A BILL TO BE ENTITLED
AN ACT to require Insurance Brokers to disclose compensation arrangements to customers.
The General Assembly of North Carolina enacts:
SECTION 1. Article 33 of Chapter 58 of the General Statutes is amended by adding a new section to read:
"§ 58‑33‑86.  Broker compensation consent and disclosure.
(a)	No broker that receives compensation directly from the customer shall also accept or receive any compensation from an insurer or other third party for the initial placement of insurance for a customer unless the broker has, prior to the customer's purchase of insurance, complied with all of the following:
(1)	Disclosed to the customer the amount of compensation the broker will receive from the insurer or other third party for the placement. If the amount of compensation is not known and cannot be determined at the time of disclosure, the broker shall disclose the specific method for calculating the compensation and, if possible, a reasonable estimate of the amount that will be received.
(2)	Obtained the customer's written consent that the compensation will be received by the broker. In the case of a purchase over the telephone or by electronic means for which written consent cannot reasonably be obtained, the broker shall document the customer's consent.
(b)	This section does not apply to any of the following:
(1)	A person licensed as an insurance producer who acts only as an intermediary between an insurer and the customer's producer, including a managing general agent, a sales manager, or a wholesale broker.
(2)	A reinsurance intermediary.
(3)	An agent of a company which is a member of the North Carolina Insurance Underwriting Association placing or binding coverage with the Association for a customer.
(4)	An agent of  a company which is a member of the North Carolina Joint Underwriting Association placing or binding coverage with the Association for a customer.
(5)	The placement of insurance in excess or surplus lines.
(c)	For purposes of this section:
(1)	"Affiliate" has the same meaning as in G.S. 58‑19‑5(1).
(2)	"Broker" has the same meaning as in G.S. 58‑33‑10(3) and includes an affiliate of a broker.
(3)	"Compensation from an insurer or other third party" means payments, commissions, fees, awards, overrides, bonuses, contingent commissions, loans, stock options, gifts, prizes, or any other form of valuable consideration, whether or not payable pursuant to a written agreement.
(4)	"Customer" shall not include a person who is merely either a participant or beneficiary of an employee benefit plan, or covered by a group or blanket insurance policy or group annuity contract sold, solicited, or negotiated by the broker."
SECTION 2.  This act becomes effective January 1, 2006.