducement whatever not specified in the contract;20
or giving, or selling, or purchasing or offering to give, sell, or purchase as21
inducement to such insurance or annuity or in connection therewith, any stock,22
bonds, or other securities of any insurer or other corporation, association, or23
partnership, or any dividends or profits accrued thereon, or anything of value24
whatsoever not specified in the contract.25
(b) Nothing in paragraph Paragraph (7) or this paragraph (8) Paragraph of26
this Sub-section Subsection shall be construed as including within the definition of27
discrimination or rebates any of the following practices:28 HLS 12RS-1469 ORIGINAL
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(a) (i) Paying bonuses to policyholders or otherwise abating their premiums1
in whole or in part out of surplus accumulated from nonparticipating insurance2
provided that any such bonuses or abatement of premiums shall be fair and equitable3
to policyholders and for the best interest of the insurer and its policyholders ;.4
(b) (ii) In the case of life insurance policies issued on the industrial debit5
plan, making allowance to policyh olders who have paid premiums in advance or6
continuously for a specified period made premium payment directly to an office of7
the insurer in an amount which fairly represents the saving in collection expense ;.8
(c) (iii) Readjustment of the rate of premium for a group insurance policy9
based on the loss or expense experience thereunder, at the end of the first year or of10
any subsequent year of insurance thereunder, which may be made retroactive only11
for such policy year ;.12
(d) (iv) Agents accepting on their own responsibility, notes for the first13
premiums.14
(v) The policy of an insurer or health maintenance organization to exclude15
commissions when quoting a premium rate and administering a product.16
(vi) The practice of a producer to enter into an agreement with an insured,17
employer, benefit plan sponsor or other person through which such person agrees to18
pay the producer a fee in lieu of commissions for the procurement of insurance.19
* * *20
DIGEST
The digest printed below was prepared by House Legislative Services. It constitutes no part
of the legislative instrument. The keyword, one-liner, abstract, and digest do not constitute
part of the law or proof or indicia of legislative intent. [R.S. 1:13(B) and 24:177(E)]
Talbot HB No. 1032
Abstract: Allows insurance producers to provide premium quotes that do not include fees
that the producer has agreed to accept in lieu of commission.
Present law provides that premiums quoted by insurers shall be in a specific dollar amount
which is inclusive of all fees, charges, premiums, or other consideration charged for the
insurance, except for certain exceptions provided within present law. HLS 12RS-1469 ORIGINAL
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Proposed law provides that present law shall not prohibit an insurer or health maintenance
organization from excluding commission from a premium calculation when quoting a
premium rate or administering a product.
Proposed law provides that present law shall not prohibit a producer from entering into an
agreement with an insured, employer, benefit plan sponsor, or other person whereby such
person agrees to pay the producer a fee in lieu of commissions for the procurement of
insurance.
Present law further provides that no insurer, producer, or other representative of an insurance
company may receive any fee, compensation, or consideration for insurance that is not
included within the premium delivered to the insured, except for certain exceptions provided
within present law.
Present law defines "premium" as all sums charged, received, or deposited as consideration
for the purchase or continuance of insurance for a definitely stated term; requires that the
term "premium" include any assessment, membership, policy, survey, inspection, service or
similar fee, or charge made by an insurer as part of the consideration for the purchase or
continuance of insurance.
Proposed law states that the term "premium" shall not include a producer commission when
the insurer pays no commission for the sale of a product or when a producer accepts a fee
from the insured, employer, or benefit plan sponsor in lieu of a commission.
(Amends R.S. 22:34, 46(13), 855(H)(intro. para.), and 1964(8); Adds R.S. 22:855(H)(1) and
(2))