Krumme v. Mercury InsuranceKrumme v. Mercury Insurance
Opinion
Insurance Code section 1704
1
requires that certain kinds of insurance may be sold only by what are known as “appointed agents”— persons for whom the insurer has filed with the Insurance Commissioner a notice of appointment formally designating the person to act on the insurer’s behalf. A trio of related insurers (which for purposes of simplicity will hereinafter be collectively referred to as Mercury) sold policies of automobile insurance within the state through “broker-agents” who are not appointed agents. Suit was instituted to stop this practice, as well as permitting the “broker-agents” to charge consumers broker fees added to the advertised price of insurance. The trial court determined that both of these practices ran afoul of the unfair competition law
The primary issue pressed by Mercury is whether its practice of employing broker-agents who are not appointed agents has been sanctioned by the Legislature and therefore enjoys a “safe harbor” from liability under the UCL. Although the issue is not free from all doubt, on balance it appears from the governing statutes, particularly section 1704(a), that the Legislature has not created a safe harbor for this practice. We therefore affirm.
BACKGROUND
The trial court’s findings of fact and conclusions of law are best comprehended in light of the extensive statutory history that underpins the trial court’s reasoning. That history involves the evolution of the concepts of broker and agent in the insurance context.
Statutorily, an agent is defined as one who is “authorized, by and on behalf of an insurer, to transact all classes of insurance” except for life insurance (§§ 31, 1621) while a broker is “a person who, for compensation and on behalf of another person, transacts insurance other than life with, but not on behalf of, an insurer.” (§§ 33, 1623.)
One of the leading treatises explains the fundamental distinction between an agent and a broker in these terms: “An ‘insurance broker’ is one who acts as a middleman between the insured and the insurer, soliciting insurance from the public under no employment from any special company, and, upon securing an order, placing it with a company selected by the insured or with a company selected by himself or herself; whereas an ‘insurance agent’ is one who represents an insurer under an employment by it. A broker is, in essence, employed in each instance as a special agent for a single purpose, while the very definition of agent indicates an ongoing and continuous relationship. . . . [B]rokers and insureds are ordinarily involved in what can be viewed as a series of discrete transactions, while agents and insureds tend to be under some duty to each other during the entire length of the relationship.” (3 Couch on Insurance (3d ed. 1997) § 45:1, pp. 45-3 to 45-4, fns. omitted; see 7 Appleman on Insurance 2d (Holmes ed. 1998), § 44.2, pp. 2-11; Croskey et al., Cal Practice Guide: Insurance Litigation (The Rutter Group 1997)
ff
2:2-2:7, pp. 2-1 to 2-3 (rev. # 1, 2004.) In 1976 one Court of Appeal held that a broker is not an agent of the insurer, but is an independent contractor acting as agent for the insured. “The most definitive characteristic of an insurance agent is his authority to bind his principal, the insurer; an insurance broker has no such authority .... [T]he broker does not have authority to bind an insurer and ... the insurance company must first execute the binder or policy; a broker does not execute a policy without a prior authorization from the insurer. In contrast, the agent is authorized to execute the binder himself.”
(Marsh & McLennan of Cal., Inc. v. City of Los Angeles
(1976)
“An individual cannot act as an insurance agent in California without a valid license issued by the commissioner of insurance. (
Nevertheless, there is no absolute dichotomy between agents and brokers. In 1917, in a noninsurance context, our Supreme Court recognized that a person could be the agent of both parties to a commercial transaction.
(Glenn
v.
Rice
(1917)
Brokers liked the result in Maloney but did not want to be required to be licensed as agents as well as brokers. At their prompting, the Insurance Commissioner sponsored a bill that would codify the result of Maloney and authorize brokers to act as the insurer’s agent while collecting premiums and delivering policies. (See Cal. Ins. Com., Enrolled Bill Rep. on Assem. Bill No. 1417 (1952 Reg. Sess.) prepared for Governor Warren (June 16, 1953).) The bill was signed into law in July 1953, six months after Maloney was decided. (Stats. 1953, ch. 1732, § 2, p. 3482 [enacting former § 1660.5].) The basis for what is now section 1732 provided: “A person licensed as an insurance broker may act as an insurance agent in collecting and transmitting premium or returning] premium funds and delivering policies and other documents evidencing insurance.”
Here matters more or less remained until passage of Proposition 103 in 1988. That initiative made the Insurance Commissioner (Commissioner) an elected official (§ 12900), rolled back car insurance rates (§ 1861.01), and made rates subject to the Commissioner’s approval (§ 1861.05). It also directed that every person who meets the statutory standards as a “good driver” (§ 1861.025) was entitled a rate “at least 20% below the rate the insured would otherwise have been charged for the same coverage.” (§ 1861.02, subd. (b)(2).) “An insurer shall not refuse to offer and sell a Good Driver Discount policy to any person who meets the standards” (§ 1861.02, subd. (b)(1)).
In 1990 the Legislature added the term “broker-agent” to section 1625, which defines “fire and casualty licensee,” and to section 1732. (Stats. 1990, ch. 1420, §§ 4, 57, pp. 6446, 6463.) 2 The same bill amended section 1704(a) to provide in pertinent part: “Every applicant for a license as a life agent, a fire and casualty broker-agent to act as an insurance agent, or a travel insurance agent shall have filed on his or her behalf with the commissioner a notice of appointment to act as an agent executed by an insurer . . . appointing the applicant, upon licensing, its agent within this state” (Stats. 1990, ch. 1420, § 38, p. 6457).
Five years later “broker-agent” was added to the statute governing the termination of a broker or agent operating pursuant to a written contract. (§ 769, as amended by Stats. 1995, ch. 921, § 1, p. 7029.) Applicable to “a written agency or written brokerage contract[] where the broker-agent represents the insurer,” the amended statute specified that advance notice of termination was not required if “the broker-agent [][] . . . [f] Exceeded his or her binding authority under the agency or
In January of 2000, the Commissioner sent Mercury a draft “Notice of Noncompliance.” The gist of the notice was much the same as this litigation—that Mercury was employing brokers who “are operating as de facto agents” but who were being advertised by Mercury as independent. The notice was discussed at a meeting later that month between Mercury and representatives of the Department of Insurance. Mercury took the position that “statutes and court decisions do not clearly define the difference between agents and brokers.” One of the Commissioner’s representatives proposed that Mercury “draft a bill that defines agents and brokers” for submission to the Legislature. Mercury did so, but the Commissioner opposed the bill on the ground that it would “ ‘blur’ the long-established legal distinctions between ‘agents’ and ‘brokers’ and would create confusion for the consumer . . . .” The Legislature passed the bill and the Governor signed it. It amended section 1623, which then provided; “An insurance broker is a person who, for compensation and on behalf of another person, transacts insurance other than life with, but not on behalf of, an insurer.” The Mercury bill added the following language: “Every application for insurance submitted by an insurance broker to an insurer shall show that the person is acting as an insurance broker. If the application shows that the person is acting as an insurance broker and is licensed as an insurance broker in the state in which the application is submitted, it shall be presumed, for licensing purposes only, that the person is acting as an insurance broker. Nothing in this section is intended to affect any rights or remedies otherwise available under the law.” 3 (Stats. 2000, ch. 1074, § 1.)
In 2000-2001, the Legislature enacted a number of statutes dealing with the scope of a “personal lines licensee.” A person holding such a license is “authorized to transact automobile insurance, . . . including insurance for recreational vehicles used for noncommercial purposes, personal watercraft insurance, residential property insurance . . . including earthquake and flood insurance, inland marine insurance covering personal property, and umbrella or excess liability insurance providing coverage when written over one or more underlying automobile or residential property insurance policies . . . .” A personal lines “broker-agent” is given the same authorization. (§ 1625.5, subd. (a).) A fire and casualty licensee is defined as “a person authorized to act as an insurance agent, broker or solicitor, and a fire and casualty broker-agent” and “authorized to transact 24-hour care coverage . . . and any coverage that a personal lines licensee is authorized to transact” (§ 1625; see Stats. 2000, ch. 321, § 2; Stats. 2001, ch. 174, §§ 1-2).
Finally, in 2002, the Legislature again amended section 1704(a) to provide in pertinent part; “Life agents, travel agents, and fire and casualty insurance agents shall not act as an agent of an insurer unless the insurer has filed with the commissioner a notice of appointment, executed by the insurer, appointing the licensee as the insurer’s agent” (Stats. 2002, ch. 203, § 15).
(B)
This litigation commenced when plaintiff Robert Krumme filed a complaint “on Behalf of the General Public.” Plaintiff stated he was challenging “the practices of the defendant insurance companies in selling automobile and other personal lines insurance policies through insurance producers
4
At the conclusion of a four-day bench trial, the trial court issued 17 pages of findings of fact and conclusions of law. Although Mercury states in its opening brief that many of the findings “are either unsupported by the
evidence or are otherwise flawed,” it chooses to forgo challenging them because it sees issues of law—the trial court’s erroneous conclusions of law in its application of statutes—as sufficient to require reversal of the injunction. In light of this approach, we presume the findings are supported by substantial evidence and summarize the relevant facts as set forth in the findings. (See
State Farm Mutual Automobile Ins. Co.
v.
Quackenbush
(1999)
Until 1989, Mercury only sold insurance through approximately 800 appointed agents. Beginning in 1989, Mercury terminated the appointments of approximately 700 of those agents and made them brokers. In general, the change in title did not alter the ability or authority to bind Mercury, but it did allow the former agents to charge brokerage fees. Policies sold by brokers or appointed agents used the same application forms, rating guidelines, and underwriting guidelines, all of which were provided by Mercury. Both brokers and appointed agents advertise that they “represent” Mercury. Mercury subjects agents and brokers to the same amount of training and supervision. Mercury does not object to brokers charging brokerage fees (in addition to policy premiums), but it will discipline appointed agents who attempt to charge such fees. In its comparative rate advertising, Mercury does not advise that brokerage fees may be added to the advertised cost of insurance. This practice may provide a competitive advantage to Mercury, which “is aware of, and concerned about, misleading the public with its comparative rate print advertisements,” but it “has not established any system to discover or monitor . . . and has no way of knowing” whether brokerage fees are being assessed. Mercury submits its insurance rates and premiums—but not the brokerage fees—to the California Department of Insurance for approval.
As conclusions of law, the trial court determined:
Brokers and appointed agents were “functionally indistinguishable” in their relationship to Mercury.
In view of the substance of their dealings with Mercury, “[b]ecause these ‘brokers’ have transacted, and do transact, insurance on behalf of Mercury, they cannot be considered ‘insurance brokers’ for licensing purposes within the meaning of
“The Court constmes
“From January 1, 1996 to date, Mercury has violated and continues to violate the letter, policy, and spirit of
The court further concluded that because broker fees may be charged only by bona fide brokers, not persons and firms claiming to be brokers that are in reality appointed agents, the brokerage fees collected by Mercury’s “brokers” were illegal. “Mercury should have filed action notices for its ‘brokers.’ Its failure to do so violated and violates the spirit and policy of the common law of agency.
“Mercury is vicariously liable under the [UCL] for these past and ongoing violations of the broker fee regulations and the common law by its ‘broker’ agents. The ‘brokers’ charged and charge these ‘broker fees’ in the course and scope of transacting insurance on behalf of Mercury, and therefore in the capacity of insurance agents within the meaning of
“From at least July 1, 1996, Mercury has engaged and continues to engage in false advertising in violation of Business & Professions Code sections 17200 and 17500 by advertising rate comparisons without disclosing that broker fees may be added in addition to the premium advertised. These advertisements were and are likely to deceive consumers because undisclosed broker fees that materially affect the cost of the insurance and adversely affect the comparison of Mercury’s rates with those of the quoted competitors may be added at the time the consumer purchases Mercury insurance.”
“It is immaterial to Mercury’s liability in this case that it did not actually receive the ‘broker fees.’ Under section 17200, the test of liability is whether Mercury engaged in unlawful, unfair or fraudulent business practices .... Mercury need not directly benefit in order to be held liable under this statute. Nevertheless, there is evidence in the record that even though Mercury did not directly receive the fees, Mercury perceives some business advantage and therefore a benefit in the charging of ‘broker fees’ by its ‘broker’ agents .... Further, Mercury is deemed by operation of law to have constructively received the ‘broker fees.’ . . . The issue of constructive as opposed to actual receipt is more appropriately addressed to the remedial aspect of the case.”
The court thereafter entered a judgment in the form of a permanent injunction prohibiting Mercury from: (1) selling “any policy of personal lines automobile and/or homeowners insurance in California through a broker-agent who has not been appointed an agent” pursuant to
Mercury filed timely notices of appeal from the judgment and from the fee order.
Both sides have the support of amici curiae on this appeal—the American Agents Alliance for Mercury, and the Commissioner for plaintiff.
REVIEW
I
Several semi-jurisdictional matters require initial comment.
Mercury makes a point of opening its brief with comments that plaintiff never purchased a policy from Mercury and is therefore utterly “disinterested” in the controversy he began. It is well established, however, that a personal stake is not required for standing to prosecute an unfair competition lawsuit on behalf of others: “ ‘[A] private plaintiff who has himself
According to Mercury, “the trial court’s conclusion that Mercury ‘constructively received’ illegal broker fees, while incorrect, nonetheless brings this matter within the original and exclusive jurisdiction of the Insurance Commissioner and divests the superior court of any power to grant relief.” Mercury reasons that if the fees charged by its brokers are part of the premium charged customers, the matter comes within the Commissioner’s plenary authority over rates and premiums. We do not see the trial court’s actions as trespassing upon the Commissioner’s jurisdiction.
The elaborate statutory and administrative process for setting rates has “been interpreted to provide exclusive original jurisdiction over issues related to ratemaking to the commissioner.”
(Walker v. Allstate Indemnity Co., supra, 77
Cal.App.4th 750, 755.) The Insurance Code does not, however, displace the UCL “except as to . . . activities related to rate setting.”
(Quelimane Co.
v.
Stewart Title Guaranty Co.
(1998)
Our confidence in this determination is enhanced by the fact that the Commissioner, appearing as amicus curiae, does not agree with Mercury, but has filed a brief supporting plaintiff. The fact that the Commissioner does not view the trial court as having poached into the Commissioner’s statutory domain is clearly significant, and we defer to his interpretation of his authority. (E.g.,
Henning
v.
Industrial Welfare Com.
(1988)
After briefing was completed, Mercury sent a letter advising us of the recent decision in
Jonathan Neil & Assoc., Inc. v. Jones
(2004)
Unlike exclusive jurisdiction, primary jurisdiction is not jurisdictional in the sense that courts are utterly without the power to decide, but is a common
law policy advancing comity between courts and administrative agencies. “ 1 “Primary jurisdiction,” . . . applies where a claim is originally cognizable in the courts, and comes into play whenever enforcement of the claim requires the resolution of issues which, under a regulatory scheme, have been placed within the special competence of an administrative body; in such a case the judicial process is suspended pending referral of such issues to the administrative body for its views.’ ”
(Farmers Ins. Exchange v. Superior Court
(1992)
Mercury invoked the doctrine of primary jurisdiction before the trial court. Mercury did not, however, claim in its opening brief that the trial court’s decision not to stay judicial proceedings was an abuse of discretion. Mercury did not mention the issue of the Commissioner having primary jurisdiction until it filed its reply brief. Thus, the issue could be treated as waived. (E.g.,
Kahn
v.
Wilson
(1898)
Assuming the issue was preserved, we conclude the trial court did not abuse its discretion by declining to refer the matter to the Commissioner. First, there is a basis for believing the Commissioner would not have accepted the referral. In July of 2000, when he adopted regulations concerning broker fees (see Cal. Code Regs., tit. 10, §§ 2189.1-2189.8), the Commissioner took the position that “current California case law establishes that the existence of binding authority creates an agency relationship between insurer and producer.
Marsh & McLennan of California v. City of Los Angeles[, supra,]
n
Mercury’s principal contention is that “the dual agency practiced by Mercury and its independent brokers cannot form the basis of UCL liability because it falls within a statutory and regulatory safe harbor.” Mercury is invoking an exception to the UCL that our Supreme Court explained as follows: “Although the unfair competition law’s scope is sweeping, it is not unlimited. Courts may not simply impose their own notions of the day as to what is fair or unfair. Specific legislation may limit the judiciary’s power to declare conduct unfair. If the Legislature has permitted certain conduct or considered a situation and concluded no action should lie, courts may not override that determination. When specific legislation provides a ‘safe harbor,’ plaintiffs may not use the general unfair competition law to assault that harbor.”
(Cel-Tech Communications, Inc.
v.
Los Angeles Cellular Telephone Co.
(1999)
Mercury marshals a number of arguments as to why its practices with brokers are proper and should not have been enjoined.
“Proposition 103 altered the way insurance products were delivered to consumers. With all underwriting decisions made in advance under the watchful eyes of the Insurance Commissioner, personal lines insurance became more of a ‘commodity,’ and the functions of the insurance producer became limited primarily to customer service. If an applicant is a ‘good
driver,’ satisfies the insurer’s guidelines, and pays the initial premium, the insurer must automatically accept the risk. The generic nature of this transaction reduced the significance of any distinction between the functions of agents and brokers, [f] Due to mandatory insurance laws ... the marketplace also demanded that all insurance producers have the ability to provide immediate ‘on-the-spot’ insurance coverage to every qualified applicant. Without that ability, producers could not satisfy the needs of car purchasers unable to drive their cars off the lot without insurance.
Plaintiff responds that
Neither of these arguments is completely persuasive, in large part because each suffers from a common defect. Each selectively emphasizes favorable statutory language in isolation without attempting to
Mercury does not establish, as a matter of law that the Legislature expressly created a safe harbor for the practices enjoined by the trial court. True, the Legislature did, following
Maloney,
enact what is now
The 1990 addition of “broker-agent” to section 1625 defining fire and casualty licensee, and to
The legislative history establishes that the Legislature did indeed intend to amalgamate the categories of broker and agent, at least with respect to personal lines. The Legislative Counsel’s digest for the bill states: “This bill would eliminate insurance agent and insurance broker as categories of licensure, and would instead provide for licensure of fire and casualty insurance broker-agents. . . . Under the bill, fire and casualty broker-agents could be authorized to act as brokers or agents.” (Legis. Counsel’s Dig., Sen. Bill No. 2642 (1989-1990 Reg. Sess.) 5 Stats. 1990, Summary Dig., p. 565.) There are numerous committee reports and analyses that made the same point. (Sen. Com. on Insurance, Claims and Corporations, Rep. on Sen. Bill No. 2642 (1989-1990 Reg. Sess.) as amended
Thus, there is some basis for Mercury to maintain that the changes enacted by the 1990 bill “drained the definitional language of
For Mercury, the Legislature, by introducing the term “broker-agent” into a number of statutes (principally sections 769, 1625, and 1625.5), and yet not defining that term, means that the only definition can come from the statutes defining “broker” and “agent.” According to this reasoning, broker-agents can now exercise the powers of brokers and agents that are spelled out in
The first version was enacted by the same bill whereby the Legislature added the term “broker-agent” to sections 1625 and 1732, the same bill Mercury maintains homogenized the former categories of broker and agent into the new single category of broker-agent. This was only one year after Mercury began converting its agents to brokers. Thus, for more than a decade Mercury was not complying with the plain command of
The 2002 amendment changed the reference from “broker-agent” to “agent.” The legislative history provides no clear reason why this particular change was made. The history demonstrates that the major intention of the bill, which amended, repealed, and added numerous provisions to the Insurance Code, was to avoid federal regulation in the areas of federally chartered depository institutions and reciprocal multistate licensing of producers; there is nothing showing why this precise change was made, and no expressed intent to relieving personal lines broker-agents of the appointment requirement.
7
Because the legislative history is completely silent, there is no reasonable basis for concluding that the Legislature intended that people writing fire and casualty insurance on behalf of insurers, whether called broker-agents or agents, should be exempt from the appointment requirement. (See
People v. Barker
(2004)
To be sure, Mercury has presented a convincing argument that the traditional distinction between broker and agent has
The 2002 version did not amend that portion of
Notwithstanding the 2002 change to
Mercury and amicus curiae American Agents Alliance have devoted considerable time and attention to explaining the numerous and valuable services broker-agents can and do provide in securing automobile insurance for the public. This may be conceded, but it is not relevant. What is relevant is what the statutes say and whether what they say establishes a safe harbor protecting Mercury from UCL liability. Until the Legislature makes an express statutory declaration to the contrary, we cannot hold that Mercury enjoys a safe harbor from the requirement that its broker-agents must be appointed in accordance with
III
Mercury next contends that its advertising “likewise falls within a safe harbor that precludes UCL liability.” It bases this claim upon the broker’s fees regulations promulgated by the Commissioner in 1998. As has already been established, administrative regulations are insufficient to create a safe harbor from UCL liability. (See fn. 5,
ante.)
Mercury argues “there is little or no precedent” for making Mercury vicariously responsible for charges added by “third party” broker-agents to the
The trial court concluded from the findings that injunctive relief was required to halt Mercury’s “ongoing violations,” including its “false advertising.” Its decision to issue the permanent injunction to halt these practices will be overturned only if we are compelled to conclude that the remedy amounts to an abuse of discretion. (E.g.,
Union Interchange, Inc. v. Savage
(1959)
IV
In their application for attorney fees, plaintiff’s attorneys submitted that $781,878 was a fair lodestar figure for the reasonable value of their services, and should be increased by a multiplier of two. The court found that the lodestar fees were reasonable and should be increased by a multiplier of 1.5, for an award of $1,172,817.
Employing less than two pages in its brief, Mercury’s final argument is that this award “should be vacated, reduced or remanded.” Mercury submits that because plaintiff began by seeking restitution but ended up with only injunctive relief that is “technical in nature and confers virtually no benefits on consumers. Without a restitution award, this case should be considered a failure for Plaintiff’s attorneys
It is true that plaintiff originally sought restitution and did so up to the entry of judgment. The court rejected the plaintiff’s proposal “to take discovery for a period of three months from the Mercury brokers to discover which ones have charged broker fees and to scale this problem into a factual context rather than dealing with it as it is now where we don’t really know what’s involved administratively or managerially with the mechanics of restitution.” Nevertheless, plaintiff did achieve a significant objective of the lawsuit—halting Mercury’s placing of insurance through brokers who were not appointed agents.
“There is no hard-and-fast rule limiting the factors that may justify an exercise of judicial discretion to increase or decrease a lodestar calculation.” (Th
ayer v. Wells Fargo Bank
(2001)
DISPOSITION
The judgment and the attorney fee order are affirmed.
Reardon, J., and Rivera, J., concurred.
A petition for a rehearing was denied November 29, 2004, and appellants’ petition for review by the Supreme Court was denied January 19, 2005.
Notes
Statutory references are to this code unless otherwise indicated. The precise part of
These provisions now read: “A fire and casualty licensee is a person authorized to act as an insurance agent, broker, or solicitor, and a fire and casualty broker-agent license is a license so to act.” (§ 1625.)
“A person licensed as a fire and casualty broker-agent acting as an insurance broker may act as an insurance agent in collecting and transmitting premium or retum[ing] premium funds and delivering policies and other documents evidencing insurance.” (
In Mercury’s original version of the bill, the presumption was conclusive.
“Producer” is not a statutory term, but appears to be a term of art in the insurance industry referring to persons or firms who “produce”—that is, generate or obtain—business for insurers. (See
Osborn
v.
Ozlin
(1940)
Mercury includes in its discussion the regulations on “broker fees” promulgated by the Commissioner in 1998 (Cal. Code Regs., tit. 10, §§ 2189.1-2189.8) and two advisory letters written by a staff attorney in the Department of Insurance. These materials are not germane to our analysis because our Supreme Court has held that only statutes can create a safe harbor. (See Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co., supra, 20 Cal.4th 163, 182-184.)
Mercury also argues that its “marketing practices fall within an implied safe harbor because the overall statutory scheme acknowledges the existence of the broker market as currently structured.” However, a safe harbor statute must explicitly prohibit liability for the defendant’s acts or omissions. (See
Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co., supra,
“It is . . . ‘an established rule of statutory construction that similar statutes should be construed in light of one another .... “[Application of the rule that statutes in pari materia should be construed together is most justified, and light from that source has the greatest probative force, in the case of statutes relating to the same subject matter that were passed at the same session of the legislature, especially if they were passed or approved or take effect on the same day ....”’ [Citation.] When as in the present case both statutes are part of the same bill, enacted and chaptered together, the rule requiring the courts to reconcile the statutes is even more compelling . . . .”
(International Business Machines
v.
State Bd. of Equalization
(1980)
The Legislature stated its reasons for enacting the bill in these findings: “(a) Pursuant to the federal government’s Financial Services Modernization Act of 1999 (the Gramm-Leach-Bliley Act), the Comptroller of the Currency, the Office of Thrift Supervision, the Federal Deposit Insurance Corporation, and the Board of Governors of the Federal Reserve Bank adopted joint consumer protection regulations. In order for California to retain jurisdiction to regulate the insurance sales practices of depository institutions, or persons who are engaged in those activities at an office of a depository institution or on behalf of a depository institution, California law must have similar or stronger consumer protections than those of the four federal agencies. Consequently, it is necessary to add language to the Insurance Code to provide California with consumer protection laws that are uniform with the federal regulations.
“(b) The Gramm-Leach-Bliley Act authorizes the establishment of a new organization named the National Association of Registered Agents and Brokers (NARAB). NARAB comes into existence if 29 state and territory insurance regulators do not implement uniform or reciprocal laws for the licensing of nonresident insurance producers by November 2002. NARAB would establish uniform producer licensing laws and provide a mechanism for multistate licensing of insurance producers, thereby preempting state-unique licensing procedures and qualifications. In an effort to avoid the creation of NARAB and preserve state regulation of producer licensing, California should amend the Insurance Code as necessary to create reciprocal licensing laws.” (Stats. 2002, ch. 203, § 1.) A number of legislative committee reports and analyses never discuss precisely why the amendment of