Under the proposed new state rules insurance agents and brokers would be required to disclose any third party income they would receive from a sale.

It would also require the revelation of any agreements they may have worked out with an insurer.

The agent community has criticized this provision as being unfairly broad and counter to current state administrative procedures. Agents have also argued that a provision requiring agents and brokers to offer the "best" available coverage is subjective to the point of being impossible to comply with.

"These proposed regulations are not necessary, are incomprehensibly vague and ambiguous, would subject insurance agents and brokers to a set of duties that are factually and legally impossible to meet, and plainly exceed the boundaries of current law," said Steve Young, general counsel for the Insurance Brokers and Agents of the West, and affiliate of the Independent Insurance Agents and Brokers of America.

"We are not opposed to disclosure of broker fees wherever there could be a conflict of interest, such as when a broker takes a fee from an insured and also receives payment from insurers, provided the requirements are limited to brokers and reasonable in scope," he said. "But these regulations go far beyond mere disclosure, far beyond legal authority available to the commissioner, and far beyond common sense."

Roger W. Hogeboom, a lawyer with the firm of Barger & Wolen who testified on behalf of the American Agents Alliance and the Western Insurance Agents Association, blasted the proposed regulations as an improper attempt to circumvent procedures established in the California Insurance Code.

That process, he said, requires the state insurance commissioner to prosecute acts he believes are unfair and to seek a court order enjoining them.

The law, Mr. Hogeboom said, defines unfair acts and requires that any acts not defined by the law be established by the administrative hearing process and accompanied with a proceeding initiated by the state attorney general in Superior Court.

Mr. Young, with the brokers group, also argued that the commissioner has failed to meet these criteria and has not shown any need for these regulations as required by the law.

"The commissioner has failed to assert any legitimate necessity for these regulations," he said. "The proposal purports to create affirmative and radically new legal duties upon brokers and agents, and, ironically, would force brokers and agents to violate the very law?prohibiting unfair and deceptive practices?that the commissioner has cited as his sole legal authority," Mr. Young said.

In November of last year Mr. Garamendi sued a health benefits broker, Universal Life Resources of San Diego, charging the firm took kickbacks in the form of fees to steer business to Metlife, Cigna, Prudential and Unum.