Although yet to be unveiled, it appears the California Department of Insurance will be introducing the third iteration of its broker fiduciary responsibility regulations.
American Agents Alliance Executive Director Ken Nigohosian said, “The Alliance has been working in tandem with other insurance industry trade organizations and carriers to combat this seemingly endless series of unnecessary regulatory and legislative proposals. The commissioner has yet to clearly identify the need for further governance over brokers’ fiduciary responsibilities. The Alliance and the coalition believe existing Insurance Codes offer ample consumer protection and recourse due to any irresponsible acts on the part of insurance brokers/agents.”
In October, 2004, the DOI introduced its first iteration of the proposed Broker Fiduciary Regulations. The Alliance joined in a coalition to combat the proposed regulations. The coalition won the first round by identifying that the DOI failed to pass the litmus test for any regulation in showing any level of necessity, consistency, clarity and non-duplication.
The DOI subsequently released a second iteration of the proposed regulations in the spring of 2005. Once again, the coalition successfully addressed each issue and helped to thwart these proposed regulations, as well.
The DOI subsequently sought a legislative solution and sponsored SB 938 (Dunn). This measure would have provided the commissioner with the authority needed to implement the proposed Broker Fiduciary Regulations. SB 938 died in the Senate Banking, Finance and Insurance Committee.
Nigohosian commented, “We at The Alliance and among the coalition are confused as to why the insurance commissioner continues to go to the well on this matter. He clearly has not shown any additional need for regulations governing broker fiduciary duties. This continued battle is simply an unnecessary drain of taxpayer resources which the Alliance and our coalition believe is unacceptable.”
Nigohosian concluded, “We continue to urge the coalition to present a unified front on this matter. We can ill-afford to have any “splintering” of the coalition. This is not an issue that only impacts one person or one group; it involves our entire insurance community. As a result, we must, and I emphasize must, stay together in defeating any onerous and unnecessary regulations and/or legislation.”