The Life Insurance Consumer Advocacy Center (LICAC) has released a survey finding that most consumers misunderstand basic facts about how life insurance agents are compensated and whose interests they legally represent.
More than 65% of respondents incorrectly believed their agent had a legal obligation to act in their best interest, while only 10% understood that an agent primarily represents the insurance company rather than the policyholder. Just 35% understood that agent compensation is commission-based as a percentage of premium, and only 6% knew that first-year commissions can reach 100% or more of the premium paid.
Brian Brosnahan, LICAC's president and executive director, said the findings point to a gap between what consumers assume and what the law actually requires.
"Consumers are making decisions about products that can affect their financial security for decades, yet this survey shows many don't understand something as fundamental as who their agent represents. Too many consumers get victimized buying life insurance because they trust their agent more than they should," Brosnahan said, adding that many agents are honest professionals while others prioritize commissions over client interests.
The survey, conducted by Research America in early 2026, polled just over 200 people who had purchased a life insurance policy within the past 10 years, a sample size worth keeping in mind when weighing how precisely these percentages might generalize to the roughly 10.2 million individual life insurance policies California consumers held as of 2024.
LICAC is proposing that California require agents to disclose, before a sale, that they represent the insurance company rather than the customer, that they have no legal obligation to act in the customer's best interest, and how much they stand to earn in commission if the customer accepts their recommendation.
LICAC's central policy ask is that California "follow New York's lead" and impose a best-interest obligation on life insurance agents. That framing is accurate but requires context: New York's Regulation 187 is unusual in that it extends a best-interest standard to life insurance sales specifically, not just annuities.
Most states, including California, have instead adopted a version of the National Association of Insurance Commissioners' Suitability in Annuity Transactions Model Regulation, which does impose a best-interest standard, but only for annuity sales.
According to the American Council of Life Insurers, 45 states have adopted that annuity-specific standard, with more than 90% of Americans now living in a state with best-interest protections for annuities. Life insurance sales themselves, however, generally remain governed by a lower "suitability" standard in most states outside New York, which is the specific gap LICAC's survey and proposal are targeting.
LICAC is a nonprofit consumer advocacy organization founded by Brosnahan, a former litigator who spent nearly four decades representing both businesses and consumers before founding the organization.
LICAC has actively opposed industry-backed legislation in California before, including urging a veto of a 2024 bill it argued would have weakened consumer protections around life insurance and annuity sales, and has filed a Ninth Circuit amicus brief in litigation against an insurer over policy conversion rights.
This survey and its accompanying policy recommendations fit a consistent, multi-year position the organization has taken, including a prior "Consumers' Bill of Rights" proposal calling for best-interest obligations specifically targeting what LICAC calls "life insurance investment schemes," universal life products marketed with an investment-like pitch that carry high lapse rates among middle- and lower-income buyers.
Industry groups have taken a related but distinct position on best-interest standards generally. The American Council of Life Insurers and the National Association of Insurance and Financial Advisors have both publicly supported a "uniform, harmonized" best-interest standard across state and federal platforms, and were the driving advocates behind the 45-state adoption of the NAIC's annuity-specific model.
At the same time, both organizations, along with several other trade groups, sued the US Department of Labor in 2024 to block a broader federal fiduciary-only rule they argued would restrict consumer access to retirement products and financial advice, illustrating that the industry's position favors negotiated, model-based best-interest standards rather than a broader fiduciary mandate imposed independent of that process.
The survey's release lands during an active race for California's next insurance commissioner, a position that oversees the California Department of Insurance, which licenses more than 390,000 agents and brokers statewide and regulates every line from life insurance to the state's beleaguered homeowners market.
Insurance Business has reported that whoever wins the November election inherits a property market already in acute crisis following the January 2025 Los Angeles wildfires, and LICAC is explicitly positioning this survey to ensure life insurance gets similar attention from candidates and the next commissioner rather than being overshadowed by the property crisis.
Richard Weber, LICAC's treasurer, made that framing explicit.
"We need stronger consumer protections and clearer disclosure requirements. These are issues that deserve the attention of policymakers, the insurance industry and candidates for California Insurance Commissioner," Weber said.
For life insurance agents and brokers, particularly those licensed in California, this survey is a signal that disclosure practices around compensation and representation may face renewed regulatory or legislative scrutiny, regardless of whether a formal best-interest mandate ultimately advances. Agents who proactively and clearly disclose commission structures and their role as a company representative, rather than waiting for a mandate to require it, may be better positioned both to build client trust and to get ahead of whatever the next round of California's regulatory debate produces.
