The American Agents Alliance is coming out against commission reductions announced by the Calif
ornia FAIR Plan that will lower compensation for independent insurance brokers.
The FAIR Plan is reducing commissions from 10% to 7% on affected new business beginning October
15. Renewal commissions will be reduced from 8% to 3% for certain dwelling fire, commercial, commercial high-value, and businessowners policies.
The alliance argues the result of the change could mean that independent agencies may decide they can no longer afford to accept or service FAIR Plan busin
ess at the same level, and homeowners in high-fire-risk communities may have fewer brokers willing to assist them with difficult placements.
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As a result, consumers may face longer delays, less individualized advice and more out-of-pocket e
xpenses when professional assistance becomes harder to obtain, according to the alliance.
“This is confounding, deeply unfair, and a real middle finger to California homeowners in fir
e-prone communities,” stated Michael D’Arelli, executive director of the alliance. “These families have already watched insurers r
educe capacity, halt new business, increase rates, and decline to renew existing customers. They have been forced into the FAIR Plan because the voluntary market has inc
reasingly rejected them. Now the brokers helping these homeowners navigate the fallout are being jammed with a massive compensation cut.”