California Warns Consumers of Brooke Policies

California Insurance Commissioner Steve Poizner encouraged consumers who have purchased insurance policies through Brooke franchises to verify their coverage, in light of recent closures at Brooke. It is unlikely that an insurance policy held by a California resident will be impacted, but consumers should take simple steps to verify their policy status, the California Department of Insurance said.

“The Department of Insurance continues to closely monitor the Brooke situation, and is formally requesting that insurers reach out to policyholders who obtained coverage through Brooke,” Poizner said. “I encourage consumers who purchased policies through Brooke to verify their coverage through their insurance company, or through the Brooke agent that sold the coverage. If anyone has a problem or a question, they should contact the Department of Insurance at 800-927-HELP.”

Brooke Corp., an Overland Park, Kan.-based company, operates an insurance agency franchise business in California, and throughout half of the country. In a typical transaction, a consumer buys insurance from a franchisee and the premium for the coverage is forwarded to Brooke in Kansas, where the coverage is placed with an insurance company.

There are upwards of 200 franchised agencies operating in California. The insurance agent’s offices may advertise as Brooke Insurance and Financial Services, Brooke Auto Insurance, or a variation of Brooke Insurance.

On Sept. 15, 2008, a Kansas federal judge placed control of Brooke’s business operations in the hands of a special master. On Oct. 28, 2008, Brooke filed for Chapter 11 protection with the U.S. Bankruptcy Court in Kansas City, Kan.

While these circumstances are unsettling, they should not affect any current coverage held by a California resident. However, the Insurance Commissioner believes that California insurance consumers should be aware of the situation, and that they should take reasonable steps to verify coverage purchased through a Brooke agent, the DOI said.

The Department of Insurance is advising consumers that paid premium to a Brooke agent for coverage and were given some evidence of coverage with a named insurance company, to either call the insurance company directly or seek assistance from the Brooke agent. If consumers paid a premium to a Brooke agent but have no policy or evidence of coverage; and have no idea of the name of the insurer, the DOI is advising consumers to seek assistance from the Brooke agent.

The Department of Insurance said it is aware that several of the Brooke franchise offices in California have closed. The DOI is in the process of contacting the insurance companies that have done business with Brooke. While the Department will request those insurers to notify California consumers of the status of their coverage, the process may take several weeks, it said.

Source: DOI