Slam the Door

It’s back-door time again in Sacramento, and this time the Legislature is holding that door open for insurance agents trying to protect their commissions at the expense of competition. If the agents had to come to the front door and hawk their wares in the open like everyone else, people could see that they have an empty case on this one.

California has so-called anti-rebate laws preventing insurance agents from voluntarily discounting their commissions to try to make a sale at a lower price than competitors. Other sections of insurance law protect consumers against misrepresentation, so this anti-rebate law only shields insurance agents from the competition encouraged in most other fields. Consumers Union has filed suit in San Francisco to set aside these laws. A similar suit was recently successful in Florida.

Against that backdrop, insurance agents went to the Legislature. A Senate committee changed a bill already before it to say that laws against these rebates are in the public interest.

Whose public interest? Only the agents, as far as we can tell, because Consumers Union estimates that California consumers could save as much as $770 million a year if these anti-competitive laws were successfully challenged. The Senate, which may act today, should slam the door on these laws.