US insurance commissioners have their hearts set on introducing new disclosure rules for brokers. It’s possible the new rules may be introduced before the end of the year.

The new regulations are a reaction to the contingent commission scandal and New York Attorney-General Eliot Spitzer’s continuing attack on major broking companies, which began in earnest in October with a lawsuit against Marsh.

A new task force formed by the National Association of Insurance Commissioners has released draft model legislation detailing new requirements on letting customers know how brokers are compensated for selling insurance products.

The task force has developed a three-part action plan that includes more transparency for consumers, and will bring US disclosure rules closer to those operating in other developed countries.

The task force has also proposed helping state regulators to deal with improper conduct by brokers and insurers through investigation and a new online fraud reporting system.

The legislation would require brokers to obtain the insured’s written consent before receiving compensation from the insurer for a transaction. Brokers would have to disclose the amount of compensation from the insurer and the method of calculating it, including any contingent compensation.

Where the contingent commission is not known, brokers would have to provide a reasonable estimate of the amount and the method of calculating it.

The goal of greater transparency outlaid by the commissioners has been broadly supported by buyers and insurance industry groups. It remains to be seen whether the regulator will adopt its proposal in full by the end of this year.