Our Agency is an appointed Agent with Mercury Insurance. We have never charged a Broker Fee. My understanding is there is a difference between an Agency Agreement and a Brokerage Agreement. Brokers can lawfully charge broker’s fees but they must be disclosed to the insured as such. Agents may not charge broker fees. I think some Agents did break the law, whether or not Mercury knew and did nothing to stop them is another question. Interesting at any rate, the relationship history between Mercury and the DOI.
This feels to be another over reach by California Department of Insurance. Mercury independent agents are not carrier agents. If Mercury were able to control more activities then that may unintentionally interfere with their IRS definition of Independent Contractor status of their agents.
Recently the IRS has “sifted its analysis on a three-part behavioral analysis – behavioral control, financial control, and the relationship of the parties (IRS Pub. 15-A).
Does CA DOI plan to use the money awarded to really help the masses? Will CA DOI hire more employees or use funds to insure more CA drivers? Is this just another example of taking or looting (Ayn Rand) via expansion of government (Why Government Is the Problem –Milton Friedman)?
This is a poorly written article. It states “Mercury did not obtain Jones’s approval for these fees…” The issue occurred from 1996 to 2004(going back 19 years ago). There was a court decision in 2003 saying there was no financial penalty since the DOI’s definition of Agent or Broker was so loose. The DOI changed its Agents should be up in arms over this issue. The money that was collected was collected by insurance brokers and NOT Mercury. Who wants to bet that Jones is going after those brokers next for the return of that money that was illegally charged. This is purely punitive and the insurance commissioner trying to bully the industry he is supposed to be regulating. Let it go already and work on issues that are occurring today.
re: Having the CA DOI “work on issues that are occurring today”.
A good start would be to have the DOI take a good hard look at the broker fees that are currently being charged, like $100-$150 just to complete an insurance application. California’s FR minimum liability limits are absurdly low at 15/30/5 due to concerns of affordability, yet brokers are charging predatory fees with impunity.
From what I read, Mercury was complicent with their Agents in collecting these fees. But it’s unclear whether the Agent kept the fee or it was passed through to Mercury.
I feel for Mercury since it was agents charging broker fees without Mercury’s foreknowledge.
Our Agency is an appointed Agent with Mercury Insurance. We have never charged a Broker Fee. My understanding is there is a difference between an Agency Agreement and a Brokerage Agreement. Brokers can lawfully charge broker’s fees but they must be disclosed to the insured as such. Agents may not charge broker fees. I think some Agents did break the law, whether or not Mercury knew and did nothing to stop them is another question. Interesting at any rate, the relationship history between Mercury and the DOI.
This feels to be another over reach by California Department of Insurance. Mercury independent agents are not carrier agents. If Mercury were able to control more activities then that may unintentionally interfere with their IRS definition of Independent Contractor status of their agents.
Recently the IRS has “sifted its analysis on a three-part behavioral analysis – behavioral control, financial control, and the relationship of the parties (IRS Pub. 15-A).
Does CA DOI plan to use the money awarded to really help the masses? Will CA DOI hire more employees or use funds to insure more CA drivers? Is this just another example of taking or looting (Ayn Rand) via expansion of government (Why Government Is the Problem –Milton Friedman)?
This is a poorly written article. It states “Mercury did not obtain Jones’s approval for these fees…” The issue occurred from 1996 to 2004(going back 19 years ago). There was a court decision in 2003 saying there was no financial penalty since the DOI’s definition of Agent or Broker was so loose. The DOI changed its Agents should be up in arms over this issue. The money that was collected was collected by insurance brokers and NOT Mercury. Who wants to bet that Jones is going after those brokers next for the return of that money that was illegally charged. This is purely punitive and the insurance commissioner trying to bully the industry he is supposed to be regulating. Let it go already and work on issues that are occurring today.
re: Having the CA DOI “work on issues that are occurring today”.
A good start would be to have the DOI take a good hard look at the broker fees that are currently being charged, like $100-$150 just to complete an insurance application. California’s FR minimum liability limits are absurdly low at 15/30/5 due to concerns of affordability, yet brokers are charging predatory fees with impunity.
Is this money going to be paid back to the consumers who have been allegedly over charged or is the DOI going to keep that money?
From what I read, Mercury was complicent with their Agents in collecting these fees. But it’s unclear whether the Agent kept the fee or it was passed through to Mercury.