November 7, 2005

The California Department of In-surance has deleted a section of proposed regulations that would have required insurers to notify CDI when a notice of agency appointment was terminated “for cause.”

California Insurance Code Section 1704 previously required insurers to notify CDI when an insurance producer is given an agency appointment (known as an action notice), and also when the appointment is terminated.

In proposed regulations titled, “Presc-ribed Method for Filing of Notices of Appointment of Agents and Notices of Ter-mination of Appointment of Agents,” CDI attempted to require insurers to file all action notices electronically, according to IBA West. The department also proposed to require insurers to notify CDI whenever an agency appointment was being terminated “for cause”–a provision that IBA West urged CDI to delete from the regulations.

“This provision is unsupported by the underlying statutory authorities cited by CDI, and the term is nowhere defined in the regulations,” IBA West General Counsel Steve Young said in testimony submitted July 18. “As a consequence, it is impossible for insurers or licensees to know when such explanation would be required.

“A ‘for cause’ termination presumably would always be present in the rationale of the insurer making the termination; yet a termination could be ‘for cause’ without any illegality or other misconduct on the part of the producer,” he added.

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Insurance Journal West November 7, 2005
November 7, 2005
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