BILL NUMBER: AB 1072	AMENDED
	BILL TEXT

	AMENDED IN SENATE  JUNE 25, 2015
	AMENDED IN SENATE  JUNE 10, 2015
	AMENDED IN ASSEMBLY  APRIL 28, 2015
	AMENDED IN ASSEMBLY  APRIL 13, 2015

INTRODUCED BY   Assembly Member Daly

                        FEBRUARY 27, 2015

   An act to add and repeal  Section   Sections
 11401.5  of   and 11401.6 of  the
Insurance Code, relating to insurance.



	LEGISLATIVE COUNSEL'S DIGEST


   AB 1072, as amended, Daly. Insurance: firefighters' or police
officers' benefit and relief associations.
   Existing law generally provides for the regulation of insurers by
the Department of Insurance pursuant to laws set forth in the
Insurance Code. Existing law authorizes the Insurance Commissioner to
make certain examinations, investigations, and prosecutions and,
upon making a determination of the existence of certain conduct,
conditions, or grounds, to issue orders reasonably necessary to
correct, eliminate, or remedy the conduct, conditions, or grounds.
   Existing law exempts from the requirements set forth in the
Insurance Code firemen's, policemen's, and peace officers' benefit
and relief associations that comply with specified criteria,
including, among other things, a requirement that the membership
consist solely of peace officers, members of police or fire
departments, and emergency medical personnel employed by fire
departments, as specified. Existing law prohibits an association from
operating or doing business in the state without a certificate of
authority.
   This bill would require every association that holds a certificate
of authority and that issues long-term disability or long-term care
policies or contracts, as specified, to submit to the commissioner
the opinion, as specified, of a qualified actuary as to whether the
reserves and related actuarial items that support the policies or
contracts issued are based on assumptions that satisfy contractual
provisions, are consistent with prior reported amounts, and are based
on specified actuarial standards and procedures. The bill would also
require an association seeking a certificate of authority to file an
opinion that meets specified requirements and that establishes that
it would have adequate resources to provide benefits, as specified,
as required to satisfy its proposed contractual obligations.  The
bill would recognize that information submitted by a company
pursuant to those provisions and in the possession or control of the
department as confidential and privileged, exempt from disclosure
pursuant to the California Public Records Act, and not subject to
subpoena or discovery or admissible in evidence in a private civil
action.  The bill would require the commissioner to notify the
association of the deficiencies in the filing if the association
fails to provide an opinion and supporting memoranda to the
commissioner that meets the requirements of the bill, as specified.
The bill would require an association that  receives that
notice to, commencing 30 days from the notification date, 
 self-funds all or part of the benefits to  include
specified disclosure language in all contracts that are not regulated
by the department and in certificates evidencing coverage under
those contracts. The bill would also require the commissioner, if he
or she determines that the laws governing these associations are
inadequate to protect the interests of the members of the
associations, to develop and deliver recommendations to the Assembly
Committee on Insurance and the Senate Committee on Insurance
regarding changes in the law that would better protect the interests
of members of the associations. The provisions of the bill would
remain in effect only until December 31, 2018, and as of that date
would be repealed. 
   Existing constitutional provisions require that a statute that
limits the right of access to the meetings of public bodies or the
writings of public officials and agencies be adopted with findings
demonstrating the interest protected by the limitation and the need
for protecting that interest.  
   This bill would make legislative findings to that effect. 
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 11401.5 is added to the Insurance Code, to
read:
   11401.5.  (a) (1) Each association that holds a certificate of
authority pursuant to this chapter and that issues long-term
disability or long-term care policies or contracts shall submit to
the commissioner the opinion of a qualified actuary as to whether the
reserves and related actuarial items that support the policies or
contracts issued pursuant to this chapter, including policies and
contracts issued by entities established by these associations that
provide benefits described in this chapter, are based on assumptions
that satisfy contractual provisions, are consistent with prior
reported amounts, and are based on actuarial standards and procedures
established by the American Academy of Actuaries and the Actuarial
Standards Board. An association that holds a certificate of authority
pursuant to this chapter shall file its opinion no later than July
1, 2016. The opinion shall have been completed no earlier than
December 31, 2013.
   (2) An association is considered to have issued a long-term care
or disability policy or contract if it self-funds all or part of the
resulting obligation. An association that markets long-term policies
or contracts issued by an insurer that is admitted by the department
to offer insurance products in the state is exempt from this
reporting requirement.
   (3) An association seeking a certificate of authority pursuant to
this chapter shall file an opinion, to the extent feasible, that
establishes that it would have adequate resources to provide benefits
described in this chapter as required to satisfy its proposed
contractual obligations.
   (b) The opinion required by subdivision (a) shall include an
opinion with supporting memoranda consistent with the same qualified
actuary as to whether the reserves and related actuarial items held
in support of the policies and contracts, when considered in light of
the assets held by the association with respect to the reserves and
related actuarial items, including, but not limited to, the
investment earnings on the assets and the considerations anticipated
to be received and retained under the policies and contracts, and
shall make adequate provision for the association's obligations under
the policies and contracts, including, but not limited to, the
benefits under any expenses associated with the policies and
contracts.
   (c) The opinion required by subdivision (b) shall be governed by
the following provisions:
   (1) It shall include a memorandum, in form and substance
consistent with actuarial standards and procedures acceptable to the
American Academy of Actuaries and the Actuarial Standards Board, in
support of the opinion.
   (2) If the association fails to provide an opinion and supporting
memoranda to the commissioner that meets the requirements of this
section, the commissioner shall notify the association of the
deficiencies in the filing, and shall make a specific request that
identifies the issues that should be addressed in an amended filing.

   (3) (A) An association that receives a notification from the
commissioner pursuant to paragraph (2) shall not indicate in any form
of communication that it is operating under the auspices of, or was
established under, the authority of any provision of this code, the
commissioner, or the department, and shall, commencing 30 days from
the date of the notification from the commissioner, include the
following language in all contracts that are not regulated by the
department, and in certificates evidencing coverage under those
contracts, in capital letters and in a minium of 12-point type:


   "THE BENEFITS PROVIDED BY THIS CONTRACT ARE NOT SUBJECT TO
REGULATION BY THE CALIFORNIA DEPARTMENT OF INSURANCE, AND THE
CONTRACT IS NOT GUARANTEED BY THE CALIFORNIA INSURANCE GUARANTEE
ASSOCIATION." 

   (B) The requirements of this paragraph shall continue until the
association satisfies the requirements of this section. 
   (d) If the commissioner determines, after a review of the filings
from the associations, that the laws governing these associations are
inadequate to protect the interests of the members of the
associations, he or she  shall   shall, on or
before July 1, 2017,  develop and deliver recommendations to the
Assembly Committee on Insurance and the Senate Committee on
Insurance regarding changes in the law that would better protect the
interests of members of the associations. 
   (e) Documents, materials, or other information, including the
opinion with supporting memoranda, submitted pursuant to this section
that are in the possession or control of the Department of Insurance
and that are obtained by, created by, or disclosed to the
commissioner or any other person pursuant to this section, are
recognized by this state as being proprietary and to contain trade
secrets. Those documents, materials, or other information shall be
confidential by law and privileged, shall not be subject to
disclosure pursuant to the California Public Records Act (Chapter 3.5
(commencing with Section 6250) of Division 7 of Title 1 of the
Government Code), and shall not be subject to subpoena or discovery,
or admissible in evidence, in a private civil action. The
commissioner shall not otherwise make those documents, materials, or
other information public without the prior written consent of the
association.  
   (e) 
    (f)  This section shall remain in effect only until
December 31, 2018, and as of that date is repealed, unless a later
enacted statute, that is enacted before December 31, 2018, deletes or
extends that date.
   SEC. 2.    Section 11401.6 is added to the  
Insurance Code  , to read:  
   11401.6.  (a) An association that self-funds all or part of the
benefits provided under this chapter shall include the following
language, or other language approved by the commissioner, in all
contracts that are not regulated by the department, and in
certificates evidencing coverage under those contracts, in capital
letters and in a minium of 12-point type:

   "ALL OR A PORTION OF THE BENEFITS PROVIDED BY THIS CONTRACT ARE
NOT SUBJECT TO REGULATION BY THE CALIFORNIA DEPARTMENT OF INSURANCE,
AND THE CONTRACT IS NOT GUARANTEED BY THE CALIFORNIA LIFE AND HEALTH
INSURANCE GUARANTEE ASSOCIATION."

   (b) This section shall remain in effect only until December 31,
2018, and as of that date is repealed, unless a later enacted
statute, that is enacted before December 31, 2018, deletes or extends
that date. 
   SEC. 3.    The Legislature finds and declares that
Section 1 of this act, which adds Section 11401.5 of the Insurance
Code, imposes a limitation on the public's right of access to the
meetings of public bodies or the writings of public officials and
agencies within the meaning of Section 3 of Article I of the
California Constitution. Pursuant to that constitutional provision,
the Legislature makes the following findings to demonstrate the
interest protected by this limitation and the need for protecting
that interest:  
   In order to protect proprietary information, it is necessary to
enact legislation that limits the public's right of access to
insurance holding company information that is provided pursuant to
Section 11401.5 of the Insurance Code.