Industry News

Insurance industry commissions under microscope

California proposes new rules against steering

Calling secret insurance broker commissions a "serious problem that betrays the public's trust," California Insurance Commissioner John Garamendi announced new regulations Wednesday to require agents and brokers to disclose any financial incentive they would receive for selling certain insurance products and steering business to specific companies. Targeting a practice in the insurance industry that has sparked a national controversy and criminal charges against industry executives, Commissioner Garamendi said his proposal would help clarify and strengthen the laws prohibiting these practices. The real estate connection may not be far off. Mortgage brokers often steer business to particular lenders in exchange for compensation. While the compensation should be disclosed, it is often fuzzy and still represents payment for directing business to particular lenders. In response to the insurance industry controversy, Garamendi said: "When consumers place their trust in the hands of (insura...