FACTS
Effective Jan. 1, California law provides that all insurers, brokers, agents, and others engaged in the transaction of insurance owe a prospective insured who is 65 years of age or older, a duty of honesty, good faith, and fair dealing. This duty is in addition to any other duty, whether express or implied, that may exist.
Now an insurance broker or agent is prohibited from participating in, being associated with, or employing any party that participates in or is associated with, the origination of a reverse mortgage, except as provided for things like title insurance, homeowners insurance, etc. Individuals transacting insurance are also prohibited with exceptions, from receiving compensation, commission, or direct incentive for providing reverse mortgage borrowers with a noncasualty insurance product that is connected to or a result of the reverse mortgage. (Ins. C. §785.1, AB793)
MORAL
Title insurance brokers and agents do not appear to be affected by this bill. But if you are selling life insurance, annuities and similar products, watch out! The insurance commissioner cuts a wide path and while we do defend all licensees in administrative hearings, why do you want to risk going there?
