©2008 The Alliance
2007 Legislative Update
It was one of
the more quiet years in the state Legislature when it comes to
insurance-related legislation. Check out
a recap of some of the measures that were being tracked by Alliance Legislative
Advocate Kevin Pedrotti, which have made their way to the governor’s desk:
AB 430 (Benoit), Vehicles:
AB 797 (Coto),
Insurance Agents:
Creates a special limited automobile agent license. The bill passed the
Assembly 77-0 and was signed by the governor.
AB 881 (Mullin): Requires, beginning on June 30, 2008, children up to eight years of age to ride in
a child safety seat.
AB 1401
(Aghazarian), Insurance Fraud: Assessments. Increases per-company fraud assessment from
$1,300 to $5,100, but would not change existing law with regard to the $1.80
per-vehicle fraud assessment. The bill passed the Assembly and was sent to the
governor.
AB 1483 (Carter),
Automotive Repair: Crash Parts. Requires that auto body repair shops affirm that the crash
parts designated in written estimates to customers are the parts that were
actually installed on the motor vehicle. The bill passed the Assembly 78-0 and
was sent to the governor.
SB 316 (Yee),
Insurance: Insurer Reserves: Excludes workers’ compensation insurance from the reserve
requirement in Insurance Code Section 11558. The bill passed the Senate and was
sent to the governor.
Click to View "Members Tapped for Legislative Outreach" (Exerpt from Alliance Alert 10/17/2006)
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Regulatory Update
Letter to OAL Condemns Application
of Settlement that Threatens Broker Fees
The Alliance of Insurance Agents and Brokers has committed to its members to take action against attempts by the California Department of Insurance to eliminate or curtail the charging of broker fees.
In support of this commitment, the Alliance has contested the Commissioner’s attempt to create as precedent its recent settlement with American Reliable which the CDI seeks to use in future actions. The settlement creates 12 separate circumstances which, if any are performed by a broker, would be improper and subject the broker to refund any fees charged, as well as disciplinary action against the insurer for not appointing the broker.
“This is a broad and inappropriate use of a settlement that has the effect of creating a regulation applicable to all brokers and producers who do not transact directly on behalf of insurers,” says Robert W. Hogeboom, legal counsel for the Alliance and senior partner of the Los Angeles law firm Barger & Wolen LLP.
On Oct. 6, Hogeboom authored a letter to Office of Administrative Law Director William L. Gausewitz on behalf of the Alliance in support of a recent petition by IBA West objecting to the Commissioner’s attempt to set as precedent the recent settlement with American Reliable.
Following the lead of the Alliance, the Association of California Insurance Companies has also filed arguments supporting the petition.
The petition alleges that the settlement of the Commissioner’s Order to Show Cause against American Reliable for engaging insurance brokers who charged broker fees while performing specified acts on behalf of the insurer, is an underground regulation since the matter was not adjudicated in a court of law.
“A precedent decision can only be based on a decision resulting from an adjudicatory proceeding,” says Hogeboom, “but the CDI is seeking to create a rule establishing a number of indicia of agency not adjudicated and which have no relevance to the actual facts of the American Reliable matter.”
The ruling on the petition to the OAL is not expected until later this year, but the Alliance is counting on a positive outcome.
“We fully expect that the Office of Administrative Law after looking at the petition and our response will conclude that the decision is an underground regulation and therefore improper,” says Hogeboom.
Since the Krumme v. Mercury case, the Alliance believes that the current CDI is on a mission to eliminate broker fees. The Alliance, through special postings on its Web site and notices in the Alliance Alert, will keep interested parties informed on any new developments.
FOR ADDITIONAL INFORMATION ON LEGISLATION BEING MONITORED BY THE ALLIANCE, PLEASE VISIT WWW..JKPEDROTTI.COM
