California Governor Signs Agent-Broker Bill

September 26, 2008

With a Tuesday, Sept. 30, 2008, deadline to sign or veto bills fast approaching in Califorrnia, Gov. Arnold Schwarzenegger has taken action on several bills this week.

Perhaps most notable to insurance agents is AB 2956, which the Governor signed, clarifying the duties of an agent versus those of a broker.

The bill, Insurance Brokers and Agents of the West explained, establishes four specific situations in which the broker presumption is deemed rebutted: 1) where the insurer has appointed the licensee as its agent and filed a notice of said appointment with CDI; or in cases where the insurer has a written agreement with a licensee that expressly: 2) confers binding authority; 3) authorizes the licensee to appoint other licensees as agents of that insurer; or 4) confers the authority to pay claims on behalf of the insurer.

In any other case, the presumption could be rebutted only if the “totality of circumstances” establishes that the broker-agent is “acting on behalf of the insurer,” rather than — as required by longstanding definitions in the Code — acting on behalf of the consumer.

Additionally, the bill codifies a requirement — applicable in all brokered transactions — that brokers disclose their fees in a written agreement signed by the consumer.

The Alliance of Insurance Agents and Brokers, IBA West and Western Insurance Agents Association supported the bill.

IBA West will be conducting a series of classes — eligible for one hour of continuing education credit — this fall to inform California brokers and agents of the requirements of the new law.

Source: California Legislature, IBA West

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