California’s State Compensation Insurance Fund announced that it will disclose broker commissions to policyholders beginning Oct. 1, 2005. Insurance quotes and terms letters will display the commission rate paid to brokers for the placement of their workers’ compensation policy with State Fund.
“State Fund believes that disclosure of the commission arrangement between State Fund, its brokers and their clients is in the best interests of all parties,” said State Fund Acting President James Tudor.
State Fund Vice President George Vignolo said, “Clients rely on their
broker for insurance expertise and professional guidance, but, even more, brokers are deemed under law to be the ‘representatives’ of the insurance consumer. As such, brokers may not put their own financial interest ahead of that of a client. Disclosure of the commission arrangement provides an important tool for satisfying this long standing legal requirement, as well as for educating consumers.”
Tudor further added, “State Fund values its relationship with its
policyholders and with the independent brokers who serve them. We are committed to continue to work with the broker community to provide workers’ compensation coverage to California employers and the highest level of service at the most economical price.”
Recent workers’ comp reform legislation signed by Governor Schwarzenegger has reportedly spurred carriers to return to the market, increasing competition and providing rates that are better than they’ve been for several years. State Fund, for example, has decreased its average rate a cumulative 26.2 percent since Jan. 1, 2004.
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