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An IBA West sponsored bill to create an Accident and Health Broker-Agents license gained overwhelming approval of a key legislative committee. AB 736, by Assemblyman Chuck Calderon, passed the important Assembly Insurance Committee by a vote of 11 to 1. The bill was opposed by Harvey Rosenfield's Consumer Watchdog Organization. In addition, the California Department of Insurance expressed concerns.
Currently California's insurance licensing laws do not provide insurance professionals and their clients with all the options to respond to the changing face of healthcare. Insurance producers that sell healthcare coverage are limited to an agents license.
Federal healthcare legislation, The Patient Protection and Affordable Care Act, may significantly change how insurers market and sell their products. PPOs and HMOs are now subject to federal "medical loss ratio" limitations. Under the MLR insurers must spend 80 percent of small group premiums on benefits. For large group plans, insurers must spend 85 percent of premiums on benefits. These restrictions leave only 15 to 20 percent of premium for administrative and overhead, taxes, profit and sales costs, including producer fees and commissions.
AB 736 may provide insurance producers with a valuable tool to work with their clients. Acting in the capacity of a broker, rather than an agent, in selling healthcare coverages should provide the insurance professional with options now only available in the property and casualty insurance marketplace for structuring relationships and providing services.
AB 736 will now advance to the Assembly Appropriations Committee for hearing. Opponents of the legislation are currently trying to have the bill re-referred to the Assembly Health Insurance Committee. So far that effort has failed.
IBA West is working with the California Department of Insurance to address concerns express relative to the bill. The key concern is that AB 736 will allow insurance producers to circumvent the federal Medical Loss Ratio. IBA West main goal is to provide its members with options to serve their clients and be able to be fairly compensated for services provided.