IBA West has urged the California Department of Insurance (CDI) to make changes to potential regulations that would specify the criteria used by CDI for approving or rejecting insurance producers’ business names.
Under California Insurance Code Section 1724.5, the insurance commissioner has the authority to review proposed agency and brokerage names, and to reject any name that is similar to a name that is already in use, is potentially misleading, or implies that the producer is an insurance company. The statute also limits licensees to nore more than two “DBA” names except in the cases of merger or acquisition.
CDI has followed certain guidelines for approving or rejecting names under that statutory authority, but has not committed them to regulation or publicized them to licensees.
On Sept. 2., CDI held a pre-notice workshop to receive comments on a set of proposals that the CDI may decide to try to adopt as regulations.
Steve Young, IBA West general counsel, commended CDI for its desire to put its rules into regulatory form, but urged the department to consider making changes in its procedures.
CDI, in determining whether a proposed name is appropriate, pays attention to the first two words of the proposed names, and its potential regulation would codify that practice. However, Young noted that all corporations, partnerships and limited liability companies in California are already required to submit proposed names to the California Secretary of State, and that the agency must approve names under statutory criteria that are almost identical to the provisions in teh Insurance Code.
It makes no sense to have two separate agencies making essentially the same determination, Young said. “Consequently, we urget he CDI to amend this proposed regulatory section to permit any proposed name (for purposes of the similarity determination) if that name has already been approved by the Secretary of State or (in the event of a sole proprietorship) any County,” he said. “There are at least three good reasons to do this: First, the Secretary of State has a much larger database of names against which to check for similarity than CDI; consequently, a more thorough evaluation can be done. Second, it maximizes governmental efficiency and permits CDI to focus its efforts on other aspects of the name approval requirements. Third, it avoids circumstances wherein one agency has approved a name but the other has rejected it–applying what is essentially the same exact legal criterion.”
IBA West also urged CDI to reconsider its plan to prohibit the use of any name that is the same as, or similar to, comonly known phrases. And IBA West criticized CDI’s requirement that the word insurance appear in every busines name and be immediately followed by one of a smaller number of approved qualifying words, such as agency, brokerage or services.
Department representatives indicated they would evaluate IBA West’s testimony and comments frm other organizations on the proposals before deciding what to adopt formally.
For a copy of IBA West’s testimony, visit http://www.ibawest.com/pdf/Articles/IBAWestSupport090905.pdf.
Topics California Legislation
Was this article valuable?
Here are more articles you may enjoy.
Progressive Q2 Net Income Skyrockets Over 320% 
Insurers Hike Rates as Extreme Storms Like Beryl Proliferate 
The Battle Over J&J’s Bankruptcy Plan to End Talc Lawsuits 
Project 2025 Plan to End NFIP Welcomed by Some, Rejected by Others in Insurance 
