NIPPER v. CALIFORNIA AUTOMOBILE ASSIGNED RISK PLAN (1976)

OPINION

This appeal presents two questions of first impression: Does the California Automobile Assigned Risk Plan, an unincorporated association organized pursuant to Insurance Doe section 11620 et seq. for the purpose of insuring applicants for automobile liability insurance who are unable to procure such insurance through ordinary methods, owe a duty to the motoring public to make inquiry concerning the applicants' mental and physical characteristics which pertain to their ability to safely and lawfully operate an automobile? We hold that it does.

Second, does a licensed insurance broker who is the ‘producer of record’ owe a duty to the motoring public to disclose to the Assigned Risk Plan any information of which he has actual knowledge concerning the applicants's mental and physical characteristics which pertain to their ability to safely and lawfully operate an automobile? We hold that he does.

STATEMENT OF THE CASE

This action was filed by appellant to recover for personal injuries sustained in a collision between the pickup truck he was driving and the automobile being driven by defendant H. K. Warkentin. In addition to Warkentin, appellant sought recovery against respondents H. B. Klassen and Klassen & Ratzlaff, a licensed insurance broker and agency (Klassen), and against respondent California Automobile Assigned Risk Plan (CAARP). After respondents' general demurrers were sustained without leave to amend, appellant proceeded to trial and obtained a judgment against Warkentin in the amount of $200,000, of which $180,000 remains unsatisfied.

As to respondent CAARP, this appeal is concerned with the validity of the third, fourth and fifth causes of action in the first amended complaint. The third cause of action alleges:

(1) that H. B. Klassen is a licensed insurance broker in the insurance agency of Klassen & Ratzlaff; that said agency is in the business of writing automobile casualty insurance;

(2) that CAARP is an unincorporated association of insurance companies organized pursuant to statute and operating according to rules and regulations in the California Administrative Code; that Does 10–200 are insurance companies jointly administering CAARP; that CAARP is their agent and employee, and that all the things complained of were done in the scope of that employment;

(3) that in November 1971, Warkentin was 79 years of age and not possessed of sufficient alertness and mental capacity to safely operate an automobile; that he had been insured by Travelers Indemnity Company for the operation of an automobile; that in 1971 Travelers refused to further insure Warkentin because of information received from Klassen;

(4) that on October 5, 1971, Klassen submitted an application to CAARP,¹ signed by Warkentin, to insure Warkentin for $15,000; that Klassen did not submit with the application any information regarding Warkentin's inability to safely operate an automobile even though he had personal knowledge of these facts from Warkentin's physician and his observations of Warkentin;

(5) that Warkentin was issued a policy pursuant to CAARP with United Services Automobile Association (United) for $15,000 in violation of the Insurance Code and the Administrative Code because of Warkentin's inability to safely drive an automobile; that the issuance of the policy by CAARP and United induced Warkentin to believe he could safely operate an automobile, thereby proximately causing the accident;

(6) that CAARP's application form failed to require applicants to submit information concerning their mental or physical capability to drive an automobile, and that, had such information been sought as required by law, neither CAARP nor United would have issued the policy;

(7) that CAARP would have informed the Department of Motor Vehicles (DMV) as required by law of such rejection, and that the DMV would have revoked Warkentin's license;

(8) that Warkentin, if uninsured and unlicensed, would not have been driving his automobile on the date of the accident;

(9) that it was foreseeable that the negligence and violations of law alleged would result in the operation of an automobile by unqualified persons and would result in physical injury to the motoring public; and it was foreseeable that issuance of a policy would induce Warkentin to believe he was capable of driving an automobile.

The fifth cause of action alleges that CAARP and Does 21–200 wilfully and with reckless disregard for the possible injury to the motoring public, wrongfully failed to abide by the statutes, rules and regulations controlling CAARP and to abide by their duties to the motoring public; that CAARP and Does 21–200 did so in order to induce persons unqualified to operate automobiles to do so for the purpose of profiteering, and that Does 21–200 authorized and/or ratified CAARP's alleged conduct.

The first amended complaint prays against all defendants for general damages, medical and other expenses, losses incurred by reason of plaintiff's inability to pursue his usual activities, and damages to plaintiff's automobile according to proof, and for punitive damages.

CAARP and Klassen demurred to the first amended complaint on several grounds including that facts alleged were insufficient to state a cause of action. The trial court sustained CAARP's demurrer without leave to amend, and sustained Klassen's demurrer with leave to amend.

SECOND AMENDED COMPLAINT

Appellant filed a second amended complaint, and the third cause of action against Klassen was amended as follows:

(1) that in 1971 Travelers Indemnity Company had refused to further insure Warkentin because Klassen had supplied them with a letter from Warkentin's physician stating that he was not able to safely operate an automobile because of senility;

(2) that on October 5, 1971, Klassen had Warkentin's physician's opinion; that Klassen filled out the application and certified that he had read the California Automobile Assigned Risk Plan and had included all required information given to him by Warkentin;

(3) that Klassen wilfully omitted the physician's opinion from the application, thereby making the application incorrect and misleading;

(4) that Klassen owed a duty to the motoring public to submit the physician's opinion because it was required by California Administrative Code, title 10, section 2430, and as a licensed insurance broker, and it was foreseeable that such omission would lead to the insuring of Warkentin and his driving on public streets;

(5) that Klassen knew that if Warkentin was uninsured he would not drive, and Warkentin, in fact, would not have driven without insurance.

The balance of the third cause of action remained as it had read in the first amended complaint. The prayer was the same except for the deletion of the claim for punitive damages.

Klassen again demurred to the second amended complaint on the ground that the alleged facts did not state a cause of action. The demurrer was sustained without leave to amend.

Judgments of dismissal were entered in favor of CAARP and Klassen. Appellant filed a timely appeal.

CAARP OWED A DUTY TO MAKE REASONABLE INQUIRY

The essence of appellant's complaint against CAARP is that it breached a duty of ordinary care to the motoring public by failing to make inquiry in its application form as to facts relevant to Warkentin's physical and mental capacity to safely operate a motor vehicle; that the breach resulted in the issuance of an automobile liability policy to Warkentin which induced him to believe he was qualified and competent to drive and that he did drive, causing injury to appellant.

The existence of a legal duty of care owing by a defendant to the class of persons of which the plaintiff is a member is primarily a question of law. (Weirum v. RKO General, Inc. (1975) 15 Cal.3d 40, 46, 123 Cal.Rptr.468, 539 P.2d 36.) Such a duty is the court's “expression of the sum total of those considerations of policy which lead the law to say that the particular plaintiff is entitled to protection.” (Prosser, Law of Torts (4th ed. 1971) pp. 325-326.) While the question of whether one owes a duty to another must be decided on the particular facts of each case, every case is governed by the general rule that all persons are required to use ordinary care to prevent others from being injured by the conduct. (Civ.Code, § 1714; Weirum v. RKO General, Inc., supra 15 Cal.3d at p. 46, 123 Cal.Rptr. 468, 539 P.2d 36.) Rowland v. Christian (1968) 69 Cal.2d 108, 112, 70 Cal.Rptr. 97, 443 P.2d 561; Hilyar v. Union Ice Co. (1955) 45 Cal.2d 30, 36, 286 P.2d 21.)

In the absence of overriding policy considerations foreseeability of the risk created by the defendant's conduct is the primary consideration in establishing a duty of care. (Weirum v. RKO General, inc., supra, 15 Cal.3d at p. 46, 123 Cal.Rptr. 468, 539 P.2d 36; Dillon v. Legg (1968) 68 Cal.2d 728, 739, 69 Cal.Rptr. 72, 441 P.2d 912.) As foreseeability is a question of fact (Weirum v. RKO General, Inc., supra, 15 Cal.3d at p. 46, 123 Cal.Rptr. 468, 539 P.2d 36), and as appellant has alleged that it was foreseeable that he insuring of Warkentin would cause him to drive thereby creating a hazard to others on the highway, appellant has pleaded facts from which a duty arises unless there are overriding policy considerations which foreclose the imposition of such a duty. Respondents argue that the Assigned Risk Law itself reflects a countervailing policy; therefore, we must examine that law.

The Assigned Risk Law was enacted in 1947 to administer a plan for the equitable apportionment among insurers of applicants for automobile liability insurance who are ‘. . . in good faith entitled to but are unable to procure such insurance through ordinary methods.’ (Ins.Code, § 11620.) All insurers who have been admitted to transact liability insurance business in California are required to subscribe to the plan and participate therein. (Ins.Code, § 11620; Cal.Admin.Code, tit. 10, § 2405.) If accepted, the applicant is assigned to an insurer, who issues the minimum coverage required by law. (Ins.Code, § 11622.) In consideration of assuming the assigned risk, the insurer is entitled to charge an extra premium fixed by administrative regulation. (Cal.Admin.Code, tit. 10, § 2460 et seq.)

The plan resulted from legislative concern over ‘[t]he tremendous increase in the number of motor vehicles . . ., the great number of automobile accidents, the enormous loss to the persons injured where the person at fault is uninsured and unable to respond in damages, and the natural desire of the automobile insurance companies to keep their losses down by limiting their policies to selected risks, . . .’ (Cal.State Auto., etc., Bureau v. Downey (1950) 96 Cal.App.2d 876, 880, 216 P.2d 882, 885.) The Legislature believed that many otherwise competent drivers who depended for a living upon driving a motor vehicle were prevented from operating motor vehicles because of their inability to obtain insurance or to give other proof of their financial responsibility. Other large groups of drivers who had difficulty in securing insurance were traffic law violators, members of minority groups, persons with minor physical disabilities,² the young and old driver, and those who had bad driving records. (Cal. State Auto., etc., Bureau v. Downey, supra, 96 Cal.App.2d at pp. 881–882, 216 P.2d 882.)

As a prerequisite to consideration for assignment under the plan, section 2430 of title 10 of the Administrative Code requires that the applicant certify in the application form that he has attempted within 60 days prior to the date of the application to obtain automobile liability insurance in the state and that he has been unable to obtain such insurance through ordinary methods. An applicant so certifying shall be considered for assignment upon making application ‘in good faith’ to the plan; the applicant is deemed to be in good faith if he reports all information of a material nature and does not willfully make incorrect or misleading statements in the application form or does not otherwise come within any of the prohibitions or exclusions therein. One of the prohibitions is that the applicant who does not have a driver's license shall not be entitled to insurance except that he is entitled to consideration if his driving privileges have been suspended or revoked and can be restored upon proof of ability to respond to damages as provided by the Vehicle Code. (Admin.Code, tit. 10, § 2430, subd. (a).)

Insurance Code section 11624 requires the plan to contain standards for determining the eligibility of applicants and sets forth certain criteria which ‘may’ be utilized by CAARP in deciding whether the applicant or any other person who is reasonably expected to drive the applicant's automobile with his permission shall be issued a policy.³ The criteria include the applicant's criminal record, his record of suspension or revocation of operator's license, his automobile accident records, his age and mental, physical and moral characteristics which pertain to his ability to safely and lawfully operate an automobile, and the condition or use of the automobile. (Ins.Code, § 11624, subd. (a).) Subdivision (c) of section 11624 provides that the plan shall contain a provision that CAARP shall notify the DMV of the name of each applicant for insurance who is rejected by the plan and the statutory grounds for such rejection.⁴

Thus, the basic purpose of the Assigned Risk Law is to provide a means whereby liability insurance can be issued to licensed drivers or those who are entitled to be licensed and who otherwise are unable to get such insurance because of their lack of financial responsibility or because they are considered high risk drivers due to bad driving records or minor physical or mental defects. We particularly note that the Legislature did not require than all licensed applicants be insured under the plan; it left the final decision to CAARP, presumably under the belief that CAARP's self-interest in avoiding undue exposure from insuring an ultrahazardous or totally incompetent driver would dictate a rejection of such a driver's application.

The critical issue to be decided is whether the standards enumerated in section 11624 are mandatory in the sense that they must be considered by CAARP in deciding whether to accept or reject an application for insurance. CAARP argues that the standards were intended to be discretionary, citing dictum in Vice v. Automobile Club of So. Cal. (1966) 241 Cal.App.2d 759, 765, 50 Cal.Rptr. 837, 840, that ‘[i]t is likely that the [standards] . . . are not compulsive but were intended to furnish criteria under which an insurer would be permitted to reject an application . . .’

While ordinarily the word ‘may’ in a statute is deemed to be permissive in nature, it will be construed to be mandatory when the object to be obtained compels such a construction, or when the construction is necessary to give effect to the legislative intent or policy. (Estate of Ballentine (1873) 45 Cal. 696, 699.) Moreover, statutes are to be given a common sense construction—one that is practical rather than technical and that will lead to a wise rather than an absurd result. (45 Cal.Jur.2d, Statutes, § 116, p. 625.)

Contrary to the suggestion in Vice, supra, we believe that when the Legislature imposed the requirement in section 11624 that the plan contain standards for determining the eligibility of applicants, it intended that the specified criteria would be considered by CAARP in deciding whether to issue a policy. To hold otherwise would render the statute meaningless. For example, if the standards are not to be considered by CAARP, then, as a practical matter, the requirement that CAARP shall notify the DMV of any rejection and the statutory grounds for the rejection is nullified. Without considering the criteria CAARP cannot reach an informed judgment whether to reject an application.

We also infer from the statute a legislative intent that CAARP is to reject the applications of totally incompetent drivers such as those suffering from serious mental or physical defects rendering them incapable of safely operating an automobile.⁵ Such an inference accords with the strong public policy of reducing so far as possible the number of accidents on our highways. As stated by the Senate committee which studied the matter, there are two aspects in solving the social problems created by the increasing injuries to victims of uninsured drivers: (1) that of reducing so far as practical the frequency and severity of accidents, and (2) securing to the innocent victims some measure of compensation for their injuries. (See Sen. Interim Com. Rep. on Vehicles and Aircraft, The Financially Irresponsible Motorist, supra, p. 8; see also Interinsurance Exchange v. Ohio Cas. Ins. Co. (1962) 58 Cal.2d 142, 154, 23 Cal.Rptr. 592, 373 P.2d 640.) In our view, both aspects of the problem must be considered in interpreting the Assigned Risk Law.

The administrative history of the Assigned Risk Law also supports a mandatory interpretation of section 11624 insofar as requiring CAARP to obtain information concerning the applicant's mental and physical characteristics to safely drive. From 1957 until 1971, section 2430 of title 10 of the Administrative Code provided that all applicants were eligible for insurance except as provided in section 2431–2437. Section 2431.5a covered persons with major mental or physical disabilities; hence, for some 17 years, the insurance commissioner interpreted section 11624 as mandating a rejection of any applicant unable to safely operate an automobile because of severe mental or physical problems. It is well-settled that an administrative interpretation of a statute is a significant factor to be considered in ascertaining the meaning of the statute. (See Mudd v. McColgan (1947) 30 Cal.2d 463, 470, 183 P.2d 10.)⁶

Furthermore, the existence of a duty of inquiry on CAARP Can be inferred from the provision in section 2430 that only ‘good faith’ applicants are entitled to consideration for insurance, and to be in good faith an applicant must report in the application form all information obviously includes facts pertaining to the applicant's mental or physical ability to drive safely. A duty of disclosure to CAARP logically implies an attendant duty of inquiry by CAARP. As the present case aptly demonstrates, a failure to make inquiry as to pertinent facts can only engender a failure to disclose those facts; again, such a result cannot have intended by the Legislature.

CAARP argues against the imposition of a duty of inquiry by citing the general principle of negligence law set forth in Restatement of Torts, Second, section 315, that absent some ‘special relationship’ a person has no duty to take affirmative steps to protect another from harm arising out of the unlawful conduct of a third person. (California Body & Trailer Mfrs. v. Albrecht (1971) 16 Cal.App.3d Supp. 1, 4, 94 Cal.Rptr. 238; Schauf v. Southern Cal. Edison Co. (1966) 243 Cal.App.2d 450, 461, 52 Cal.Rptr. 518; Wright v. Arcade School Dist. (1964) 230 Cal.App.2d 272, 277, 40 Cal.Rptr. 812.) This principle, however, is inapplicable to the instant case for two reasons: first, section 315 deals with ‘nonfeasance’ situations where the defendant has failed to act when he is not obligated to do so by some special relationship. (See Schauf v. Southern Cal. Edison Co., supra, 243 Cal.App.2d 450, 461, 52 Cal.Rptr. 518.) The principle is inapplicable to ‘misfeasance’ situations in which the defendant has taken upon himself the duty of acting but fails to act in accord with reasonable standards which result in injury to the plaintiff. (Weirum v. RKO General, Inc., supra, 15 Cal.3d 40 at pp. 48–49, 123 Cal.Rptr. 468, 539 P.2d 36; Wright v. Arcade School Dist., supra, 230 Cal.App.2d at p. 277, 40 Cal.Rptr. 812.) In the present case, CAARP acted by preparing an application form wherein it elected to make inquiry concerning all criteria specified in section 11624 other than the mental or physical characteristics which pertain to the applicant's ability to safely drive an automobile. Therefore, we review an act of misfeasance, and the absence of any special relationship between CAARP and appellant is immaterial.

Second, even if CAARP's conduct is viewed as an act of nonfeasance, we are persuaded that under the Assigned Risk Law, CAARP has a special relationship with appellant as a member of the motoring public. This relationship arises out of the quasi-public nature of the insurance industry (see Berrera v. State Farm Mut. Automobile Ins. Co. (1969) 71 Cal.2d 659, 663, 668, fn. 5, 79 Cal.Rptr. 106, 456 P.2d 674) and the fact that the law contemplates that CAARP will reject any applicant deemed by it to be a totally incompetent or ultrahazardous driver. This duty inures not only to the benefit of CAARP and the applicant, but to the motoring public as well. (Cf. Matthias v. United Pacific Ins. Co. (1968) 260 Cal.App.2d 752, 755, 67 Cal.Rptr. 511.)

Having established that CAARP owes a duty of care to the motoring public, we must define precisely the scope of that duty as it relates to the instant case. As we see it, the duty is twofold: first, to make inquiry on its application form about the applicant's mental, physical and moral characteristics which pertain to his ability to safely drive an automobile; and second, to make a reasonable evaluation of the information obtained in accordance with the established underwriting standards of the assigned risk industry. Whether the duty of care has been satisfied in a particular case is, of course, a question of fact.

In summary, by failing to make the required inquiry, CAARP breached the duty of care and placed itself in a position where it was unable to reach an informed and reasonable judgment whether to reject Warkentin's application. Since appellant has alleged that if inquiry had been made, United would not have issued the policy; that CAARP would have notified the DMV of its rejection; that Warkentin's license would have been revoked; and that as an unlicensed and uninsured motorist he would not have been driving his automobile on the date of the accident, he has stated a cause of action for negligence, good against the general demurrer.

KLASSEN OWED A DUTY OF DISCLOSURE

Appellant alleges that Klassen, a licensed insurance broker and ‘producer of record,’ had actual knowledge that Warkentin was senile and not fit to safely operate an automobile; that he nonetheless submitted an application signed by Warkentin to CAARP without indicating the state of Warkentin's mental and physical incapacity; that this omission resulted in insurance coverage which would not otherwise have occurred and caused Warkentin to drive when he otherwise would not have done so.

As with the cause of action against CAARP, we must assume for the purpose of the demurrer that the allegations concerning foreseeability and causation are true. The only question is whether Klassen owed a duty to the motoring public to disclose to CAARP the contents of the doctor's letter concerning Warkentin.

Apart from the question of foreseeability of harm to the plaintiff, the existence of a common law duty of care depends upon the balancing of several factors including ‘. . ., the degree of certainty that the plaintiff suffered injury, the closeness of the connection between the defendant's conduct and the injury suffered, the moral blame attached to the defendant's conduct, the policy of preventing future harm, the extent of the burden to the defendant and consequences to the community of imposing a duty to exercise care with resulting liability for breach, and the availability, cost, and prevalence of insurance for the risk involved.’ (Rowland v. Christian, supra, 69 Cal.2d 108, 112–113, 70 Cal.Rptr. 97, 100, 443 P.2d 561, 564; see also Amaya v. Home Ice, Fuel & Supply Co. (1963) 59 Cal.2d 295, 309–310, 29 Cal.Rptr. 33, 379 P.2d 513; Weirum v. RKO General, Inc., supra, 15 Cal.3d 40, 46, 123 Cal.Rptr. 468, 539 P.2d 36.) Other considerations include the social utility of the activity causing the injury compared with the risk involved in its conduct, the kind of a person with whom the actor is dealing, the workability of a rule of care, especially in terms of the parties' relative ability to adopt practical means of preventing injury, and the prophylactic effect of a rule of liability. (Rainer v. Grossman (1973) 31 Cal.App.3d 539, 543–544, 107 Cal.Rptr. 469; Raymond v. Paradise Unified School Dist. (1963) 218 Cal.App.2d 1, 8–9, 31 Cal.Rptr. 847.)

Klassen's conduct meets these criteria. That appellant was injured is undisputed, and the closeness of the connection between Klassen's conduct and the injury is inferable from the allegations. There is considerable moral blame in withholding credible information concerning Warkentin's incapacity to drive; this is particularly so where Klassen had submitted the same information to Travelers Insurance Company, causing them to refuse to insure Warkentin. Klassen is a licensed insurance broker and the ‘producer of record.’ Thus, he was aware of the provisions in section 2430 of the Administrative Code to the effect that the applicant must good faith report all information of a material nature to CAARP. He signed a statement in the application form to the effect that he had read the Assigned Risk Plan and had included in the application all ‘required information’ given to him by Warkentin.

Klassen cannot shield himself from blame by asserting that he was not the applicant or that the application form did not specifically ask for the information. As a licensed broker and agent, Klassen had a responsibility to the public as well as to his insured. (See Ins.Code, § 1668, subds. (b), (j) and (l).)

The policy of preventing future harm is furthered by the imposition of a duty to disclose to CAARP all pertinent facts. BY this information CAARP would have been able to evaluate Warkentin's mental and physical condition and undoubtedly would have rejected his application with the result that Warkentin would not have driven his automobile. Moreover, the imposition of a duty of disclosure would place no intolerable burden on the broker; the loss of a commission cannot justify putting an incompetent driver on the road.

As to the availability, cost and prevalence of insurance for the risk involved, an insurance broker, like other professionals, has a means of protecting himself by way of ‘errors and omissions' insurance.

Finally, the social utility of the activity causing the injury—knowingly obtaining an insurance policy for an incompetent driver—cannot be said to outweigh the risk involved in inducing such a person to drive on the public highways.⁷

We emphasize that the duty of care which we impose on Klassen is one only of disclosure of facts of which Klassen had actual knowledge pertaining to the inability of his insured to safely operate an automobile. We do not reach the question whether, and under what circumstances, an insurance broker could be held liable for failure to disclose information of which he only has constructive knowledge based on a failure to investigate the physical or mental condition of his insured. Such a case is not before us.⁸

The judgment of dismissal of the first amended complaint against CAARP and Does 1–200 is reversed. The judgment of dismissal of the second amended complaint against CAARP and Klassen & Ratzlaff is reversed.

FOOTNOTES

1.  A copy of the application is attached to the complaint. It is a form prepared by CAARP and requests information about the applicant's age, occupation, description and use of vehicles, the operators of the vehicles, prior accidents, convictions, financial responsibility, prior auto liability insurance and the names of companies providing insurance with in the past three years. The introductory paragraph of the application is entitled ‘Statement of the Producer of Record’ and consists of a certification by Klassen that he is licensed California insurance agent-broker, his license number, and a statement that he has read the Assigned Risk Plan, has explained its provisions to the Assigned Risk Plan, has explained its provisions to the applicant, and has included in the application all required information given to him by the applicant.

2.  That a physical or mental defect does not per se disqualify a person from driving an automobile is evidenced by Vehicle Code section 12806, subdivision (a), which provides that ‘any physical or mental defect of the applicant which in the opinion of the department does not affect [his] ability to exercise reasonable and ordinary control in operating a motor vehicle . . . shall not prevent the issuance of a license . . .’

3.  Section 11624 provides in pertinent part:‘Such plan shall contain:‘(a) Standards for determining eligibility of applicants for insurance, and in establishing such standards the following may by taken into consideration in respect to the applicant or any other person who may reasonably be expected to operate the applicant's automobile with his permission:‘(1) His criminal conviction record;‘(2) His record of suspension or revocation of a license to operate an automobile;‘(3) His automobile accident records;‘(4) His age and mental, physical and moral characteristics which pertain to his ability to safely and lawfully operate an automobile;‘(5) The condition or use of the automobile.’ (Emphasis added.)

4.  Presumably, this is to enable the DMV to investigate the applicant's qualification to hold a license, and if he is found unqualified. to revoke or suspend the license. Under Vehicle Code section 13359, the DMV may revoke a license upon any ground which allows it to issue a license. Under section 12805, subdivision (f), the DMV shall not issue or renew a license ‘[w]hen it appears by examination or other evidence that such person is unable to operate a motor vehicle upon a highway safely because of physical or mental defect or lack of skill.’

5.  If the Legislature had intended that CAARP insure every licensed applicant regardless of the extent of his mental or physical disabilities on the theory that such a person might continue to drive his automobile in spite of his disabilities, it could have so declared, but this would have established a compulsory assigned risk insurance program which neither the insurance industry nor the Legislature desired. (See Cal. State Auto., etc., Bureau v. Downey, supra, 96 Cal.App.2d 876, 880–883, 216 P.2d 882; see also Sen. Interim Com. Rep. on Vehicles and Aircraft, The Financially Irresponsible Motorist (1955) p. 7.)

6.  In 1971, Administrative Code sections 2431–2437 were repealed and section 2430 was amended to require that all information of a ‘material’ nature be furnished by the applicant to CAARP with no willful inaccuracies. We have been cited to no explanation or authority for the 1971 repeal or section 2431.5a, and we are unable to infer any administrative intent to abrogate a duty on the part of CAARP to reject any applicant who is unable to safely drive his automobile because of a mental or physical disability.

7.  It can also be argued that a statutory duty of care is owing from Klassen to appellant. Insurance Code section 1668 and 1738, and Administrative Code, title 10, section 2430, seem to impose a public responsibility on insurance agents. Section 1668 allows the insurance commissioner to deny an application for license on several grounds including ‘(j) [t]he applicant has shown incompetency or untrustworthiness in the conduct of any business, or has by commission of a wrongful act or practice in the course of any business exposed the public or those dealing with him to the danger of loss; . . .’ Section 1668 allows a denial of a license if ‘[t]he applicant has failed to perform a duty expressly enjoined upon him by a provision of this code . . .;’ Section 1738 empowers the insurance commissioner to suspend or revoke an agent's license on any of the grounds stated in section 1668. Thus, the Insurance Code sections establish a duty on the part of an insurance agent to act for the public welfare as well as for his insured. (See also Barrera v. State Farm Mut. Automobile Ins. Co., supra, 71 Cal.2d 659, 669–670, 70 Cal.Rptr. 106, 456 P.2d 659, 669–670, 70 Cal.Rptr. 106, 456 P.2d 674; Fletcher v. Western National Life Ins. Co., (1970) 10 Cal.App.3d 376, 403, 89 Cal.Rptr. 78.)

8.  Klassen contends that the imposition of even a limited duty as we have defined it will open a floodgate of litigation against insurance brokers in every instance in which an assigned risk motorist injures someone on the highways. He argues that such a result would be contrary to the policy of the state which is to encourage the issuance of liability insurance to as many licensed drivers as possible, citing Wildman v. Government Employees' Ins. Co. (1957) 48 Cal.2d 31, 35, 307 P.2d 359. However, as explained in our discussion of CAARP's duty to the motoring public, the policy of this state is twofold: to insure as many drivers as possible, but at the same time to reduce the number of accidents on our highways. By requiring insurance brokers to exercise a limited degree of the applications for assigned risk insurance as we have defined it, both policies are accommodated. Whether this will result in a flood of litigation is conjectural. If so, the remedy lies with the Legislature.

FRANSON, Associate Justice.

GARGANO, Acting P. J., and CARKEET,* J., concur.