Bill Text: CA AB1391 | 2013-2014 | Regular Session | Amended
NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: Insurance: omnibus.
Spectrum: Unknown
Status: (Passed) 2013-09-20 - Chaptered by Secretary of State - Chapter 321, Statutes of 2013. [AB1391 Detail]
Download: California-2013-AB1391-Amended.html
Bill Title: Insurance: omnibus.
Spectrum: Unknown
Status: (Passed) 2013-09-20 - Chaptered by Secretary of State - Chapter 321, Statutes of 2013. [AB1391 Detail]
Download: California-2013-AB1391-Amended.html
BILL NUMBER: AB 1391 AMENDED
BILL TEXT
AMENDED IN SENATE JUNE 27, 2013
AMENDED IN SENATE JUNE 17, 2013
AMENDED IN ASSEMBLY APRIL 11, 2013
AMENDED IN ASSEMBLY APRIL 3, 2013
INTRODUCED BY Committee on Insurance
MARCH 4, 2013
An act to amend Sections 131, 662, 739, 739.3, 985, 1011, 1011.1,
1012, 1016, 1070.6, 1216.1, 1624, 1675, 1749.3, 1749.31, 1749.32,
1749.33, 1749.8, 1758.3, 1872.87, 10234.93, 10785, 11620,
12414.25, and 14090.1 of, to add Sections 1758.681 and 12389.7 to,
and to repeal Section 668.5 of, the Insurance Code, relating to
insurance.
LEGISLATIVE COUNSEL'S DIGEST
AB 1391, as amended, Committee on Insurance. Insurance: omnibus.
(1) Existing law requires an entity seeking to be licensed as a
risk retention group to be organized under California law and
licensed as a liability insurance company. A risk retention group is
a corporation, public entity, or other limited liability association
that meets certain criteria, including that its primary activity
consists of assuming and spreading all, or any portion, of the
liability exposure of its group members. Existing law also exempts
risk retention groups from the Business Transacted with Producer
Controlled Insurer Act, which regulates controlled insurers, as
prescribed.
This bill would require, on and after January 1, 2015, a risk
retention group to comply with specified corporate governance
requirements at the time of licensure, including that the board of
directors have a majority of independent directors, as defined, that
the term of any material service provider contract with a risk
retention group not exceed 5 years, and that the risk retention group
have an audit committee composed of at least 3 independent board
members. The bill would also delete the risk retention group
exemption from the Business Transacted with Producer Controlled
Insurer Act.
(2) Existing law provides that no cancellation of a motor vehicle
insurance policy, not subject to certain cancellation protections
because it has been in effect less than 60 days, is effective unless
a notice of cancellation, subject to certain notice provisions, is
mailed or delivered by the insurer to the named insured not later
than the 59th day following the effective date and at least 10 days
prior to the effective date of cancellation. Existing law also
provides no notice of cancellation of a motor vehicle insurance
policy, where the cancellation is based on, among other things,
nonpayment of premium, is effective unless mailed or delivered by the
insurer to the named insured, lienholder, or additional interest at
least 20 days prior to the effective date of cancellation, except as
specified.
This bill would delete the requirements for cancellation of a
motor vehicle insurance policy less than 60 days old, and would apply
the requirements regarding notice of cancellation for nonpayment of
premiums, and other specified reasons, to all cancellation
circumstances.
(3) Existing law defines the term "Adjusted RBC Report" as a
Risk-Based Capital (RBC) report that has been adjusted by the
Insurance Commissioner in accordance with specified provisions
governing the determination of a property and casualty insurer's RBC.
This bill would revise that definition to also include an RBC
report that has been adjusted by the commissioner in accordance with
specified provisions governing the determination of a life or health
insurer's RBC.
(4) Existing law provides for continuing education requirements,
prior to license renewals, for specified insurance agents and
broker-agents, including personal lines broker-agents and limited
lines automobile insurance agents.
This bill would require that those continuing education
requirements include 3 hours of ethics.
(5) Existing law requires every life agent who sells annuities to
satisfactorily complete 8 hours of training prior to soliciting
individual consumers, and requires every life agent who sells
annuities to satisfactorily complete 4 hours of training prior to
each license renewal.
This bill would clarify the completion of an 8-hour training
requirement to initially procure a license to sell annuities does not
satisfy the requirement to complete a 4-hour training course in
order to renew the annuity license.
(6) Existing law prohibits the Insurance Commissioner from
granting authority to transact variable contracts unless the life
agent or applicant furnishes proof that he or she is registered to
sell securities in accordance with the rules of the United States
Securities and Exchange Commission or the Financial Industry
Regulatory Authority.
This bill would make clear that the life agent or applicant is
required to furnish proof that he or she is registered to sell
securities in California in accordance with the rules of the United
States Securities and Exchange Commission or the Financial Industry
Regulatory Authority.
(7) Existing law requires an individual holding an insurance
adjuster license, not otherwise exempt, to complete a minimum of 24
hours of continuing education courses, as specified.
This bill would authorize an exemption from the continuing
education requirements for an individual licensed as an insurance
adjuster and as a property or casualty broker-agent who has met other
specified continuing education requirements.
(8) Existing law defines an insurance solicitor as a natural
person employed to aid an insurance agent or insurance broker in
transacting insurance other than life.
This bill would redefine an insurance solicitor to mean a natural
person employed to aid a property and casualty broker-agent acting as
an insurance agent or insurance broker in transacting insurance
other than life, disability, or health.
(9) Existing law provides that a nonresident licensee who applies
for a property broker-agent, casualty broker-agent, personal lines
broker-agent, or life agent resident license in this state, and who
is currently licensed for the same lines of authority in the state of
his or her current resident license, is not required to complete an
examination. The application for examination is required to be
received within 90 days of the cancellation of the applicant's
resident license and the producer database records, maintained by the
National Association of Insurance Commissioners, are required to
indicate that the producer is licensed in good standing for the line
of authority requested.
This bill would provide that upon issuance of the California
resident license, the examination waiver also applies to adding
additional lines of authority to the California resident license
provided that the individual was previously licensed in good standing
for the requested additional lines of authority, and the application
is received within 12 months of the cancellation of the applicant's
previous resident license in another state.
(10) Existing law regulates the sale of portable electronics
insurance policies and requires all portable electronics vendors
offering that insurance to be licensed, as specified.
This bill would authorize an insurer to terminate or otherwise
change the terms and conditions of a policy of portable electronics
insurance, as provided.
(11) Existing law requires the commissioner, after a public
hearing held in accordance with the rulemaking provisions of the
Administrative Procedure Act, to approve or issue a reasonable plan,
or reasonable amendments to the plan, for the equitable
apportionment, among insurers admitted to transact liability
insurance, of those applicants for automobile bodily injury and
property damage liability insurance who are in good faith entitled
to, but are unable to procure, that insurance through ordinary
methods. Existing law provides for judicial review of the proceedings
held to revise automobile insurance rates.
This bill would additionally require that the reasonable
amendments to the plan be approved by the plan's advisory committee.
The bill would delete the requirement that the public hearings be
held in accordance with the rulemaking provisions of the
Administrative Procedure Act, and provide, with exceptions, that the
plan and any amendments not be subject to those provisions. The bill
would instead require the commissioner to provide 45 days' notice of
a public hearing by publishing the notice in the California
Regulatory Notice Register, mailing the notice to the parties on the
Department of Insurance's regulations mailing list, and posting the
notice on the department's public Internet Web site. The bill would
authorize interested parties to make oral or written comments and
require the commissioner to consider all comments received before
adopting any amendments to the plan, as provided. The bill would also
provide for judicial review of a change to the plan.
(11)
(12) Existing law authorizes an underwritten title
company to engage in the business of preparing title searches, title
reports, title examinations, or certificates or abstracts of title,
upon the basis of which a title insurer writes title policies.
Existing law authorizes any insurer, upon payment of the fees and
costs and surrender to the commissioner of its certificate of
authority, to apply to withdraw from this state, as provided.
This bill would authorize underwritten title companies to apply to
withdraw from the California insurance market.
(12)
(13) This bill would make technical, conforming, and
clarifying changes, and delete obsolete provisions.
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 131 of the Insurance Code is amended to read:
131. (a) An entity seeking to be licensed in this state as a risk
retention group shall be organized under the laws of this state and
licensed as a liability insurance company pursuant to Article 3
(commencing with Section 699) of Chapter 1 of Part 2.
(b) An entity that has not completed its chartering and licensing
as a risk retention group in its domiciliary state is subject to the
requirements of Article 8 (commencing with Section 820) of Chapter 1
of Part 2.
(c) In addition to the requirements of Article 3 (commencing with
Section 699) of Chapter 1 of Part 2, a risk retention group licensed
in this state shall submit to the commissioner a feasibility study or
plan of operations and all other documentation required by the
federal Liability Risk Retention Act of 1986 (15 U.S.C. Sec. 3901 et
seq.) to be submitted by a risk retention group to a nonchartering
state.
(d) In addition to the requirements of Article 3 (commencing with
Section 699) of Chapter 1 of Part 2, a risk retention group licensed
in this state shall comply with all of the following at the time of
licensure, and thereafter:
(1) (A) The "board of directors" or "board," as used in this
section, means the governing body of the risk retention group elected
by the shareholders or members to establish policy, elect or appoint
officers and committees, and make other governing decisions.
(B) "Director," as used in this section, means a natural person
designated in the articles of the risk retention group, or
designated, elected, or appointed by any other manner, name, or title
to act as a director.
(2) (A) The board of directors of the risk retention group shall
have a majority of independent directors. If the risk retention group
is a reciprocal risk retention group, the attorney-in-fact shall be
required to adhere to the same standards regarding independence of
operation and governance as imposed on the risk retention group's
board of directors and subscribers' advisory committee under these
standards, and, to the extent permissible under this state's laws,
service providers of a reciprocal risk retention group shall contract
with the risk retention group and not the attorney-in-fact.
(B) No director qualifies as "independent" unless the board of
directors affirmatively determines that the director has no "material
relationship" with the risk retention group. Each risk retention
group shall disclose these determinations to its domestic regulator,
at least annually. For this purpose, any person that is a direct or
indirect owner of, or subscriber in, the risk retention group, or is
an officer, director, or employee, or all three, of an owner and
insured, as contemplated by 15 U.S.C. Section 3901(a)(4)(E)(ii) of
the federal Liability Risk Retention Act of 1986, is considered to be
"independent," unless some other position of that officer, director,
or employee constitutes a "material relationship."
(C) "Material relationship" of a person with the risk retention
group includes, but is not limited to, any of the following:
(i) The receipt in any one 12-month period of compensation or
payment of any other item of value by that person, a member of that
person's immediate family, or any business with which that person is
affiliated from the risk retention group or a consultant or service
provider to the risk retention group that is greater than, or equal
to, 5 percent of the risk retention group's gross written premium for
that 12-month period or 2 percent of its surplus, whichever is
greater, as measured at the end of any fiscal quarter falling in a
12-month period. The person or immediate family member of that person
is not independent until one year after his or her compensation from
the risk retention group falls below the threshold.
(ii) A relationship with an auditor as follows: a director or an
immediate family member of a director who is affiliated with, or
employed in, a professional capacity by a present or former internal
or external auditor of the risk retention group is not independent
until one year after the end of the affiliation, employment, or
auditing relationship.
(iii) A relationship with a related entity as follows: a director
or immediate family member of a director who is employed as an
executive officer of another company where any of the risk retention
group's present executives serve on that other company's board of
directors is not independent until one year after the end of that
service or the employment relationship.
(3) The term of any material service provider contract with the
risk retention group shall not exceed five years. Any contract, or
its renewal, shall require the approval of the majority of the risk
retention group's independent directors. The risk retention group's
board of directors shall have the right to terminate any service
provider, audit, or actuarial contracts at any time for cause after
providing adequate notice as defined in the contract. The service
provider contract is deemed material if the amount to be paid for
that contract is greater than, or equal to, 5 percent of the risk
retention group's annual gross written premium or 2 percent of its
surplus, whichever is greater.
(A) For purposes of this standard, "service providers" shall
include captive managers, auditors, accountants, actuaries,
investment advisers, attorneys, and managing general underwriters or
any other party responsible for underwriting, determination of rates,
collection of premium, adjusting and settling claims, or the
preparation of financial statements. Any reference to "attorneys"
does not include defense counsel retained by the risk retention group
to defend claims, unless the amount of fees paid to those attorneys
are "material" as referenced in this paragraph.
(B) A service provider contract meeting the definition of
"material relationship" pursuant to paragraph (2) shall not be
entered into unless the risk retention group has notified the
commissioner in writing of its intention to enter into the
transaction at least 30 days prior thereto, and the commissioner has
not disapproved the transaction within that period.
(4) The risk retention group's board of directors shall adopt a
written policy in the plan of operation as approved by the board that
requires the board to do all of the following:
(A) Ensure that all owners or insureds, or both, of the risk
retention group receive evidence of ownership interest.
(B) Develop a set of governance standards applicable to the risk
retention group.
(C) Oversee the evaluation of the risk retention group's
management, including, but not limited to, the performance of the
captive manager, managing general underwriter, or other parties
responsible for underwriting, determination of rates, collection of
premium, adjusting or settling claims, or the preparation of
financial statements.
(D) Review and approve the amount to be paid for all material
service providers.
(E) Review and approve, at least annually, all of the following:
(i) The risk retention group's goals and objectives relevant to
the compensation of officers and service providers.
(ii) The officers' and service providers' performance in light of
those goals and objectives.
(iii) The continued engagement of the officers and material
service providers.
(5) The risk retention group shall have an audit committee
composed of at least three independent board members as defined in
paragraph (2). A nonindependent board member may participate in the
activities of the audit committee, if invited by the members, but
cannot be a member of that committee.
(A) The audit committee shall have a written charter that defines
the committee's purpose, which, at a minimum, shall be to do all of
the following:
(i) Assist in board oversight of the integrity of the financial
statements, the compliance with legal and regulatory requirements,
and the qualifications, independence, and performance of the
independent auditor and actuary.
(ii) Discuss the annual audited financial statements and quarterly
financial statements with management.
(iii) Discuss the annual audited financial statements with its
independent auditor and, if advisable, discuss its quarterly
financial statements with its independent auditor.
(iv) Discuss policies with respect to risk assessment and risk
management.
(v) Meet separately and periodically, either directly or through a
designated representative of the committee, with management and
independent auditors.
(vi) Review with the independent auditor any audit problems or
difficulties and management's response.
(vii) Set clear hiring policies of the risk retention group as to
the hiring of employees or former employees of the independent
auditor.
(viii) Require the external auditor to rotate the lead or
coordinating audit partner having primary responsibility for the risk
retention group's audit as well as the audit partner responsible for
reviewing that audit, so that neither individual performs audit
services for more than five consecutive fiscal years.
(ix) Report regularly to the board of directors.
(B) If an audit committee is not designated by the insurer, the
insurer's entire board of directors shall constitute the audit
committee.
(6) The board of directors shall adopt and disclose governance
standards by making the information available through electronic
means, such as posting the information on the risk retention group's
Internet Web site, or other means, and providing that information to
members and insureds upon request. The information shall include all
of the following:
(A) A process by which the directors are elected by the owners,
insureds, or both.
(B) Director qualification standards.
(C) Director responsibilities.
(D) Director access to management and, as necessary and
appropriate, independent advisers.
(E) Director compensation.
(F) Director orientation and continuing education.
(G) The policies and procedures that are followed for management
succession.
(H) The policies and procedures that are followed for the annual
performance evaluation of the board.
(7) The board of directors shall adopt and disclose a code of
business conduct and ethics for directors, officers, and employees
and promptly disclose to the board of directors any waivers of the
code for directors or executive officers, including all of the
following topics:
(A) Conflicts of interest.
(B) Matters covered under the corporate opportunity doctrine under
the state of domicile.
(C) Confidentiality.
(D) Fair dealing.
(E) Protection and proper use of risk retention group assets.
(F) Compliance with all applicable laws, rules, and regulations.
(G) Requiring the reporting of any illegal or unethical behavior
that affects the operation of the risk retention group.
(8) The captive manager, president, or chief executive officer of
the risk retention group shall promptly notify the domestic
regulator, in writing, if he or she becomes aware of any material
noncompliance with any of these governance standards.
(e) Domestic risk retention groups, licensed as of December 31,
2013, shall be governed by subdivision (d) on and after January 1,
2015.
SEC. 2. Section 662 of the Insurance Code is amended to read:
662. (a) A notice of cancellation of a policy shall not be
effective unless mailed or delivered by the insurer to the named
insured, lienholder, or additional interest at least 20 days prior to
the effective date of cancellation; provided, however, that where
cancellation is for nonpayment of premium, at least 10 days' notice
of cancellation accompanied by the reason for the cancellation shall
be given. Unless the reason accompanies or is included in the notice
of cancellation, the notice of cancellation shall state or be
accompanied by a statement that upon written request of the named
insured, mailed or delivered to the insurer not less than 15 days
prior to the effective date of cancellation, the insurer will specify
the reason for the cancellation.
(b) This section shall not apply to nonrenewal.
(c) Notices made to lienholders pursuant to this section may be
done electronically with the consent of the lienholder.
SEC. 3. Section 668.5 of the Insurance Code is repealed.
SEC. 4. Section 739 of the Insurance Code is amended to read:
739. As used in this article, these terms shall have the
following meanings:
(a) "Adjusted RBC Report" means a Risk-Based Capital (RBC) report
that has been adjusted by the commissioner in accordance with
subdivision (b) or (c) of Section 739.2.
(b) "Corrective Order" means an order issued by the commissioner
specifying corrective actions that the commissioner has determined
are required.
(c) "Domestic insurer" means any life or health insurer or
property and casualty insurer organized in this state.
(d) "Foreign insurer" means any life or health insurer or property
and casualty insurer that is licensed to do business in this state
but is not domiciled in this state.
(e) "Life or health insurer" means any admitted insurer issuing
insurance subject to Part 2 (commencing with Section 10110) of
Division 2, or a licensed property and casualty insurer writing only
disability insurance.
(f) "NAIC" means the National Association of Insurance
Commissioners.
(g) "Negative trend" means, with respect to a life or health
insurer, a negative trend over a period of time, as determined in
accordance with the "Trend Test Calculation" included in the RBC
Instructions defined in subdivision (i).
(h) "Property and casualty insurer" means any admitted insurer
writing insurance as described in Section 102, 103, 105, 107, 108,
109, 110, 111, 112, 113, 114, 115, 116, 118, 119.5, 119.6, or 120,
but does not include monoline mortgage guaranty insurers, financial
guaranty insurers, or title insurers.
(i) "RBC Instructions" means the RBC Report, including risk-based
capital instructions adopted by the NAIC, and as the RBC Instructions
may be amended by the NAIC from time to time in accordance with the
procedures adopted by the NAIC.
(j) "RBC Level" means an insurer's Company Action Level RBC,
Regulatory Action Level RBC, Authorized Control Level RBC, or
Mandatory Control Level RBC where:
(1) "Company Action Level RBC" means, with respect to any insurer,
the product of 2.0 and its Authorized Control Level RBC.
(2) "Regulatory Action Level RBC" means the product of 1.5 and its
Authorized Control Level RBC.
(3) "Authorized Control Level RBC" means the number determined
under the risk-based capital formula in accordance with the RBC
Instructions.
(4) "Mandatory Control Level RBC" means the product of .70 and the
Authorized Control Level RBC.
(k) "RBC Plan" means a comprehensive financial plan containing the
elements specified in subdivision (b) of Section 739.3. If the
commissioner rejects the RBC Plan, and it is revised by the insurer,
with or without the commissioner's recommendation, the plan shall be
called the "Revised RBC Plan."
( l ) "RBC Report" means the report required in Section
739.2.
(m) "Total Adjusted Capital" means the sum of:
(1) An insurer's statutory capital and surplus.
(2) Other items, if any, that the RBC Instructions may provide.
SEC. 5. Section 739.3 of the Insurance Code is amended to read:
739.3. (a) "Company Action Level Event" means any of the
following events:
(1) The filing of an RBC Report by an insurer that indicates any
of the following:
(A) The insurer's Total Adjusted Capital is greater than or equal
to its Regulatory Action Level RBC but less than its Company Action
Level RBC.
(B) If a life or health insurer, the insurer has Total Adjusted
Capital that is greater than or equal to its Company Action Level RBC
but less than the product of its Authorized Control Level RBC and
2.5, and has a negative trend.
(C) If a property and casualty insurer, the insurer has Total
Adjusted Capital that is greater than or equal to its Company Action
Level RBC but less than the product of its Authorized Control Level
RBC and 3.0, and triggers the trend test determined in accordance
with the trend test calculation included in the Property and Casualty
RBC instructions.
(2) The notification by the commissioner to the insurer of an
Adjusted RBC Report that indicates the event in paragraph (1),
provided that the insurer does not challenge the Adjusted RBC Report
under Section 739.7.
(3) If the insurer challenges, under Section 739.7, an Adjusted
RBC Report that indicates the event in paragraph (1), the
notification by the commissioner to the insurer that the commissioner
has, after a hearing, rejected the insurer's challenge.
(b) In the event of a Company Action Level Event, the insurer
shall prepare and submit to the commissioner a comprehensive
financial plan that shall do all of the following:
(1) Identify the conditions in the insurer that contribute to the
Company Action Level Event.
(2) Contain proposals of corrective actions that the insurer
intends to take and would be expected to result in the elimination of
the Company Action Level Event.
(3) Provide projections of the insurer's financial results in the
current year and at least the four succeeding years, both in the
absence of proposed corrective actions and giving effect to the
proposed corrective actions, including projections of statutory
operating income, net income, capital, or surplus, or a combination.
The projections for both new and renewal business may include
separate projections for each major line of business and separately
identify each significant income, expense, and benefit component.
(4) Identify the key assumptions impacting the insurer's
projections and the sensitivity of the projections to the
assumptions.
(5) Identify the quality of, and problems associated with, the
insurer's business, including, but not limited to, its assets,
anticipated business growth and associated surplus strain,
extraordinary exposure to risk, mix of business, and use of
reinsurance in each case, if any.
(c) The RBC Plan shall be submitted as follows:
(1) Within 45 days of the Company Action Level Event.
(2) If the insurer challenges an Adjusted RBC Report pursuant to
Section 739.7, within 45 days after notification to the insurer that
the commissioner has, after a hearing, rejected the insurer's
challenge.
(d) Within 60 days after the submission by an insurer of an RBC
Plan to the commissioner, the commissioner shall notify the insurer
whether the RBC Plan shall be implemented or is, in the judgment of
the commissioner, unsatisfactory. If the commissioner determines that
the RBC Plan is unsatisfactory, the notification to the insurer
shall set forth the reasons for the determination, and may set forth
proposed revisions that will render the RBC Plan satisfactory, in the
judgment of the commissioner. Upon notification from the
commissioner, the insurer shall prepare a Revised RBC Plan, which may
incorporate by reference revisions proposed by the commissioner, and
shall submit the Revised RBC Plan to the commissioner as follows:
(1) Within 45 days after the notification from the commissioner.
(2) If the insurer challenges the notification from the
commissioner under Section 739.7, within 45 days after a notification
to the insurer that the commissioner has, after a hearing, rejected
the insurer's challenge.
(e) In the event of a notification by the commissioner to an
insurer that the insurer's RBC Plan or Revised RBC Plan is
unsatisfactory, the commissioner may, at his or her discretion,
subject to the insurer's right to a hearing under Section 739.7,
specify in the notification that the notification constitutes a
Regulatory Action Level Event.
(f) Every domestic insurer that files an RBC Plan or Revised RBC
Plan with the commissioner shall file a copy of the RBC Plan or
Revised RBC Plan with the insurance commissioner in any state in
which the insurer is authorized to do business if both of the
following apply:
(1) That state has an RBC provision substantially similar to
subdivision (a) of Section 739.8.
(2) The insurance commissioner of that state has notified the
insurer of its request for the filing in writing, in which case the
insurer shall file a copy of the RBC Plan or Revised RBC Plan in that
state no later than the later of:
(A) Fifteen days after the receipt of notice to file a copy of its
RBC Plan or Revised RBC Plan with the state.
(B) The date on which the RBC Plan or Revised RBC Plan is filed
under subdivision (c) of Section 739.7.
SEC. 6. Section 985 of the Insurance Code is amended to read:
985. (a) On or after January 1, 1970, as used in this article and
in subdivision (i) of Section 1011, "insolvency" means either of the
following:
(1) Any impairment of minimum "paid-in capital" or "capital paid
in," as defined in Section 36, required in the aggregate of an
insurer by the provisions of this code for the class, or classes, of
insurance that it transacts anywhere.
(2) An inability of the insurer to meet its financial obligations
when they are due.
(b) On or after January 1, 1970, an insurer cannot escape the
condition of insolvency by being able to provide for all its
liabilities and for reinsurance of all outstanding risks. An insurer
must also be possessed of additional assets equivalent to the
aggregate "paid-in capital" or "capital paid in" required by this
code after making provision for all those liabilities and for that
reinsurance.
(c) On or after October 1, 1967, as used in this code provision
for reinsurance of all outstanding risks and "gross premiums without
any deduction, received and receivable upon all unexpired risks"
means the greater of: (1) the aggregate amount of actual unearned
premiums, or (2) the amount reasonably estimated as being required to
reinsure in a solvent admitted insurer the unexpired terms of the
risks represented by all outstanding policies.
(d) On or after October 1, 1967, an insurer shall make provision
for reinsurance of the outstanding risk on policies that provide
premiums that are fully earned at inception and on policies that for
any other reason do not provide for a return premium to the insured
on cancellation prior to expiration.
(e) On or after October 1, 1967, the commissioner shall prescribe
standards for reasonably estimating the amount required to reinsure
that will provide adequate safeguards for the policyholders,
creditors, and the public.
(f) On or after October 1, 1967, this section shall not be
applicable to life, title, mortgage, or mortgage guaranty insurers.
(g) In the application of this section to disability insurance, as
defined in Section 106, reserves for unearned premiums and amounts
reasonably estimated as required to reinsure outstanding risks shall
be determined in accordance with the provisions of Section 997.
SEC. 7. Section 1011 of the Insurance Code is amended to read:
1011. The superior court of the county in which the principal
office of a person described in Section 1010 is located, upon the
filing by the commissioner of the verified application showing any of
the conditions in this subdivision exist, or a filing by the Federal
Deposit Insurance Corporation of the verified application showing
that the conditions enumerated in subdivision (j) exist and the
conditions set forth in Section 5383(e)(3) of Title 12 of the United
States Code having been satisfied, shall issue its order vesting
title to all of the assets of that person, wheresoever situated, in
the commissioner or his or her successor in office, in his or her
official capacity, and direct the commissioner forthwith to take
possession of all of its books, records, property, real and personal,
and assets, and to conduct, as conservator, the business of the
person, or so much thereof as to the commissioner may seem
appropriate, and enjoining the person and its officers, directors,
agents, servants, and employees from the transaction of its business
or disposition of its property until any of the following further
order of the court:
(a) That the person has refused to submit its books, papers,
accounts, or affairs to the reasonable inspection of the commissioner
or his or her deputy or examiner.
(b) That the person has neglected or refused to observe an order
of the commissioner to make good within the time prescribed by law
any deficiency in its capital if it is a stock corporation, or in its
reserve if it is a mutual insurer.
(c) That the person, without first obtaining the consent in
writing of the commissioner, has transferred, or attempted to
transfer, substantially its entire property or business or, without
consent, has entered into any transaction the effect of which is to
merge, consolidate, or reinsure substantially its entire property or
business in or with the property or business of any other person.
(d) That the person is found, after an examination, to be in a
condition that makes its further transaction of business hazardous to
its policyholders, or creditors, or to the public.
(e) That the person has violated its charter or any law of the
state.
(f) That any officer of the person refuses to be examined under
oath, touching its affairs.
(g) That any officer or attorney in fact of the person has
embezzled, sequestered, or wrongfully diverted any of the assets of
the person.
(h) That a domestic insurer does not comply with the requirements
for the issuance to it of a certificate of authority, or that its
certificate of authority has been revoked.
(i) That the last report of examination of any person to whom the
provisions of this article apply shows the person to be insolvent
within the meaning of Article 13 (commencing with Section 980) of
Chapter 1 of Part 2 of Division 1; or if a reciprocal or
interinsurance exchange, within the applicable provisions of Section
1370.2, 1370.4, 1371, or 1372; or if a life insurer, within the
applicable provisions of Sections 10510 and 10511.
(j) Notification is given by the United States Secretary of the
Treasury that a determination has been made by the secretary, in
accordance with and satisfying the provisions of Section 5383(b) of
Title 12 of the United States Code, as to a person described in
Section 1010 that is an insurance company as defined in Section 5381
(a)(13) of Title 12 of the United States Code, and one of the
following:
(1) The board of directors, or body performing similar functions,
of the person acquiesces or consents to the appointment of a receiver
as provided for in Section 5832(a)(1)(A)(i) of Title 12 of the
United States Code, with that consent to
be considered to be consent to issuance of an order
under this section.
(2) The United States District Court for the District of Columbia
issued an order for the appointment of a receiver of the person as
provided for in Section 5382(a)(1)(A)(iv)(I) of Title 12 of the
United States Code, without regard to whether an appeal of the order
is pending.
(3) A petition by the United States Secretary of the Treasury for
appointment of a receiver was made to the United States District
Court for the District of Columbia and was granted by operation of
the law as provided for in Section 5382(a)(1)(A)(v) of Title 12 of
the United States Code, without regard to whether an appeal of the
order is pending.
SEC. 8. Section 1011.1 of the Insurance Code is amended to read:
1011.1. If a verified application is filed pursuant to Section
1011 that shows that the conditions set forth in subdivision (j) of
Section 1011 exist and upon a showing that notice was provided to the
person that is the subject of the verification application, all of
the following apply:
(a) A superior court hearing shall be held in which the person may
oppose the verified application solely on the grounds that the
conditions set forth in subdivision (j) of Section 1101 do not exist.
The hearing shall be completed within 24 hours after the verified
application is filed with the court.
(b) The superior court shall issue an order as provided for in
Section 1011 within 24 hours after the verified application was filed
with the court.
(c) If the superior court does not issue an order within 24 hours
as provided for in subdivision (b), then an order described in
Section 1011 shall be deemed granted by operation of law upon
expiration of the 24-hour period, without further notice.
(d) An order entered by the superior court pursuant to subdivision
(b) or entered by operation of law pursuant to subdivision (c) shall
not be subject to any stay or injunction pending appeal.
SEC. 9. Section 1012 of the Insurance Code is amended to read:
1012. Except in the case of an order issued based on a verified
application showing the conditions in subdivision (j) of Section 1011
to exist, the order shall continue in force and effect until, on the
application either of the commissioner or of that person, it shall,
after a full hearing, appear to the court that the ground for the
order directing the commissioner to take title and possession does
not exist or has been removed and that the person can properly resume
title and possession of its property and the conduct of its
business.
SEC. 10. Section 1016 of the Insurance Code is amended to read:
1016. (a) If at any time after the issuance of an order under
Section 1011, or if at the time of instituting any proceeding under
this article, including under Section 1011, it shall appear to the
commissioner that it would be futile to proceed as conservator with
the conduct of the business of that person, he or she may apply to
the court for an order to liquidate and wind up the business of the
person. Upon a full hearing of that application, the court may make
an order directing the winding up and liquidation of the business of
that person by the commissioner, as liquidator, for the purpose of
carrying out the order to liquidate and wind up the business of that
person.
(b) Notwithstanding subdivision (a), the court may issue an order
to liquidate and wind up the business of a person as to whom a
verified application is filed pursuant to subdivision (j) of Section
1011 based solely on the verified application and hearing as provided
for in subdivision (a) of Section 1011.1, without further hearing,
or may issue an order to liquidate and wind up the business of the
person upon application by the commissioner after the issuance of an
order under Section 1011. The court's order may direct the winding up
and liquidation of the business of the person by the commissioner,
as liquidator, for the purpose of carrying out the order to liquidate
and wind up the business of the person.
SEC. 11. Section 1070.6 of the Insurance Code is amended to read:
1070.6. The withdrawal procedure and fees prescribed by this
article shall not be required of a nonsurviving admitted constituent
to a merger or consolidation into another admitted insurer in
accordance with the applicable statutes and the commissioner's prior
written consent given pursuant to subdivision (c) of Section 1011,
provided the commissioner is satisfied by documents, authenticated so
as to be admissible in evidence over objection, filed with him or
her, that:
(a) The constituent has discharged all of its liabilities to
residents of this state in the manner provided by Section 1071.5;
(b) There will be an admitted insurer directly available to the
constituent's policyholders: (1) to obtain policy changes and
endorsements, (2) to receive payment of premiums and refund unearned
premiums, (3) to serve notice of claim, proof of loss, summons,
process, and other papers, and (4) for purposes of suit;
(c) The constituent shall timely file with the commissioner
appropriate financial statements reporting its insurance business
done in this state during the calendar year of the merger or
consolidation and all appropriate tax returns required by law for the
period, and shall timely pay all taxes found to be due on account of
the business; and
(d) The constituent has surrendered its current California
certificate of authority to the commissioner for cancellation as of
the effective date of the merger.
The withdrawal procedure and fees prescribed by this article shall
not be required of an insurer that has been liquidated by a final
order of a court of record of this or any sister state provided a
certified copy of the order reciting the fact of liquidation and
discharge of all obligations has been filed with the commissioner.
SEC. 12. Section 1216.1 of the Insurance Code is amended to read:
1216.1. As used in this article, the following terms have the
following meanings:
(a) "Accredited state" means a state in which the insurance
department or regulatory agency having jurisdiction over the business
of insurance has qualified as meeting the minimum financial
regulatory standards promulgated and established from time to time by
the National Association of Insurance Commissioners' (NAIC)
Financial Regulation Standards and Accreditation Program.
(b) "Control" or "controlled" has the meaning ascribed in Section
1215.
(c) "Controlled insurer" means an admitted insurer which is
controlled, directly or indirectly, by a producer.
(d) "Controlling producer" means a producer who, directly or
indirectly, controls an insurer.
(e) "Admitted insurer" or "insurer" means any person, firm,
association, or corporation admitted to transact any property or
casualty insurance business in this state. The following are not
insurers for the purposes of this article:
(1) All residual market pools and joint underwriting authorities
or associations.
(2) All captive insurers, other than risk retention groups as
defined in the federal Superfund Amendments Reauthorization Act of
1986 (42 U.S.C. Sec. 9671), the federal Liability Risk Retention Act
of 1986 (15 U.S.C. Sec. 3901 et seq.), and the California Risk
Retention Act of 1991 (Chapter 1.5 (commencing with Section 125) of
Part 1). For the purposes of this article, captive insurers are
either insurance companies which are owned by another organization
and whose exclusive purpose is to insure risks of the parent
organization and affiliated companies, or in the case of groups and
associations, insurance organizations which are owned by the insureds
and whose exclusive purpose is to insure risks of member
organizations and group or association members and their affiliates.
(f) "Producer" means a fire and casualty licensee or licensees or
any other person, firm, association, or corporation, when, for any
compensation, commission, or other thing of value, the person, firm,
association, or corporation acts or aids in any manner in soliciting,
negotiating or procuring the making of any insurance contract on
behalf of an insured other than the person, firm, association, or
corporation.
SEC. 13. Section 1624 of the Insurance Code is amended to read:
1624. "Insurance solicitor" means a natural person employed to
aid a property and casualty broker-agent acting as an insurance agent
or insurance broker in transacting insurance other than life,
disability, or health.
SEC. 14. Section 1675 of the Insurance Code is amended to read:
1675. The following applicants who have theretofore been licensed
under this code are exempt from the requirements of this article:
(a) An applicant for a license to act as a property broker-agent
or a casualty broker-agent who has been licensed as a property
broker-agent, casualty broker-agent, or surplus line broker during
any part of the license year in which the application is filed or the
immediately preceding license year.
(b) An applicant for a license to act as a life-only agent who has
been licensed as a life-only agent during any part of the license
year in which the application is filed or the immediately preceding
license year.
(c) An applicant for a license to act as an accident and health
agent who has been licensed as an accident and health agent during
any part of the license year in which the application is filed or the
immediately preceding license year.
(d) An applicant for a license to act as a travel insurance agent.
(e) An applicant specifically exempted from the particular
qualifying examination requirement by other provisions of this code.
(f) (1) A nonresident licensee who applies for a property
broker-agent, casualty broker-agent, personal lines broker-agent, or
life agent resident license in this state, and who is currently
licensed for the same lines of authority in the state of his or her
current resident license, shall not be required to complete an
examination. The application shall be received within 90 days of the
cancellation of the applicant's resident license and the producer
database records, maintained by the National Association of Insurance
Commissioners, shall indicate that the producer is licensed in good
standing for the line of authority requested.
(2) Upon issuance of the California resident license, the
examination waiver also applies to adding additional lines of
authority to the California resident license provided that the
individual was previously licensed in good standing for the requested
additional lines of authority, and the application is received
within 12 months of the cancellation of the applicant's previous
resident license in another state.
SEC. 15. Section 1749.3 of the Insurance Code is amended to read:
1749.3. An individual licensed as a life-only agent or an
accident and health agent and also licensed as a property or casualty
broker-agent, or an individual only licensed as a property or
casualty broker-agent, shall complete those courses, programs of
instruction, or seminars approved by the commissioner for the type of
license held. Completion of specified product training required in
subdivision (d) of Section 1749.33, subdivision (b) of Section
1749.8, and paragraph (4) of subdivision (a) of Section 10234.93 may
result in the completion of more than the minimum of required
continuing education hours. The minimum number of hours required is
as follows:
(a) Any licensee, as specified in this section, shall
satisfactorily complete 24 hours of instruction, of which three hours
shall be in ethics, prior to renewal of the license. These hours of
instruction may be completed at any time prior to renewal of the
license.
(b) An individual licensed as a property broker-agent or casualty
broker-agent and as a life-only agent or an accident and health agent
shall satisfy the requirements of this section by demonstrating
completion of the courses, programs of instruction, or seminars
approved by the commissioner for any of the license types listed in
this section.
(c) A licensee shall not be required to comply with the
requirements of this article if the licensee submits proof
satisfactory to the commissioner that he or she has been a licensee
in good standing for 30 continuous years in this state and is 70
years of age or older. This exemption shall not apply to those
individuals licensed for the first time on or after January 1, 2010.
SEC. 16. Section 1749.31 of the Insurance Code is amended to read:
1749.31. (a) An individual licensed as a personal lines
broker-agent shall complete required continuing education courses,
programs of instruction, or seminars approved by the commissioner.
The personal lines broker-agent shall complete 24 hours, of which
three hours shall be in ethics, during each two-year license term as
defined in subdivision (d) of Section 1625.5.
(b) An individual licensed as a personal lines broker-agent and as
a life-only agent or accident and health agent shall satisfy the
requirements of this section by satisfactorily completing 24 hours of
instruction prior to renewal of the license.
SEC. 17. Section 1749.32 of the Insurance Code is amended to read:
1749.32. (a) An individual licensed as a limited lines automobile
insurance agent shall complete required continuing education
courses, programs of instruction, or seminars approved by the
commissioner. The minimum number of hours required is 20 hours, of
which three hours shall be in ethics, per license term prior to the
renewal of the license.
(b) An individual licensed as a limited automobile insurance agent
and as a life-only agent or accident and health agent shall satisfy
the requirements of this section by satisfactorily completing 24
hours of instruction prior to renewal of the license.
SEC. 18. Section 1749.33 of the Insurance Code is amended to read:
1749.33. (a) A life-only agent licensee shall satisfactorily
complete 24 hours of instruction, of which three hours shall be in
ethics, prior to renewal of the license. These hours of instruction
may be completed at any time prior to renewal of the license.
(b) An accident and health agent licensee shall satisfactorily
complete 24 hours of instruction, of which three hours shall be in
ethics, prior to renewal of the license. These hours of instruction
may be completed at any time prior to renewal of the license.
(c) An agent licensed as both a life-only agent and as an accident
and health agent shall satisfactorily complete a total of 24 hours
of instruction, of which three hours shall be in ethics, prior to
renewal of the license. These hours of instruction may be completed
at any time prior to renewal of the license.
(d) Any accident and health agent who wishes to sell 24-hour care
coverage, as defined in Section 1749.02, shall complete a course,
program of instruction, or seminar of an approved continuing
education provider on workers' compensation and general principles of
employer liability, which shall be completed by examination approved
by the commissioner as part of the continuing education course,
program of instruction, or seminar prior to selling this coverage.
The required number of instruction hours shall be equal to but no
greater than that required by the curriculum board for the
prelicensing requirements of a property broker-agent or a casualty
broker-agent on these subjects. For resident licensees, this
requirement shall count toward the licensee's continuing education
requirement, but may still result in completing more than the minimum
number of continuing education hours set forth in this section.
Nothing in this section shall be deemed to allow an accident and
health agent to satisfy the obligations set forth in this section by
other than a proctored examination administered or approved by the
department.
SEC. 19. Section 1749.8 of the Insurance Code is amended to read:
1749.8. (a) Every life agent who sells annuities shall
satisfactorily complete eight hours of training prior to soliciting
individual consumers in order to sell annuities.
(b) Every life agent who sells annuities shall satisfactorily
complete four hours of training prior to each license renewal.
Completion of the eight-hour annuity training required by subdivision
(a) does not satisfy the four-hour annuity training required by this
subdivision. For resident licensees, this requirement shall count
toward the licensee's continuing education requirement, but may still
result in completing more than the minimum number of continuing
education hours set forth in this section.
(c) The training required by this section shall be approved by the
commissioner and shall consist of topics related to annuities, and
California law, regulations, and requirements related to annuities,
prohibited sales practices, the recognition of indicators that a
prospective insured may lack the short-term memory or judgment to
knowingly purchase an insurance product, and fraudulent and unfair
trade practices. Subject matter determined by the commissioner to be
primarily intended to promote the sale or marketing of annuities
shall not qualify for credit toward the training requirement. Any
course or seminar that is disapproved under the provisions of this
section shall be presumed invalid for credit toward the training
requirement of this section unless it is approved in writing by the
commissioner.
(d) The training requirements set forth in this section shall not
apply to nonresident agents representing an insurer that is a direct
response provider.
For the purposes of this section, "direct response provider" means
an insurer that meets each of the following criteria:
(1) The insurer does not initiate telephone contact with insureds
or prospective insureds.
(2) Agents of the insurer speak with insureds and prospective
insureds only by telephone, and at the request of the insureds or
prospective insureds.
(3) Agents of the insurer are assigned to speak with insureds or
prospective insureds on a random basis, when contacted.
(4) Agents of the insurer are salaried and do not receive
commissions for sales or referrals.
SEC. 20. Section 1758.3 of the Insurance Code is amended to read:
1758.3. The commissioner shall not grant authority to transact
variable contracts unless the life agent or applicant furnishes proof
that he or she is registered to sell securities in California in
accordance with the rules of the United States Securities and
Exchange Commission or the Financial Industry Regulatory Authority.
Any authority granted to a life agent to transact variable contracts
shall immediately terminate upon the life agent no longer being
registered to sell securities in accordance with the rules of the
United States Securities and Exchange Commission or the Financial
Industry Regulatory Authority.
SEC. 21. Section 1758.681 is added to the Insurance Code, to read:
1758.681. Notwithstanding any other law:
(a) As used in this section, "portable electronics vendor
policyholder" means a portable electronics insurance agent licensee
pursuant to subdivision (f) of Section 1758.69.
(b) An insurer may terminate a portable electronics insurance
policy or otherwise change the terms and conditions of a portable
electronics insurance policy only upon providing the portable
electronics vendor policyholder and enrolled customers with at least
30 calendar days' written notice.
(c) If the insurer changes the terms and conditions of a policy of
portable electronics insurance, the insurer shall provide the
portable electronics vendor policyholder with a revised policy or
endorsement and each enrolled customer with a revised certificate,
endorsement, updated brochure, or other evidence indicating that a
change in the terms and conditions has occurred and a summary of
those changes.
(d) Notwithstanding subdivision (b), an insurer may terminate an
enrolled customer's enrollment under a portable electronics insurance
policy upon 15 calendar days' notice for discovery of fraud or
material misrepresentation in obtaining coverage or in the
presentation of a claim under the policy.
(e) Notwithstanding subdivision (b), an insurer may immediately
terminate an enrolled customer's enrollment under a portable
electronics insurance policy without prior notice for any of the
following:
(1) For nonpayment of premium.
(2) If the enrolled customer ceases to have an active service with
the vendor of portable electronics.
(3) If the enrolled customer exhausts the aggregate limit of
liability, if any, under the terms of the portable electronics
insurance policy and the insurer sends notice of termination to the
enrolled customer within 30 calendar days after exhaustion of the
limit. However, if notice is not sent within 30 calendar days,
enrollment shall continue notwithstanding the aggregate limit of
liability until 30 calendar days from the date the insurer sends
notice of termination to the enrolled customer.
(f) If a portable electronics insurance policy is terminated by a
portable electronics vendor policyholder, the portable electronics
vendor policyholder shall mail or deliver a written notice
to each enrolled customer advising the enrolled customer of the
termination of the policy and the effective date of termination. The
written notice shall be mailed or delivered by the portable
electronics vendor policyholder to the enrolled customer at least 30
days prior to the termination. However, if the notice is
not sent within 30 calendar days, enrollment shall continue
notwithstanding the aggregate limit of liability until 30
calendar days from the date the portable electronics vendor
policyholder sends notice of termination to the enrolled customer
or until a new portable electronics insurance policy is in
effect .
(g) Whenever notice or correspondence with respect to a policy of
portable electronics insurance is required pursuant to this section,
it shall be in writing and sent within the notice period required
pursuant to this section. Notices and correspondence shall be sent to
the portable electronics vendor policyholder at the portable
electronics vendor policyholder's mailing address specified for that
purpose and to its affected enrolled customers' last known mailing
addresses on file with the insurer or the portable electronics vendor
policyholder. The insurer or portable electronics vendor
policyholder shall maintain proof that the notice or correspondence
was sent for not less than three years after that notice or
correspondence was sent.
SEC. 22. Section 1872.87 of the Insurance Code is amended to read:
1872.87. (a) Each insurer required to pay special purpose
assessments pursuant to Sections 1872.8, 1872.81, 1872.85, 1874.8, or
subdivision (a) of Section 1872.86 may, over a reasonable length of
time, but in no event later than the calendar year in which the
assessment is paid, recoup the special purpose assessments by way of
a surcharge on premiums charged for the insurance policies to which
those sections apply or by including the assessments within the
insurer's rates. Amounts recouped shall not be considered premiums
for any purpose, including the computation of gross premium tax or
agents' commission.
(b) The amount of the surcharge shall be separately stated on
either a billing or policy declaration sent to an insured.
SEC. 23. Section 10234.93 of the Insurance Code is amended to
read:
10234.93. (a) Every insurer of long-term care in California
shall:
(1) Establish marketing procedures to assure that any comparison
of policies by its agents or other producers will be fair and
accurate.
(2) Establish marketing procedures to assure excessive insurance
is not sold or issued.
(3) Submit to the commissioner within six months of the effective
date of this act, a list of all agents or other insurer
representatives authorized to solicit individual consumers for the
sale of long-term care insurance. These submissions shall be updated
at least semiannually.
(4) Provide the following training and require that each agent or
other insurer representative authorized to solicit individual
consumers for the sale of long-term care insurance shall
satisfactorily complete the following training requirements that, for
resident licensees, shall count toward the licensee's continuing
education requirement, but may still result in completing more than
the minimum number of continuing education hours set forth in this
section:
(A) For licensees issued a license after January 1, 1992, eight
hours of training in each of the first four 12-month periods
beginning from the date of original license issuance and thereafter
eight hours of training prior to each license renewal.
(B) For licensees issued a license before January 1, 1992, eight
hours of training prior to each license renewal.
(C) For nonresident licensees that are not otherwise subject to
the continuing education requirements set forth in Section 1749.3,
the evidence of training required by this section shall be filed with
and approved by the commissioner as provided in subdivision (g) of
Section 1749.4.
Licensees shall complete the initial training requirements of this
section prior to being authorized to solicit individual consumers
for the sale of long-term care insurance.
The training required by this section shall consist of topics
related to long-term care services and long-term care insurance,
including, but not limited to, California regulations and
requirements, available long-term care services and facilities,
changes or improvements in services or facilities, and alternatives
to the purchase of private long-term care insurance. On or before
July 1, 1998, the following additional training topics shall be
required: differences in eligibility for benefits and tax treatment
between policies intended to be federally qualified and those not
intended to be federally qualified, the effect of inflation in
eroding the value of benefits and the importance of inflation
protection, and NAIC consumer suitability standards and guidelines.
(5) Display prominently on page one of the policy or certificate
and the outline of coverage: "Notice to buyer: This policy may not
cover all of the costs associated with long-term care incurred by the
buyer during the period of coverage. The buyer is advised to review
carefully all policy limitations."
(6) Inquire and otherwise make every reasonable effort to identify
whether a prospective applicant or enrollee for long-term care
insurance already has accident and sickness or long-term care
insurance and the types and amounts of any such insurance.
(7) Every
insurer or entity marketing long-term care insurance shall establish
auditable procedures for verifying compliance with this subdivision.
(8) Every insurer shall provide to a prospective applicant, at the
time of solicitation, written notice that the Health Insurance
Counseling and Advocacy Program (HICAP) provides health insurance
counseling to senior California residents free of charge. Every agent
shall provide the name, address, and telephone number of the local
HICAP program and the statewide HICAP number, 1-800-434-0222.
(9) Provide a copy of the long-term care insurance shoppers guide
developed by the California Department of Aging to each prospective
applicant prior to the presentation of an application or enrollment
form for insurance.
(10) Clearly post on its Internet Web site and provide written
notice at the time of solicitation that a specimen individual policy
form or group master policy and certificate form for each policy form
offered in this state is available to a prospective applicant upon
request. The individual specimen policy form or group master policy
and certificate form shall be provided to a requesting party within
15 calendar days of receipt of a request.
(b) In addition to other unfair trade practices, including those
identified in this code, the following acts and practices are
prohibited:
(1) Twisting. Knowingly making any misleading representation,
incomplete, or fraudulent comparison of any insurance policies or
insurers for the purpose of inducing, or tending to induce, any
person to lapse, forfeit, surrender, terminate, retain, pledge,
assign, borrow on, or convert any insurance policy or to take out a
policy of insurance with another insurer.
(2) High pressure tactics. Employing any method of marketing
having the effect of or tending to induce the purchase of insurance
through force, fright, threat, whether explicit or implied, or undue
pressure to purchase or recommend the purchase of insurance.
(3) Cold lead advertising. Making use directly or indirectly of
any method of marketing that fails to disclose in a conspicuous
manner that a purpose of the method of marketing is solicitation of
insurance and that contact will be made by an insurance agent or
insurance company.
SEC. 24. Section 10785 of the Insurance Code is amended to read:
10785. (a) A disability insurer that covers hospital, medical, or
surgical expenses under an individual health benefit plan as defined
in subdivision (a) of Section 10198.6 may not, with respect to a
federally eligible defined individual desiring to enroll in
individual health insurance coverage, decline to offer coverage to,
or deny enrollment of, the individual or impose any preexisting
condition exclusion with respect to the coverage.
(b) For purposes of this section, "federally eligible defined
individual" means an individual who, as of the date on which the
individual seeks coverage under this section, meets all of the
following conditions:
(1) Has had 18 or more months of creditable coverage, and whose
most recent prior creditable coverage was under a group health plan,
a federal governmental plan maintained for federal employees, or a
governmental plan or church plan as defined in the federal Employee
Retirement Income Security Act of 1974 (29 U.S.C. Sec. 1002).
(2) Is not eligible for coverage under a group health plan,
Medicare, or Medi-Cal, and does not have other health insurance
coverage.
(3) Was not terminated from his or her most recent creditable
coverage due to nonpayment of premiums or fraud.
(4) If offered continuation coverage under COBRA or Cal-COBRA, has
elected and exhausted that coverage.
(c) Every disability insurer that covers hospital, medical, or
surgical expenses shall comply with applicable federal statutes and
regulations regarding the provision of coverage to federally eligible
defined individuals, including any relevant application periods.
(d) A disability insurer shall offer the following health benefit
plans under this section that are designed for, made generally
available to, are actively marketed to, and enroll, individuals: (1)
either the two most popular products as defined in Section 300gg-41
(c)(2) of Title 42 of the United States Code and Section 148.120(c)
(2) of Title 45 of the Code of Federal Regulations or (2) the two
most representative products as defined in Section 300gg-41(c)(3) of
the United States Code and Section 148.120(c)(3) of Title 45 of the
Code of Federal Regulations, as determined by the insurer in
compliance with federal law. An insurer that offers only one health
benefit plan to individuals, excluding health benefit plans offered
to Medi-Cal or Medicare beneficiaries, shall be deemed to be in
compliance with this chapter if it offers that health benefit plan
contract to federally eligible defined individuals in a manner
consistent with this chapter.
(e) (1) In the case of a disability insurer that offers health
benefit plans in the individual market through a network plan, the
insurer may do both of the following:
(A) Limit the individuals who may be enrolled under that coverage
to those who live, reside, or work within the service area for the
network plan.
(B) Within the service area covered by the health benefit plan,
deny coverage to individuals if the insurer has demonstrated to the
commissioner that the insured will not have the capacity to deliver
services adequately to additional individual insureds because of its
obligations to existing group policyholders, group contractholders
and insureds, and individual insureds, and that the insurer is
applying this paragraph uniformly to individuals without regard to
any health status-related factor of the individuals and without
regard to whether the individuals are federally eligible defined
individuals.
(2) A disability insurer, upon denying health insurance coverage
in any service area in accordance with subparagraph (B) of paragraph
(1), may not offer health benefit plans through a network in the
individual market within that service area for a period of 180 days
after the coverage is denied.
(f) (1) A disability insurer may deny health insurance coverage in
the individual market to a federally eligible defined individual if
the insurer has demonstrated to the commissioner both of the
following:
(A) The insurer does not have the financial reserves necessary to
underwrite additional coverage.
(B) The insurer is applying this subdivision uniformly to all
individuals in the individual market and without regard to any health
status-related factor of the individuals and without regard to
whether the individuals are federally eligible defined individuals.
(2) A disability insurer, upon denying individual health insurance
coverage in any service area in accordance with paragraph (1), may
not offer that coverage in the individual market within that service
area for a period of 180 days after the date the coverage is denied
or until the insurer has demonstrated to the commissioner that the
insurer has sufficient financial reserves to underwrite additional
coverage, whichever is later.
(g) The requirement pursuant to federal law to furnish a
certificate of creditable coverage shall apply to health benefits
plans offered by a disability insurer in the individual market in the
same manner as it applies to an insurer in connection with a group
health benefit plan policy or group health benefit plan contract.
(h) A disability insurer shall compensate an accident and health
agent or a life and accident and health agent whose activities result
in the enrollment of federally eligible defined individuals in the
same manner and consistent with the renewal commission amounts as the
insurer compensates accident and health agents or life and accident
and health agents for other enrollees who are not federally eligible
defined individuals and who are purchasing the same individual health
benefit plan.
(i) Every disability insurer shall disclose as part of its COBRA
or Cal-COBRA disclosure and enrollment documents, an explanation of
the availability of guaranteed access to coverage under the federal
Health Insurance Portability and Accountability Act of 1996,
including the necessity to enroll in and exhaust COBRA or Cal-COBRA
benefits in order to become a federally eligible defined individual.
(j) No disability insurer may request documentation as to whether
or not a person is a federally eligible defined individual other than
is permitted under applicable federal law or regulations.
(k) This section shall not apply to coverage defined as excepted
benefits pursuant to Section 300gg(c) of Title 42 of the United
States Code.
( l ) This section shall apply to policies or contracts
offered, delivered, amended, or renewed on or after January 1, 2001.
SEC. 25. Section 11620 of the Insurance
Code is amended to read:
11620. (a) The commissioner, after a public hearing, shall
approve or issue a reasonable plan for the equitable apportionment,
among insurers admitted to transact liability insurance, of those
applicants for automobile bodily injury and property damage liability
insurance who are in good faith entitled to but are unable to
procure that insurance through ordinary methods. The commissioner
shall require the payment of five hundred ninety dollars ($590), in
advance, as a fee for the filing of amendments to the plan with the
commissioner. The commissioner may approve or issue reasonable
amendments to the plan that are approved by the plan's advisory
committee, if he or she first holds a public hearing to
determine whether the amendments are in keeping with the intent and
purpose of this section. All such those
insurers shall subscribe to the plan and its amendments and
participate in the plan.
(b) Judicial review of a change to the plan, including
rate revision proceedings , shall be in accordance with
Section 1858.6.
(c) Public hearings held pursuant to this section shall be
conducted in accordance with the rulemaking provisions of the
Administrative Procedure Act (Chapter 3.5 (commencing with Section
11340) of Part 1 of Division 3 of Title 2 of the Government Code).
(c) The adoption of the plan referenced in subdivision (a), and
any amendments thereto, is not subject to the requirements of the
Administrative Procedure Act (Chapter 3.5 (commencing with Section
11340) of Part 1 of Division 3 of Title 2 of the Government Code),
unless written or oral comments submitted pursuant to subdivision (e)
raise regulatory standards set forth in subdivisions (a), (b), (c),
(d), (e), and (f) of Section 11349 of the Government Code.
(d) The commissioner shall provide notice of any hearing pursuant
to subdivision (a) by doing all of the following at least 45 days
prior to the hearing:
(1) Publishing the notice in the California Regulatory Notice
Register.
(2) Mailing the notice to the parties on the department's
regulations mailing list.
(3) Posting the notice on the department's public Internet Web
site.
(e) Interested parties may present
written or oral comments at the hearing, or may submit written
comments to the contact person identified in the hearing notice by
the date and time posted in the notice. Before adopting any
amendments to the plan, the commissioner shall consider all comments
received on or before the day of the hearing.
SEC. 25. SEC. 26. Section 12389.7 is
added to the Insurance Code, to read:
12389.7. (a) Sections 1070, 1070.5, 1070.6, 1071.5, 1072, and
1076 shall be applicable to underwritten title companies.
(b) The following terms from Sections 1070, 1070.5, 1070.6,
1071.5, 1072, and 1076 shall be applicable to underwritten title
companies as follows:
(1) "Certificate of Authority" shall mean an underwritten title
company license.
(2) "Insurer" shall mean an underwritten title company.
(3) "Reinsurer" shall mean a title underwriter or another
underwritten title company.
(c) For the purposes of this section, Sections 1070, 1070.5,
1070.6, 1071.5, 1072, and 1076 shall be construed in accordance with
the nature of underwritten title companies and the business of title
insurance.
SEC. 26. SEC. 27. Section 12414.25
of the Insurance Code is amended to read:
12414.25. (a) Any person, title insurer, underwritten title
company, or controlled escrow company who fails to comply with a
final order of the commissioner under this chapter shall be liable to
the state in an amount not exceeding one hundred dollars ($100), but
if that failure is willful he, she, or it shall be liable to the
state in an amount not exceeding five thousand dollars ($5,000) for
that failure. The commissioner shall collect the amount so payable
and may bring an action in the name of the people of the State of
California to enforce collection. Those penalties may be in addition
to any other penalties provided by law.
(b) (1) A willful violation of the provisions of this chapter is a
misdemeanor.
(2) This subdivision is not applicable to Section 12389.7.
SEC. 27. SEC. 28. Section 14090.1 of
the Insurance Code is amended to read:
14090.1. (a) An individual who holds an insurance adjuster
license and who is not exempt under subdivision (b) shall
satisfactorily complete a minimum of 24 hours, of which three hours
are to be in ethics, of continuing education courses pertinent to the
duties and responsibilities of an insurance adjuster license
reported to the insurance commissioner on a biennial basis in
conjunction with his or her license renewal cycle.
(b) This section does not apply to any of the following:
(1) A licensee not licensed for one full year prior to the end of
the applicable continuing education biennium.
(2) A licensee holding a nonresident insurance adjuster license
who has met the continuing education requirements of his or her
designated resident state.
(3) An individual licensed as an insurance adjuster and as a
property or casualty broker-agent, pursuant to Section 1625, who has
met the continuing education requirements specified in Section
1749.3.
