California House Evaluates Health Insurance Compensation Disclosure Bill

March 30, 2009

California Assembly Member Dave Jones, D-Sacramento, has introduced AB 1521, “Health care coverage: solicitation,” that would establish a fiduciary duty for persons or entities that submit an application to a plan or insurer that results in the offer, sale or purchase of health care coverage. Additionally, the bill would require that person to disclose to the offeree or purchaser of any compensation received as fees, commissions or any other remunerations of thing as value, before the sale of coverage.

Disclosure should “include any compensation to be received by the agent, broker, solicitor, solicitor firm, representative or other entity at any time prior to, during, or after the period of coverage as a result of the transaction or potential transaction,” according to the bill text. The disclosure also should provide an estimate of the percentage of the premium to be paid by the offeree or purchaser as compensation to the agent, broker, solicitor, solicitor firm, representative or other entity. Failing to provide disclosure would be a crime.

Insurance Brokers and Agents of the West (IBA West) is opposing AB 1521 on the grounds the bill is ill-conceived, inconsistent with current law and provides no consumer benefit, while potentially discriminating against small and medium sized businesses that have provided beneficial services to their customers for many years,” wrote IBA West’s Legislative Advocate John Norwood in a letter to the bill’s author on behalf of IBA West, California Insurance Wholesalers Association (CIWA) and The Surplus Line Association (SLA).

For information, visit http://www.leginfo.ca.gov/cgi-bin/postquery.

Sources: California Legislature, IBA West

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