Broker Compensation Bill Defeated in Calif. Committee

April 28, 2005

The American Agents Alliance reported that SB 938 (Dunn) was heard and defeated in the Senate Banking, Finance and Insurance Committee yesterday by a 2-5 vote. The bill, which the Alliance and other insurance trade groups adamantly opposed, would have imposed unfair and impractical fiscal duties on independent agents and brokers.

Representatives of numerous insurance trade groups testified at the hearing. The Alliance position was well articulated by Lobbyist Kevin Pedrotti. Also in attendance at the hearing were Alliance President David Nielson, CIC, and Alliance Legislative Committee member Joe Waked.

“This is excellent news for California’s independent producer community. We are pleased that the Senate Insurance Committee agreed that the proposals made by Commissioner Garamendi were unnecessary and would have placed unjust burdens on agents and brokers throughout our state,” said Alliance Executive Director Ken Nigohosian. “Unfortunately, this is not the end of the story, as the commissioner’s proposed agent-broker fiduciary regulations are still pending. We will continue to battle against the commissioner’s apparent quest to eradicate non-existent problems in the insurance industry.”

Nigohosian added that this victory for agents and brokers underscores how a strong grassroots effort can get things accomplished. “Alliance members should be proud of the role they played in this success. Legislators pay attention to e-mails and letters, and we have proven that our association, as well as the trade group coalition, were heard.” This is why the Alliance always stresses how important it is for everyone to get involved. “We are only as strong as our members make us.”

After the measure was defeated in committee, it was granted reconsideration, which means that, under legislative rules, SB 938 could still be heard next week in committee.

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