The American Agents Alliance is continuing to call for the defeat of California Insurance Commissioner John Garamendi’s proposed regulations relating to broker disclosures, terming the proposal “unacceptable” to agents and brokers everywhere. The noted insurance law firm of Barger & Wolen has developed a position paper on behalf of the Alliance, as well as other property & casualty and life insurer clients, which outlines the association’s stand on the issue. That paper will soon be available on its Web site at www.agentsalliance.com, where other information regarding the proposed regulations and the Alliance’s battle against them is already posted.
“As written, these proposed regulations will be impossible to implement, as they depend on often subjective factors, including price, coverage, individual client needs, etc.” said Alliance President David G. Nielson. “The American Agents Alliance has taken a firm stance against this misguided attempt to saddle producers with mandates with which they could not possibly comply. They are neither required nor are they consistent with existing law.”
The position paper provides a summary and detailed analysis of the proposed regulations, as well as a discussion of the events leading up to issuance of the regulations. The key issues in the Alliance’s opposition, as stated in the position paper, are that “the Department incorrectly assumes…that a broker has a fiduciary relationship with its customer and that it has a fiduciary duty to disclose commissions received from insurers. Courts have stated that whether a duty of care exists is a question of law for the court, and whether a new duty is recognized is a question of public policy.”
“We believe Commissioner Garamendi has overstepped his authority with these proposed regulations, and, frankly, we are unhappy with his claim that some brokers fail to disclose their commissions to avoid client concern without providing any evidence that such practices occur,” said Nielson. “We believe the current broker fee regulations, which were created over years of discussion and debate between the Department of Insurance and trade groups, including the Alliance, provide ample protection for insurance consumers.”
Nielson emphasized that many independent insurance and brokers are small business people with little or no voice in California’s regulatory arena. The American Agents Alliance was founded to unite independent producers and provides a strong presence as they battle for the interests of their members and the entire independent producer community. Passage of the proposed disclosure regulations will profoundly affect how insurance is transacted in California, and Nielson urges all insurance professionals to join them in ensuring that these restrictive and unnecessary regulations are not implemented.
To view the Alliance’s position paper in its entirety, please visit www.agentsalliance.com.
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