A California producers group is criticizing both the state insurance commissioner and a fellow agent’s group over a recent agreement settling bid-rigging allegations against Zurich American that requires disclosure of all agents’ compensation to the insurers’ policyholders.

The Alliance of Insurance Agents & Brokers, based in La Berne, Calif., is calling the recent Zurich agreement a backdoor attempt by California Insurance Commissioner John Garamendi to force agents and brokers to report all forms of compensation they receive from carriers.

Alliance executive director Ken Nigohosian said in a statement that Mr. Garamendi is seeking to use the agreement, which involves eight other states, as a platform to impose reporting standards he sought for agents and brokers on compensation that were beaten back last year.

“The commissioner is now requiring more disclosure requirement than what he initially proposed in the Fiduciary Duties Regulations,” said Mr. Nigohosian.

He said the commissioner is extending mandatory disclosure to commercial lines in addition to personal lines. What was voluntary disclosure is now mandatory, he added.

“We are embarrassed by [Zurich's] alleged wrongdoings and fully support efforts to punish those offenders,” said Mr. Nigohosian. “But the commissioner must understand that rate and customer service are the main reasons why a consumer will buy an insurance policy. The compensation level is never–nor should it be–a factor in the sales process.”

Mr. Nigohosian also criticized the Insurance Brokers and Agents of the West, based in Oakland, Calif., for publishing a guide that urged producers to consider voluntary disclosure of compensation, which Mr. Garamendi supported.

“When the IBA West released its disclosure guide, we said it was dangerous to cozy up to John Garamendi,” Mr. Nigohosian said.

He added, “Now the IBA West says the commissioner’s attacks on agent/brokers are ‘completely unwarranted.’ At this point ‘we told you so’ seems all too appropriate. Next time these issues surface, we’d like the IBA West to join with the rest of the agent/broker community–and not play into the hands of Commissioner Garamendi.”

Under the March 20 agreement, Zurich will pay $151.7 million into a settlement fund to be paid to policyholders harmed by Zurich’s bid-rigging practices. The agreement was one of two agreements reached recently with various state attorneys general to end bid-rigging investigations.

The nine-state agreement including California also calls on the company to disclose all forms of compensation agents and brokers receive from Zurich to policyholders. The compensation ranges from all commissions, to gifts, travel and prizes.

In response, IBA West called the Alliance’s criticism “utterly misinformed,” and said that while it found the commissioner’s rhetoric distasteful, the insurance department cannot require producers to disclose their commissions.

“The gratuitous criticism of IBA West and our Guide to Disclosure, in the Alliance release, is equally misguided.”

It said the Zurich agreement does not affect the industry as a whole and is the result of “very serious allegations of misconduct on the part of particular individuals within specific insurance companies.”

“We are disappointed that the Alliance continues to believe that its members’ interests are somehow served by launching public attacks on other trade associations,” IBA West concluded.

In an e-mail statement, Norman Williams, spokesman for Mr. Garamendi’s office, told National Underwriter that Zurich’s “unlawful and reprehensible activity…adversely affected the ability of the policyholder to make an informed decision.”

The agreement rectifies these violations “appropriately and fairly,” he said.

“In short, consumers have a right to know what they are being charged for the services they receive,” Mr. Williams wrote. “It is our belief that the producer community as a whole embraces these principles of fairness and transparency. For the Alliance to pander to insurers and brokers who violated the law is unseemly.”