Bill Text: CA AB2056 | 2013-2014 | Regular Session | Introduced

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Insurance: pet insurance.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Passed) 2014-09-30 - Chaptered by Secretary of State - Chapter 896, Statutes of 2014. [AB2056 Detail]

Download: California-2013-AB2056-Introduced.html

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BILL NUMBER: AB 2056	INTRODUCED
	BILL TEXT


INTRODUCED BY   Assembly Member Dababneh

                        FEBRUARY 20, 2014

   An act to amend Section 120 of, and to add Part 9 (commencing with
Section 12880) to Division 2 of, the Insurance Code, relating to
insurance.



	LEGISLATIVE COUNSEL'S DIGEST


   AB 2056, as introduced, Dababneh. Insurance: pet insurance.
   Existing law governs the business of insurance and authorizes the
Insurance Commissioner to provide oversight over the insurance
industry including, life and disability insurance, health insurance,
workers' compensation, and liability insurance. The commissioner is
authorized to, among other things, conduct investigations and bring
enforcement actions against insurers for violations of the laws
governing the business of insurance. Insurance in the state is
divided into classes including, among other things, miscellaneous
insurance, which includes insurance against loss from damage done by
lightning and any insurance not included in the foregoing classes but
which is a proper subject of insurance.
   This bill would add pet insurance as a type of miscellaneous
insurance, define certain terms, and specify certain disclosures an
insurer of pet insurance is required to make to consumers. This bill
would apply to a policy of pet insurance that is marketed, issued,
amended, renewed, or delivered to a resident of this state, on or
after January 1, 2015, regardless of the situs of the contract or
master group policyholder, or the jurisdiction in which the contract
was issued or delivered. This bill would require an insurer of pet
insurance to disclose, among other things, whether the policy
excludes coverage because of a preexisting condition, a hereditary
disorder, or a congenital anomaly or disorder. This bill would
authorize the commissioner to hold a hearing to determine if an
insurer is in violation of the provisions governing pet insurance and
to assess a civil penalty, which is to be determined by the
commissioner but not to exceed $5,000 for each violation, or $10,000
for a willful violation. The hearing would be required to be
conducted pursuant to the Administrative Procedure Act, except as
specified, and a person found to be in violation may have the
proceedings reviewed by means of any remedy pursuant to a specified
statute or the Administrative Procedure Act.
   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 120 of the Insurance Code is amended to read:
   120.  Miscellaneous insurance includes insurance against loss from
damage done, directly or indirectly by lightning, windstorm,
tornado, earthquake or insurance under an open policy indemnifying
the producer of any motion picture, television, theatrical, sport, or
similar production, event, or exhibition against loss by reason of
the interruption, postponement, or cancellation of such production,
event, or exhibition due to death, accidental injury, or sickness
preventing performers, directors, or other principals from commencing
or continuing their respective performance or  duties;
  duties, pet insurance, as defined in Section 12880,
 and any insurance not included in any of the  foregoing
classes, and   types of insurance specified in this
section   but  which is a proper subject of insurance.
  SEC. 2.  Part 9 (commencing with Section 12880) is added to
Division 2 of the Insurance Code, to read:

      PART 9.  Pet Insurance


   12880.  For purposes of this part, the following definitions shall
apply:
   (a) "Pet insurance" means an individual or group insurance policy
that provides coverage for veterinary expenses.
   (b) "Veterinarian" means an individual who holds a valid license
to practice veterinary medicine from the Veterinary Medical Board
pursuant to Chapter 11 (commencing with Section 4800) of Division 2
of the Business and Professions Code or other appropriate licensing
entity in the jurisdiction that he or she practices in.
   (c) "Veterinary expenses" means the costs associated with medical
advice, diagnosis, care, or treatment provided by a veterinarian,
including, but not limited to, the cost of drugs prescribed by a
veterinarian.
   (d) "Preexisting condition" means any condition for which the pet
owner has received medical advice or the pet has received treatment
for prior to enrollment in a new pet insurance policy.
   (e) "Waiting or affiliation period" means the period of time
specified in a pet insurance policy that must transpire before some
or all of the coverage in the policy can begin.
   (f) "Hereditary disorder" means an abnormality that is genetically
transmitted from parent to offspring and may cause illness or
disease.
   (g) "Congenital anomaly or disorder" means a condition that is
present from birth, whether inherited or caused by the environment,
which may cause or otherwise contribute to illness or disease.
   12880.1.  A policy of pet insurance that is marketed, issued,
amended, renewed, or delivered to a resident of this state, on or
after January 1, 2015, regardless of the situs of the contract or
master group policyholder, or the jurisdiction in which the contract
was issued or delivered, is subject to this part.
   12880.2.  (a) In connection with the sale of a new, amended, or
renewed policy of pet insurance, a pet insurer shall disclose all of
the following to the consumer:
   (1) If the policy excludes coverage due to any of the following
exclusions:
   (A) A preexisting condition.
   (B) A hereditary disorder.
   (C) A congenital anomaly or disorder.
   (2) Any policy provision that limits coverage through a waiting or
affiliation period, a deductible, coinsurance, or an annual or
lifetime policy limit.
   (3) Whether the insurer reduces coverage or increases premiums
based on the insured's claim history.
   (b) If a pet insurer uses any of the terms in paragraph (1) of
subdivision (a) in a policy of pet insurance, the insurer shall
include a definition of the term in the policy and shall make that
definition available through a link on the main page of the insurer's
Internet Web site.
   (c) A pet insurer shall clearly disclose the basis or formula on
which the insurer determines claim payments under a pet insurance
policy within the policy and through a link on the main page of the
insurer's Internet Web site.
   (d) A pet insurer that uses a benefit schedule to determine claim
payment under a pet insurance policy shall do both of the following:
   (1) Clearly disclose the applicable benefit schedule in the
policy.
   (2) Disclose all benefit schedules used by the insurer under its
pet insurance polices through a link on the main page of the insurer'
s Internet Web site.
   (e) A pet insurer that determines claim payments under a pet
insurance policy based on usual and customary fees, or any other
reimbursement limitation based on prevailing veterinary service
provider charges, shall do both of the following:
   (1) Include a usual and customary fee limitation provision in the
policy that clearly describes the insurer's basis for determining
usual and customary fees and how that basis is applied in calculation
claim payments.
   (2) Disclose the insurer's basis for determining usual and
customary fees through a link on the main page of the insurer's
Internet Web site.
   (f) The insurer shall create a summary of all policy provisions
required in subdivisions (a) through (e), inclusive, into a separate
document titled "Insurer Disclosure of Important Policy Provisions."
   (g) The insurer shall post the "Insurer Disclosure of Important
Policy Provisions" document required in subdivision (f) through a
link on the main page of the insurer's Internet Web site.
   (h) Prior to the sale of a pet insurance policy, the insurer shall
provide the consumer with a printed copy, in at least 12-point type,
of the "Insurer Disclosure of Important Policy Provisions" document.
The insurer shall obtain the consumer's signature indicating that
the consumer has read and understands the disclosure document.
   (i) The disclosures required in this section shall be in addition
to any other disclosure requirements required by law or regulation.
   12880.3.  (a) A person who violates a provision of this part is
liable to the state for a civil penalty to be determined by the
commissioner, not to exceed five thousand dollars ($5,000) for each
violation, or, if the violation was willful, a civil penalty not to
exceed ten thousand dollars ($10,000) for each violation. The
commissioner may establish the acts that constitute a distinct
violation for purposes of this section. However, when the issuance,
amendment, or servicing of a policy or endorsement is inadvertent,
all of those acts constitute a single violation for purposes of this
section.
   (b) The penalty imposed by this section shall be imposed by and
determined by the commissioner pursuant to Section 12880.4. The
penalty imposed by this section is appealable by means of any remedy
provided by Section 12940 or by Chapter 5 (commencing with Section
11500) of Part 1 of Division 3 of Title 2 of the Government Code.
   12880.4.  Whenever the commissioner shall have reason to believe
that a person has engaged or is engaging in this state in a violation
of this article, and that a proceeding by the commissioner in
respect thereto would be to the interest of the public, he or she
shall issue and serve upon that person an order to show cause
containing a statement of the charges in that respect, a statement of
that person's potential liability under this part, and a notice of a
hearing thereon to be held at a time and place fixed therein, which
shall not be less than 30 days after the service thereof, for the
purpose of determining whether the commissioner should issue an order
to that person to, pay the penalty imposed by Section 12880.3, and
to cease and desist those methods, acts, or practices, or any of them
that violate this article.
   If the charges or any of them are found to be justified, the
commissioner shall issue and cause to be served upon that person an
order requiring that person to pay the penalty imposed by Section
12880.3 and to cease and desist from engaging in those methods, acts,
or practices found to be in violation of this part.
   The hearing shall be conducted in accordance with the
Administrative Procedure Act (Chapter 5 (commencing at Section 11500)
of Part 1 of Division 3 of Title 2 of the Government Code), except
that the hearings may be conducted by an administrative law judge in
the administrative law bureau when the proceedings involve a common
question of law or fact with another proceeding arising under other
Insurance Code sections that may be conducted by administrative law
bureau administrative law judges. The commissioner and the appointed
administrative law judge shall have all the powers granted under the
Administrative Procedure Act.
   The person shall be entitled to have the proceedings and the order
reviewed by means of any remedy provided by Section 12940 or by the
Administrative Procedure Act.
   12880.5.  The commissioner may, as conditions warrant, after
notice and hearing, adopt reasonable rules and regulations, and
amendments and additions to those regulations, as are necessary to
administer this part.