Association Files Countersignature Suit in Puerto Rico

June 15, 2004

The Council of Insurance Agents & Brokers (CIAB) has filed suit against the Commonwealth of Puerto Rico challenging a statute that precludes non-resident insurance brokers from conducting business in Puerto Rico without the countersignature of a resident agent.

Scott Sinder, CIAB’s general counsel, said the lawsuits were filed in U.S. District Court for the District of Puerto Rico. The suit argues that the Commonwealth’s countersignature law violates the Privilege and Immunities Clause of the U.S. Constitution.

The suit is not the first time the CIAB has challenged countersignature requirements. In Florida, U.S. District Judge Robert L. Hinkle agreed that Florida’s law was unconstitutional and granted a summary judgment in the case on Sept. 30, 2003. In West Virginia, the state legislature passed a law rescinding that state’s countersignature statute after CIAB filed suit.

Similar lawsuits are pending against Nevada, South Dakota and the U.S. Virgin Islands.

With the latest lawsuit, CIAB says it now has brought legal action to challenge every major countersignature requirement on the books in states or U.S. territories. “There is no place for trade barriers in a global economy,” said Ken A. Crerar, CIAB’s president. “These countersignature laws are the last vestiges of a bygone era of protectionism, and it is time to wipe them out.”

CIAB has long argued against countersignature requirements, stating they add costs to consumers without adding value to the insurance product. In some cases, out-of-state brokers have been required not only to obtain the signature of a resident agent but also to share commissions on their business with the resident agent.

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