Agents Say Consumers Have More Attractive Auto Options

June 28, 2001

Agents and brokers will weigh in this week on California’s new low-cost auto insurance program at hearings held by the California Department of Insurance (CDI), reporting that they have been swamped by calls from unqualified applicants trying to lower their insurance bills.

According to Insurance Brokers and Agents of the West (IBA West) President- Elect Joe Hernandez, who will testify on behalf of IBA West at a June 28 Los Angeles hearing, few of those consumers are eligible for the product, and those that are usually choose to purchase another product that provides better coverage for about the same price.

Hernandez, vice president of Hamman-Miller-Beauchamp- Deeble, Inc. in Long Beach, said supporters of the low-cost auto insurance program are blaming agents and brokers for the program’s rejection in the marketplace, accusing them of refusing to sell the policy to low-income drivers.

Hernandez stated that while some insurers charge unaffordable prices in some areas, agents can usually find a price-competitive product for any applicant and that selling a better consumer product also addresses serious liability concerns. He maintained that the low-cost policy is low-cost because it drops coverage to levels which are lower than the minimum level required of all other drivers and contains a confusing array of exceptions. He emphasized that consumers are best served by full-coverage policies with no exceptions, which, in most cases, cost only a few dollars more.

Testifying at a June 26 hearing in San Francisco, Jerry Miller, Miller Robertson Insurance Services, Novato, explained that many agents and brokers feel they are buying a lawsuit when they sell the low-cost policies and while some of the bills supporters claim agents and brokers are immune from liability, no such immunity was contained in the bill. He stated that the low-cost auto insurance program could be improved by providing a better consumer product with more coverage and fewer exceptions and that insurance agents and brokers should be provided with full immunity for selling the statutorily created product.

The Insurance Brokers and Agents of the West (IBA West) is the nation’s largest regional trade association representing insurance brokers and independent insurance agents in the West. Today IBA West represents 1,500 firms in California, Alaska, Hawaii, Oregon and Washington employing more than 15,000 insurance professionals. For more information on IBA West, visit www.ibawest.com.

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