The bill would give the state insurance commissioner the authority to regulate brokers' fees with the intent of ensuring that fees are commensurate with the services provided and that customers are charged similar fees for similar service.

Steve Young, vice president and general counsel of Insurance Brokers and Agents of the West, an affiliate of the Independent Insurance Agents and Brokers of America, said the group was "very concerned" about the bill, which is similar to regulations that California Insurance Commissioner John Garamendi tried to implement last year.

"On the positive side, we must have been persuasive and convincing when we told the commissioner that the regulations were hopelessly flawed for many reasons, not the least of which was his lack of legal authority," Mr. Young said.

What Mr. Garamendi proposed is not "any better in the legislative arena," he added.

The new regulations, the agents groups argue, are unnecessary because consumers are already aware of much of what would be required, one agent representative argued.

"In regards to fees and commissions, consumers already know that agents and brokers make their living from fees and commissions, and if consumers really cared about that amount they would be filing complaints by the thousands," said Clark Sitzes, executive vice president of the Professional Insurance Agents Western Alliance.

In fact, Mr. Sitzes noted, few complaints have been made, and certainly not enough to justify enacting the regulations imposed by SB 938.

"The only disclosure that is necessary to protect the consumer is when an agent or a broker collects fees and commissions from both the client and the carrier," he said. "That could be addressed in California regulations with a couple of sentences and not by implementing this complicated, ambiguous legislation," Mr. Sitzes said.

Mr. Young said that neither Commissioner Garamendi nor anyone else in the Department of Insurance has shown "even a marginally compelling need" for increased disclosure, adding that the lack of evidence would hurt the bill's chances for passage.

Additionally, Mr. Young said, the bill's "quite radical, controversial and unprecedented" provisions giving Commissioner Garamendi rulemaking authority to implement the new disclosure requirements made it "highly unlikely" the bill will pass or even be acted on by the state legislature this year.

In California, he explained, there is a deadline for legislation to be voted on at least once by the relevant committee. If no vote on the bill has been taken by the deadline, he said, it becomes what is known as a "two-year bill" and is held over until the next year. Mr. Young speculated that while there may be a hearing on the bill, it was unlikely that a vote will be taken on it before the deadline.

The new disclosures were proposed in the wake of abuses uncovered during investigations by Commissioner Garamendi's office and by New York State Attorney General Eliot Spitzer. However, Mr. Sitzes noted, the abuses uncovered by those investigations were committed at large firms and should not be the driving force behind new burdens being imposed on all agents and brokers.

"This is ridiculous," he said. "The small agents and brokers in California are not mega-insurance brokerage houses. They do not have the leverage that Marsh & McLennan or AIG [American International Group] have. Like most in insurance, they are honest professionals who work hard to get the best possible deal for their clients. These regulations are a knee-jerk reaction."