The Council of Insurance Agents & Brokers Wins Another Countersignature Victory; Statute Now Eradicated in All 50 States.

WASHINGTON -- A federal district court judge in South Dakota ruled Tuesday that the state's countersignature law is unconstitutional, giving The Council of Insurance Agents & Brokers another victory in its efforts to eliminate all statutes that bar out-of-state insurance brokers from conducting business without the involvement of a resident agent.

The South Dakota ruling means The Council has successfully challenged every remaining countersignature statute in the United States in the two years since it won its first lawsuit in Florida in 2003. Two successful countersignature challenges by The Council in Nevada and Puerto Rico are still under appeal; the only remaining case awaiting trial is in the Virgin Islands.

The Council represents the nation's leading commercial insurance brokers who write 80 percent of the commercial property/casualty business and administer billions of dollars of benefits accounts annually.

Although the South Dakota decision is likely to be appealed by the state, The Council expressed optimism that soon, no out-of-state insurance broker will again be faced with the burden of have to obtain the signature of a resident agent - and be required to pay a fee for that service.

"These countersignature laws are stubborn vestiges of protectionism that have no place in the 21st Century," said Ken A. Crerar, president of The Council. "The Council is delighted to have helped bring down these egregious barriers to free commerce."

U.S. District Judge Charles B. Kornmann, in his decision, said he found "no substantial valid reason for the difference in treatment" between resident licensed insurance agents and nonresident licensed insurance agents.

"The countersignature laws and the discrimination practiced do not bear a substantial relationship to any legitimate objectives of South Dakota," the judge said in a 12-page opinion.

The South Dakota lawsuit had been particularly hard-fought by the independent insurance agents in the state as well as the state's governor, M. Michael Rounds, who is an insurance producer and owner of Fischer, Rounds & Associates, Inc. Rounds testified in favor of the countersignature statute, arguing that it provided a safeguard to South Dakotans as well as an opportunity for state residents to have personal contact with a local insurance agent.

The judge rejected that argument, saying that "technological advances" have made it unlikely that a South Dakota customer actually has personal contact with his insurance agent even when that individual is located in the same city.

"Realistically, no reasonable consumer makes a trip to his insurance agent's office each time there is a question or concern about an insurance policy, even if the agent is just across town." Judge Kornmann said. "Rather, most questions or concerns that South Dakota businesses or individuals have about their insurance policies would be handled over the telephone or by some similarly convenient means. There is no persuasive evidence that nonresident licensed agents are less available."

The Council of Insurance Agents & Brokers is the voice of the market leaders and the premier association for commercial insurance and employee benefits intermediaries in the United States and abroad. From its headquarters in Washington, DC - with programs conducted throughout the nation and world - The Council represents leading commercial insurance agencies and brokerage firms. Only the top one percent of all agents and brokers meet membership qualifications. The Council's members, in more than 3,000 locations, place 80 percent -- well over $90 billion -- of all U.S. insurance products and services protecting business, industry, government and the public at-large, and they administer billions of dollars in employee benefits. Since 1913, The Council of Insurance Agents & Brokers has worked in the best interests of its members, securing innovative solutions and creating new market opportunities at home and abroad. Web site: www.ciab.com