A California-based agents' group expressed concern that an expected series of enforcement actions by the California Department of Insurance over disclosure issues could be another attempt to impose burdensome duties on agents and brokers.
In the wake of misconduct uncovered by New York Attorney General Eliot Spitzer, California Insurance Commissioner John Garamendi has sought to impose greater requirements for agents and brokers to disclose the exact nature of fees and commissions they will receive from consumers, and insurers if applicable.
Michael D'Arelli, vice president, legislative and regulatory affairs for the Western Insurance Agents Association, said although the group is not opposed to the department taking enforcement actions against agents and brokers engaged in disclosure misconduct, Mr. Garamendi's efforts to impose new disclosure requirements are overkill.
"If you can identify wrongdoing and establish that you don't have the authority to correct it, then we'll be the first" to support new disclosure rules, he added. Recent enforcement actions are evidence that the department can protect consumers without adding new requirements for agents and brokers, he noted.
Dishonest agents and brokers, Mr. D'Arelli said, are a problem for the entire agent community. "If there is bad conduct out there, then it taints all of us," he added. The WIAA, he said, is not opposed to disclosure, but is "opposed to unnecessary burdens without a justifiable need."
He noted the WIAA is concerned that the enforcement actions will be used as a pretext to increasing the disclosure requirements for all agents. Prior efforts to do so, through legislation and new regulations, however, have not been successful due to strong opposition from the agent community.
The legislation, Senate bill 938, failed to pass in committee, receiving only two votes out of 11. The department is working to amend the proposed regulation, but Mr. D'Arelli said the WIAA would likely challenge them before the state Office of Administrative Law.
For the present, however, he said enforcement actions by the department against agents believed to be engaged in misconduct are exactly what the WIAA has been asking for. "If you've got agents doing this, bring them in. We're not going to defend their misconduct," he said.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.