Insurance Industry Bristling Under RPCV John Garamendi's New Requirements



Insurance Industry Bristling Under RPCV John Garamendi's New Requirements

Insurance Industry Bristling Under Commissioner’s New Requirements

By LAURENCE DARMIENTO
Los Angeles Business Journal Staff

New broker regulations proposed by Insurance Commissioner John Garamendi following the scandal at Marsh & McLennan Cos. are under broad attack by the insurance industry, which calls them unnecessary, confusing and illegal.

The regulations require brokers to disclose all their compensation and to get the “best available” coverage for commercial clients, among other changes.

The industry has mounted an all-out assault against the regulations, testifying against them at a Sacramento hearing earlier this month. Some two dozen groups and companies have submitted critical comments to the insurance department.

“We don’t need new laws to stop bid-rigging and antitrust (activities),” said Dan Dunmoyer, president of the Personal Insurance Federation, a state trade group representing property and casualty insurers. “They already are illegal in California.”

Last year, the chief executive of Marsh, the world’s largest brokerage, was forced to resign after New York State Attorney General Eliot Spitzer accused company brokers of rigging bids from insurers and steering business to them in exchange for back-end commissions. (Earlier this month, a Marsh broker pleaded guilty to defrauding a customer, the first company employee to be convicted in the scandal.)

In response, Garamendi, who had said at the time he was conducting his own probe into the insurer, published the new regulations that he said would help prevent another such scandal.

Industry officials charge that the regulations are unnecessary and that the commissioner is making new law as opposed to interpreting law. They have particularly taken issue with the mandate that brokers get the “best available” coverage, saying that such a requirement would increase legal liability of what is considered a judgment call involving the weighing of varying factors.

“The proposed set of regulations proposed by Commissioner Garamendi is frankly just a stupid idea,” said Stephen Young, general counsel of Insurance Brokers and Agents of the West, a trade group that represent state insurance brokers.

Amy Bach, executive director of United Policyholders, a San Francisco-based consumer advocacy group that has filed purported class action lawsuits against brokerages over their commission practices, said she knew that the “best available” coverage mandate would draw heated response.

“It’s true the word ‘best’ is very loaded. I think (it) could be modified to be something like ‘appropriate’ or ‘most appropriate’,” Bach said.

Bach said her group would like to seek a compromise with the industry on that wording and other issues. “The industry tends to overreach whenever there is a proposed regulation, but they have got to know there is a problem that has to be addressed,” she said.

Garamendi spokesman Norman Williams said the department must consider the criticism before submitting the regulations for final approval to a state administrative law judge. While they may be amended, he said the commissioner stands by them. “He is very comfortable with these rules,” Williams said.

When this story was posted in January 2005, this was on the front page of PCOL:

Ask Not As our country prepares for the inauguration of a President, we remember one of the greatest speeches of the 20th century and how his words inspired us. "And so, my fellow Americans: ask not what your country can do for you--ask what you can do for your country. My fellow citizens of the world: ask not what America will do for you, but what together we can do for the freedom of man."

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January 15, 2005: This Week's Top Stories Bellamy finishing term - Veneman to head Unicef 15 Jan 230 RPCVs volunteer for Crisis Corps 14 Jan Peace Corps Fund needs silent auction items 12 Jan Matt Gould in one-man Peace Corps show in Hollywood 12 Jan Taylor Hackford's "Ray" Nominated for Golden Globe 12 Jan Ambassador Johnson shares memories of Thailand 11 Jan Senator Dodd suggests PC return to Venezuela 11 Jan Ambassador Hull wants PC to return to Sierra Leone 11 Jan Poiriers unhappy with PC investigation of missing son 10 Jan Emile Hons reflects on the Deborah Gardner murder case 10 Jan Judge Paul A. Bastine criticized for stalling Divorce 6 Jan Volunteer Patricia D. Scatoloni dies in Macedonia 4 Jan more top stories...

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Coleman: Peace Corps mission and expansion Senator Norm Coleman, Chairman of the Senate Subcommittee that oversees the Peace Corps, says in an op-ed, A chance to show the world America at its best: "Even as that worthy agency mobilizes a "Crisis Corps" of former Peace Corps volunteers to assist with tsunami relief, I believe an opportunity exists to rededicate ourselves to the mission of the Peace Corps and its expansion to touch more and more lives."

RPCVs active in new session of Congress In the new session of Congress that begins this week, RPCV Congressman Tom Petri has a proposal to bolster Social Security, Sam Farr supported the objection to the Electoral College count, James Walsh has asked for a waiver to continue heading a powerful Appropriations subcommittee, Chris Shays will no longer be vice chairman of the Budget Committee, and Mike Honda spoke on the floor honoring late Congressman Robert Matsui.

Latest: RPCVs and Peace Corps provide aid Peace Corps made an appeal last week to all Thailand RPCV's to consider serving again through the Crisis Corps and more than 30 RPCVs have responded so far. RPCVs: Read what an RPCV-led NGO is doing about the crisis an how one RPCV is headed for Sri Lanka to help a nation he grew to love. Question: Is Crisis Corps going to send RPCVs to India, Indonesia and nine other countries that need help?

The World's Broken Promise to our Children Former Director Carol Bellamy, now head of Unicef, says that the appalling conditions endured today by half the world's children speak to a broken promise. Too many governments are doing worse than neglecting children -- they are making deliberate, informed choices that hurt children. Read her op-ed and Unicef's report on the State of the World's Children 2005.

Changing of the Guard With Lloyd Pierson's departure, Marie Wheat has been named acting Chief of Staff and Chief of Operations responsible for the day-to-day management of the Peace Corps. Although Wheat is not an RPCV and has limited overseas experience, in her two years at the agency she has come to be respected as someone with good political skills who listens and delegates authority and we wish her the best in her new position.

Our debt to Bill Moyers Former Peace Corps Deputy Director Bill Moyers leaves PBS next week to begin writing his memoir of Lyndon Baines Johnson. Read what Moyers says about journalism under fire, the value of a free press, and the yearning for democracy. "We have got to nurture the spirit of independent journalism in this country," he warns, "or we'll not save capitalism from its own excesses, and we'll not save democracy from its own inertia."

RPCV safe after Terrorist Attack RPCV Gina Abercrombie-Winstanley, the U.S. consul general in Jeddah, Saudi Arabia survived Monday's attack on the consulate without injury. Five consular employees and four others were killed. Abercrombie-Winstanley, the first woman to hold the position, has been an outspoken advocate of rights for Arab women and has met with Saudi reformers despite efforts by Saudi leaders to block the discussions.

Is Gaddi Leaving? Rumors are swirling that Peace Corps Director Vasquez may be leaving the administration. We think Director Vasquez has been doing a good job and if he decides to stay to the end of the administration, he could possibly have the same sort of impact as a Loret Ruppe Miller. If Vasquez has decided to leave, then Bob Taft, Peter McPherson, Chris Shays, or Jody Olsen would be good candidates to run the agency. Latest: For the record, Peace Corps has no comment on the rumors.

The Birth of the Peace Corps UMBC's Shriver Center and the Maryland Returned Volunteers hosted Scott Stossel, biographer of Sargent Shriver, who spoke on the Birth of the Peace Corps. This is the second annual Peace Corps History series - last year's speaker was Peace Corps Director Jack Vaughn.

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