California Insurance Commissioner John Garamendi has proposed new regulations that could require insurance agents and brokers to give customers more information about compensation arrangements.[@@]
“This is about making it clear that brokers, and agents working as brokers, put the interest of their client first ? and not their own financial gain,” Garamendi says in a statement about the proposed broker fiduciary duty regulations.
California lawmakers already are debating S.B. 938, a bill introduced by state Sen. Joseph Dunn, D-Santa Ana, Calif., that could create a law that would increase producer commission disclosure requirements.
The Insurance Brokers & Agents of the West, Oakland, Calif., is asking its members to go to Sacramento, Calif., April 20 to protest S.B. 938.
The California Association of Health Underwriters, Sacramento, Calif., probably will oppose S.B. 938 and will want Garamendi to make changes to the proposed regulations, according to Steven Lindsay, CAHU’s legislative advocate.
“We’re not necessarily opposed to the conversation about disclosure,” Lindsay says.
But CAHU members believe existing laws and regulations are enough to deal with the kinds of problems that have made the headlines in recent months, and it is not clear that Garamendi has the authority to implement the kinds of regulations he has proposed this week without a court order declaring that the kinds of activities prohibited that would be prohibited are unfair business practices, Lindsay says.
Garamendi complains in his statement about “the industry’s opposition to comply with the most basic of disclosure proposals.”
Consumers need strong, clear guidelines that will help them know whether they’re getting the best deal for the best price, Garamendi says.
Here are some provisions in Garamendi’s proposed broker fiduciary duty regulations:
- Producers would have to describe their compensation or the method used to calculate their compensation.
- Producers who take fees from clients would have to act on behalf of the clients.
- Producers who take fees from clients would be able to get compensation from other parties only with the consent of the clients.
- Producers would have to tell clients whether they were going to get quotes from just 1 carrier or more carriers.
- Producers who said they were searching for “the best quote” would have to reveal the number of quotes obtained, the names of the insurers and the quoted rates.