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Health agent contract bill: What to know

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Health insurance agents are trying to get California to set new rules for health carrier contracts.

The California Association of Health Underwriters (CAHU) has joined with the Independent Insurance Agents and Brokers of California (IIABCal) and the California chapter of the National Association of Insurance Financial Advisors (NAIFA California) to back a new state bill, Assembly Bill 1163.

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Assembly member Freddie Rodriquez, D-Pomona, Calif., introduced A.B. 1163 last week.

Jeff Miles, a California agent, told around the same time that he and other agents were trying to find ways to change current health carrier producer compensation practices without violating antitrust laws.

In recent weeks, several insurers have said that they were trying to moderate sales of unprofitable health coverage by suspending sales in some markets or by reducing sales commissions.

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In California, one insurer made changes to its health agent agreement with only 48 hours of advance notice, according to CAHU.

For more about A.B. 1163, keep reading.

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1. You can follow the bill yourself through an electronic legislation tracking system.

California offers a comprehensive legislative tracking system at

The system does not allow users to provide permanent links to information about specific bills, but readers can query the system by entering 1163 as the search term.

The system now provides the full text of the bill. Eventually, if the bill moves ahead through the Assembly committee system, the system managers will attach reports by legislative analysts.

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2. The bill would create a new notice requirement.

A.B. 1163 would not set limits on what health insurance companies or health maintenance organizations (HMOs) could do to agent and broker contracts, but it would require a carrier to give a health producer at least 120 days of advance notice before making material changes.

Typical agent agreements contain provisions that govern how an agreement can be changed or terminated, but they often include another provision giving the carrier the authority to nullify any contract provision, if the carrier finds that necessary, CAHU says.

See also: California Bans Discretionary Clauses in Life, Disability Policies

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3. Property-casualty agents in California are already protected by a notice law.

CAHU says it thinks passing a notice law is possible because an existing California statute sets a material-change notice requirement for p-c agent agreements.

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