Iowa Becomes Third State To Act Against Countersignatures

The move to ease the transaction of insurance business across state borders continued to gather momentum this week, as the Iowa House approved a bill that includes a repeal of the state's countersignature law. The House approved SF 2397 by a vote of 93-1 March 30; the Iowa Senate had approved the measure March 5 on a 45-0 vote.

Iowa is the third state in two months to eliminate the need for a resident agent's signature on an insurance policy. Kentucky repealed its absolute countersignature law last month, while similar legislation in Georgia awaits the signature of Gov. Zell Miller (D).

Iowa Gov. Terry Branstad (R) is expected to sign SF 2397, the insurance department's omnibus package for 1998, shortly. The bill would repeal the state's existing reciprocal countersignature law, which mandates a resident agent's signature on an insurance policy unless the insurer selling the policy is domiciled in a state that doesn't require such a procedure.

"Eliminating the cumbersome process of obtaining an in-state insurance agent's signature on an insurance contract will create a more favorable business environment for insurance companies, agents and consumers in the state," said Rey Becker, associate vice president of the property/casualty department for the Alliance of American Insurers, which supported the legislation. "It will facilitate sales of insurance across state lines, encouraging insurer competition and increasing consumer choice."

Insurers will be able to save on the postage, stationery and handling costs associated with countersignature requirements, he added.

Reform of antiquated countersignature laws has accelerated recently, as states realize the limits they place on economic growth. In the past two years, countersignature reforms have been enacted in nine jurisdictions: Arizona, Delaware, the District of Columbia, Illinois, Kansas, Louisiana, Massachusetts, Oklahoma and Texas.

The issue also sparked the interest of North Dakota Insurance Commissioner Glenn Pomeroy. At the recent spring national meeting of the National Association of Insurance Commissioners, Pomeroy, the NAIC's president, pointed to countersignature requirements as a classic example of the type of laws and regulations insurance commissioners must eliminate to facilitate cross-border commerce in an increasingly global business environment.

The Alliance of American Insurers, based in Schaumburg, Illinois, is a national trade association representing more than 260 property/casualty insurance companies.