WIAA Fights Back Against Calif. Commissioner’s Proposed Regulations

June 21, 2005

The Western Insurance Agents Association has released a brochure on behalf of its member agents detailing its campaign to stop California Insurance Commissioner John Garamendi’s alleged excessive and unjust regulations aimed at the insurance industry.

“It’s a fact: agents and brokers are under siege by Insurance Commissioner John Garamendi,” the brochure reads. “Never before has our industry faced such continual attacks from a hostile regulator bent on our demise. It’s clear, these attacks are politically motivated and being justified by the conduct of a few bad actors in New York.
“We think that’s wrong,” the brochure continues. “That’s why the Western Insurance Agents Association has drawn a line in the sand.”

The brochure, mailed to WIAA’s member agents, outlines Garamendi’s alleged agenda. According to the WIAA, Garamendi’s plans for brokers-agents include the following:

Expanded liability and fiduciary duties for agents;
Cap or eliminate broker fees;
Require broker-agents to obtain the best available coverage and create liability for failing to do so;
Citation authority for Commissioner Garamendi to write $1,000 tickets for minor violations;
Require agents and brokers to present all quotes to consumers;
Must get customer permission from insurance companies.

“What we’re trying to do is rally the troops,” said Michael Hodge, chairman of the WIAA Legislative and Regulatory Committee. “We have established a legal defense fund because we believe that based on our experience with the [CDI] over these issues in the last year or so that they are intent upon increasing their regulatory authority and power, and if they do get some type of legislation through that we would have to fight the process and then we would have to fight the law that’s so passed. We’d much rather be pre-emptive, we’d much rather not have to go to court, but we need to be prepared for that eventuality. We’d like the department to know that there is not only a voice out there, but it is a strong voice, and enough is enough.”

The brochure further goes on to detail, in a section called “What Broker-Agents are Telling Us About the Garamendi Agenda,” a survey WIAA conducted, asking their member agents whether or not they agreed with IBA West’s alleged Board-adopted statement of policy regarding broker fees and compensation disclosure.

The statement reads: “A broker should disclose, in advance, the amount of the broker fee and the amount of all other material compensation; including commissions, bonuses, gifts and trips, and other thing of value.”

According to the WIAA’s survey, only 8 of their member agent respondents strongly agreed with the statement, while 233 strongly disagreed. Percentage wise, of WIAA member respondents, 96.6 percent strongly disagreed with the statement, and 93.3 percent of member-agent respondents of both WIAA and IBA West strongly disagreed with the statement.

“The tactics of the WIAA are very regrettable,” said Steve Young, general counsel for IBA West. “They have constantly misrepresented and distorted what IBA West stands for, what we are trying to accomplish. And they have done so frankly, in a transparent attempt to promote membership in their own organization.

“We have worked very hard,” he added. “We’ve spent an immense amount of money; we’ve spent an immense amount of time and effort building a coalition to present a unified front in opposition to Garamendi’s agenda. And I think it’s exceedingly unfortunate that the myopic leadership of the WIAA views this as nothing more than an opportunity to promote its own business interests while ignoring the best interests of our common membership.”

While Young defended the actions of the IBA West, not all producer trade associations were in agreement with IBA West’s Board-adopted statement.

Editor’s note: See the June 20 issue of Insurance Journal West for the full story.

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