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October 20, 2004 at 08:00 PM
California Proposes Regulations
On Oct. 20, California Insurance Commissioner John Garamendi proposed regulations to prevent brokerage compensation abuses, which could be in place at the start of 2005. Civil action against brokers and/or insurers is being considered by the department and probably will be filed soon, according to a department spokesman.
The proposed regulations define brokers to include agents. Failure to comply with the proposed regulations could result in fines of up to $10,000 per incident, issuance of a cease and desist order by the commissioner, and/or revocation or suspension of a company or brokers license.
The regulations would find agents and brokers who fail to disclose to a client all material facts surrounding the brokers receipt or potential receipt of income from a third party, which derives in whole or part from a transaction on behalf of a client, in violation of the states insurance code.
