California legislators have issued a “sharp rebuke” of Insurance Commissioner John Garamendi’s efforts to impose new requirements on agents and brokers, according to the National Association of Mutual Insurance Companies (NAMIC).
On Wednesday, the Senate Banking, Finance and Insurance Committee defeated the Garamendi-sponsored broker/agent fiduciary duties bill, SB 938, by a vote of 5-2, with four members not voting.
“The defeat of SB 938 is a strong statement that the commissioner’s lack of statistical support for his assertions against insurance producers is not acceptable to state legislators,” said NAMIC State Affairs Manager, Christian John Rataj.
NAMIC and its state advocacy partner, the Personal Insurance Federation of California (PIFC), opposed SB 938 as unnecessary in light of existing regulations, confusing and over-reaching in application.
“PIFC is pleased that the Committee rejected legislation that would have placed significant burdens on agents and brokers,” said PIFC’s Senior Legislative Advocate Michael Paiva. “The low number of complaints filed against agents and brokers simply did not support the type of sweeping changes that the Commissioner sought.”
SB 938 was “a recent attempt by the department of insurance to impose new requirements on agents and brokers, and dramatically expand the powers of the Insurance Commissioner,” said Rataj. “Since the commissioner already has extensive statutory power, increasing his power base is unnecessary and unwise, especially as he has demonstrated a propensity for basing regulations on conjecture not fact.”
“The provision that most concerned NAMIC was the section that gave the commissioner the discretion to adopt regulations to ‘implement, interpret, or clarify’ the new requirements placed upon agents and brokers by SB 938,” concluded Rataj.
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