Louisiana Department of Insurance Provides Guidance on ‘Serious Issues’ Involving Producer Compensation Agreements

Aug 14, 2010


According to the Louisiana Department of Insurance Advisory Letter No. 2010-01 (“Letter”) issued on August 9, 2010, “serious issues” exist involving producer compensation agreements and the manner in which producer compensation is being addressed among insurers, producers and insureds in the State of Louisiana.

The Letter from Louisiana Insurance Commissioner Jim Donelon, which was issued to all insurers and producers licensed to do business in Louisiana, reviews applicable portions of the Louisiana Insurance Code and states that some existing producer compensation agreements may conflict with the Code.

The Letter describes two common inquiries received by the Louisiana Department of Insurance that are related to producer compensation:  The first arises when a producer agrees to accept a flat fee in lieu of a commission based on a percentage of the premium generated.  The second arises when an insurer, producer or broker presents an insurance quote “net of commission.” 

The Letter, which can be viewed by clicking here, provides direction on how to comply with Louisiana law in each situation.


Should you have any comments or questions, please contact Colodny Fass.



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