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California: Department of Insurance (CDI) is Poised for Legislation on Broker Compensation Disclosures and Fiduciary Duties

On Feb. 22, 2005, Sen. Dunn introduced SB 938, An Act Relating to Insurance Agents and Brokers, the bill states that it is the intent of the Legislature to ensure that insurance agents and brokers disclose any financial incentive they receive for selling certain insurance products and steering businesses to specific companies.

The introduced version of this bill is merely intent language, intended to be used as a vehicle to introduce legislation to address Broker Compensation Disclosures and Fiduciary Duties the CDI has been trying to force on the insurance industry since last fall.

NAMIC's state advocacy partner, The Personal Insurance Federation of California (PIFC), believes that the bill will be amended to include language similar to the language contained in the Broker Compensation Disclosures and Fiduciary Duties Regulations that were introduced in October of 2004.

NAMIC, PIFC and the insurance industry has consistently stated that the CDI has failed to demonstrate a "problem" that cannot be addressed by the existing statutory authority of the Insurance Commissioner and the Attorney General.

Consequently. NAMIC and PIFC will oppose this bill.

NAMIC will provide updates as this issue unfolds.

Direct questions to NAMIC State Affairs Manager Christian J. Rataj.