Bill Text: CA AB2591 | 2015-2016 | Regular Session | Amended

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

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Bill Title: Insurance: electronic transmission.

Spectrum: Bipartisan Bill

Status: (Passed) 2016-09-25 - Chaptered by Secretary of State - Chapter 617, Statutes of 2016. [AB2591 Detail]

Download: California-2015-AB2591-Amended.html

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BILL NUMBER: AB 2591	AMENDED
	BILL TEXT

	AMENDED IN ASSEMBLY  MARCH 17, 2016

INTRODUCED BY   Assembly Member Dababneh

                        FEBRUARY 19, 2016

   An act  to amend Section 1633.3 of the Civil Code, and to
amend Section 38.6 of the Insurance Code,   relating to
insurance.



	LEGISLATIVE COUNSEL'S DIGEST


   AB 2591, as amended, Dababneh. Insurance: electronic transmission.

   Existing law generally requires, with exceptions, that specified
provisions of the Civil Code apply to electronic records and
electronic signatures relating to a transaction.  
   This bill would remove a policy cancellation notice by the named
insured from the above exemptions. 
   Existing law generally requires that any required notice related
to insurance transactions be made by mail. Existing law authorizes an
insurer, under specified conditions, to provide by electronic
transmission the required offer of renewal for automobile insurance,
the required offer of renewal or conditional renewal for property
insurance, the required offer of coverage or renewal or any
disclosure required regarding earthquake insurance,  and 
the offer of renewal for a workers' compensation  policy, and
life insurance records.   policy.  
   This bill would state the intent of the Legislature to enact
legislation that would expand the authority of an insurer to provide
required documents to its consumers through electronic transmission.
 
   The bill would, for the above-specified records, authorize persons
in addition to the insurer to send those records by electronic
transmission by providing that an agent, broker, or any other person
licensed by the Department of Insurance may send those records
electronically. 
   Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.


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

   SECTION 1.    Section 1633.3 of the   Civil
Code   , as amended by Chapter 638 of the Statutes of 2015,
is amended to read: 
   1633.3.  (a) Except as otherwise provided in subdivisions (b) and
(c), this title applies to electronic records and electronic
signatures relating to a transaction.
   (b) This title does not apply to transactions subject to the
following laws:
   (1) A law governing the creation and execution of wills, codicils,
or testamentary trusts.
   (2) Division 1 (commencing with Section 1101) of the Uniform
Commercial Code, except Sections 1206 and 1306.
   (3) Divisions 3 (commencing with Section 3101), 4 (commencing with
Section 4101), 5 (commencing with Section 5101), 8 (commencing with
Section 8101), 9 (commencing with Section 9101), and 11 (commencing
with Section 11101) of the Uniform Commercial Code.
   (4) A law that requires that specifically identifiable text or
disclosures in a record or a portion of a record be separately
signed, including initialed, from the record. However, this paragraph
does not apply to Section 1677 or 1678 of this code or Section 1298
of the Code of Civil Procedure.
   (c) This title does not apply to any specific transaction
described in Section 17511.5 of the Business and Professions Code,
Section 56.11, 56.17, 798.14, 1133, or 1134 of, Section 1689.6,
1689.7, or 1689.13 of, Chapter 2.5 (commencing with Section 1695) of
Title 5 of Part 2 of Division 3 of, Section 1720, 1785.15, 1789.14,
1789.16, or 1793.23 of, Chapter 1 (commencing with Section 1801) of
Title 2 of Part 4 of Division 3 of, Section 1861.24, 1862.5,
1917.712, 1917.713, 1950.6, 1983, 2924b, 2924c, 2924f, 2924i, 2924j,
2924.3, or 2937 of, Article 1.5 (commencing with Section 2945) of
Chapter 2 of Title 14 of Part 4 of Division 3 of, Section 2954.5 or
2963 of, Chapter 2b (commencing with Section 2981) or 2d (commencing
with Section 2985.7) of Title 14 of Part 4 of Division 3 of, Section
3071.5 of, Part 5 (commencing with Section 4000) of Division 4 of, or
Part 5.3 (commencing with Section 6500) of Division 4 of this code,
subdivision (b) of Section 18608 or Section 22328 of the Financial
Code, Section 1358.15, 1365, 1368.01, 1368.1, 1371, or 18035.5 of the
Health and Safety Code, Section 662, paragraph (2) of subdivision
(a) of Section 663, 664,  667.5,  673, 677,
paragraph (2) of subdivision (a) of Section 678, subdivisions (a) and
(b) of Section 678.1, Section 786 as it applies to individual and
group disability policies, Section 10192.18, 10199.44, 10199.46,
10235.16, 10235.40, 11624.09, or 11624.1 of the Insurance Code,
Section 779.1, 10010.1, or 16482 of the Public Utilities Code, or
Section 9975 or 11738 of the Vehicle Code. An electronic record may
not be substituted for any notice that is required to be sent
pursuant to Section 1162 of the Code of Civil Procedure. Nothing in
this subdivision shall be construed to prohibit the recordation of
any document with a county recorder by electronic means.
   (d) This title applies to an electronic record or electronic
signature otherwise excluded from the application of this title under
subdivision (b) when used for a transaction subject to a law other
than those specified in subdivision (b).
   (e) A transaction subject to this title is also subject to other
applicable substantive law.
   (f) The exclusion of a transaction from the application of this
title under subdivision (b) or (c) shall be construed only to exclude
the transaction from the application of this title, but shall not be
construed to prohibit the transaction from being conducted by
electronic means if the transaction may be conducted by electronic
means under any other applicable law.
   (g) Notwithstanding subdivisions (b) and (c), this title shall
apply to electronic records and electronic signatures relating to
transactions conducted by a person licensed, certified, or registered
pursuant to the Alarm Company Act (Chapter 11.6 (commencing with
Section 7590) of Division 3 of the Business and Professions Code) for
purposes of activities authorized by Section 7599.54 of the Business
and Professions Code.
   (h) This section shall remain in effect only until January 1,
2019, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2019, deletes or extends
that date.
   SEC. 2.    Section 1633.3 of the  Civil Code
  , as amended by Chapter 638 of the Statutes of 2015, is
amended to read: 
   1633.3.  (a) Except as otherwise provided in subdivisions (b) and
(c), this title applies to electronic records and electronic
signatures relating to a transaction.
   (b) This title does not apply to transactions subject to the
following laws:
   (1) A law governing the creation and execution of wills, codicils,
or testamentary trusts.
   (2) Division 1 (commencing with Section 1101) of the Uniform
Commercial Code, except Sections 1206 and 1306.
   (3) Divisions 3 (commencing with Section 3101), 4 (commencing with
Section 4101), 5 (commencing with Section 5101), 8 (commencing with
Section 8101), 9 (commencing with Section 9101), and 11 (commencing
with Section 11101) of the Uniform Commercial Code.
   (4) A law that requires that specifically identifiable text or
disclosures in a record or a portion of a record be separately
signed, including initialed, from the record. However, this paragraph
does not apply to Section 1677 or 1678 of this code or Section 1298
of the Code of Civil Procedure.
   (c) This title does not apply to any specific transaction
described in Section 17511.5 of the Business and Professions Code,
Section 56.11, 56.17, 798.14, 1133, or 1134 of, Section 1689.6,
1689.7, or 1689.13 of, Chapter 2.5 (commencing with Section 1695) of
Title 5 of Part 2 of Division 3 of, Section 1720, 1785.15, 1789.14,
1789.16, or 1793.23 of, Chapter 1 (commencing with Section 1801) of
Title 2 of Part 4 of Division 3 of, Section 1861.24, 1862.5,
1917.712, 1917.713, 1950.6, 1983, 2924b, 2924c, 2924f, 2924i, 2924j,
2924.3, or 2937 of, Article 1.5 (commencing with Section 2945) of
Chapter 2 of Title 14 of Part 4 of Division 3 of, Section 2954.5 or
2963 of, Chapter 2b (commencing with Section 2981) or 2d (commencing
with Section 2985.7) of Title 14 of Part 4 of Division 3 of, Section
3071.5 of Part 5 (commencing with Section 4000) of Division 4 of, or
Part 5.3 (commencing with Section 6500) of Division 4 of this code,
subdivision (b) of Section 18608 or Section 22328 of the Financial
Code, Section 1358.15, 1365, 1368.01, 1368.1, 1371, or 18035.5 of the
Health and Safety Code, Section 662, 663, 664,  667.5,
 673, 677, 678, 678.1, 786 as it applies to individual and
group disability policies, 10192.18, 10199.44, 10199.46, 10235.16,
10235.40, 11624.09, or 11624.1 of the Insurance Code, Section 779.1,
10010.1, or 16482 of the Public Utilities Code, or Section 9975 or
11738 of the Vehicle Code. An electronic record may not be
substituted for any notice that is required to be sent pursuant to
Section 1162 of the Code of Civil Procedure. Nothing in this
subdivision shall be construed to prohibit the recordation of any
document with a county recorder by electronic means.
   (d) This title applies to an electronic record or electronic
signature otherwise excluded from the application of this title under
subdivision (b) when used for a transaction subject to a law other
than those specified in subdivision (b).
   (e) A transaction subject to this title is also subject to other
applicable substantive law.
   (f) The exclusion of a transaction from the application of this
title under subdivision (b) or (c) shall be construed only to exclude
the transaction from the application of this title, but shall not be
construed to prohibit the transaction from being conducted by
electronic means if the transaction may be conducted by electronic
means under any other applicable law.
   (g) Notwithstanding subdivisions (b) and (c), this title shall
apply to electronic records and electronic signatures relating to
transactions conducted by a person licensed, certified, or registered
pursuant to the Alarm Company Act (Chapter 11.6 (commencing with
Section 7590) of Division 3 of the Business and Professions Code) for
purposes of activities authorized by Section 7599.54 of the Business
and Professions Code.
   (h) This section shall become operative on January 1, 2019.
   (i) This section shall remain in effect only until January 1,
2021, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2021, deletes or extends
that date.
   SEC. 3.    Section 1633.3 of the   Civil
Code   , as added by Chapter 638 of the Statutes of 2015, is
amended to read: 
   1633.3.  (a) Except as otherwise provided in subdivisions (b) and
(c), this title applies to electronic records and electronic
signatures relating to a transaction.
   (b) This title does not apply to transactions subject to the
following laws:
   (1) A law governing the creation and execution of wills, codicils,
or testamentary trusts.
   (2) Division 1 (commencing with Section 1101) of the Uniform
Commercial Code, except Sections 1206 and 1306.
   (3) Divisions 3 (commencing with Section 3101), 4 (commencing with
Section 4101), 5 (commencing with Section 5101), 8 (commencing with
Section 8101), 9 (commencing with Section 9101), and 11 (commencing
with Section 11101) of the Uniform Commercial Code.
   (4) A law that requires that specifically identifiable text or
disclosures in a record or a portion of a record be separately
signed, including initialed, from the record. However, this paragraph
does not apply to Section 1677 or 1678 of this code or Section 1298
of the Code of Civil Procedure.
   (c) This title does not apply to any specific transaction
described in Section 17511.5 of the Business and Professions Code,
Section 56.11, 56.17, 798.14, 1133, or 1134 of, Section 1689.6,
1689.7, or 1689.13 of, Chapter 2.5 (commencing with Section 1695) of
Title 5 of Part 2 of Division 3 of, Section 1720, 1785.15, 1789.14,
1789.16, or 1793.23 of, Chapter 1 (commencing with Section 1801) of
Title 2 of Part 4 of Division 3 of, Section 1861.24, 1862.5,
1917.712, 1917.713, 1950.6, 1983, 2924b, 2924c, 2924f, 2924i, 2924j,
2924.3, or 2937 of, Article 1.5 (commencing with Section 2945) of
Chapter 2 of Title 14 of Part 4 of Division 3 of, Section 2954.5 or
2963 of, Chapter 2b (commencing with Section 2981) or 2d (commencing
with Section 2985.7) of Title 14 of Part 4 of Division 3 of, Section
3071.5 of Part 5 (commencing with Section 4000) of Division 4 of, or
Part 5.3 (commencing with Section 6500) of Division 4 of this code,
subdivision (b) of Section 18608 or Section 22328 of the Financial
Code, Section 1358.15, 1365, 1368.01, 1368.1, 1371, or 18035.5 of the
Health and Safety Code, Section 662, 663, 664,  667.5,
 673, 677, 678, 678.1, 786, 10086, 10113.7, 10127.7,
10127.9, 10127.10, 10192.18, 10199.44, 10199.46, 10235.16, 10235.40,
10509.4, 10509.7, 11624.09, or 11624.1 of the Insurance Code, Section
779.1, 10010.1, or 16482 of the Public Utilities Code, or Section
9975 or 11738 of the Vehicle Code. An electronic record may not be
substituted for any notice that is required to be sent pursuant to
Section 1162 of the Code of Civil Procedure. Nothing in this
subdivision shall be construed to prohibit the recordation of any
document with a county recorder by electronic means.
   (d) This title applies to an electronic record or electronic
signature otherwise excluded from the application of this title under
subdivision (b) when used for a transaction subject to a law other
than those specified in subdivision (b).
   (e) A transaction subject to this title is also subject to other
applicable substantive law.
   (f) The exclusion of a transaction from the application of this
title under subdivision (b) or (c) shall be construed only to exclude
the transaction from the application of this title, but shall not be
construed to prohibit the transaction from being conducted by
electronic means if the transaction may be conducted by electronic
means under any other applicable law.
   (g) Notwithstanding subdivisions (b) and (c), this title shall
apply to electronic records and electronic signatures relating to
transactions conducted by a person licensed, certified, or registered
pursuant to the Alarm Company Act (Chapter 11.6 (commencing with
Section 7590) of Division 3 of the Business and Professions Code) for
purposes of activities authorized by Section 7599.54 of the Business
and Professions Code.
   (h) This section shall become operative on January 1, 2021.
   SEC. 4.    Section 38.6 of the   Insurance
Code   is amended to read: 
   38.6.  (a) (1) Any written record required to be given or mailed
to any person by a  licensee   licensee,
including an offer of renewal required by Sections 663 and 678, the
notice of policy change or cancellation requested by the insured as
required by Section 667.5, the notice of conditional renewal required
by Section 678.1, the offer of coverage or renewal or any disclosure
required by Section 10086, the offer of renewal for a workers'
compensation policy, or any written record required to be given or
mailed to any person by a licensee  relating to the business of
life insurance, as defined in Section 101 of this code may, if not
excluded by subdivision (b) or (c) of Section 1633.3 of the Civil
Code, be provided by electronic transmission pursuant to Title 2.5
(commencing with Section 1633.1) of Part 2 of Division 3 of the Civil
Code, if each party has agreed to conduct the transaction by
electronic means pursuant to Section 1633.5 of the Civil Code, and if
the licensee complies with the provisions of this section. A valid
electronic signature shall be sufficient for any provision of law
requiring a written signature.
   (2) For purposes of this section, the definitions set forth in
Section 1633.2 of the Civil Code shall apply. The term "licensee"
means an insurer, agent, broker, or any other person who is required
to be licensed by the department.
   (3) Notwithstanding subdivision (l) of Section 1633.2 of the Civil
Code, for purposes of this section, "person" includes, but is not
limited to, the policy owner, policyholder, applicant, insured, or
assignee or designee of an insured.
   (b) In order to transmit a  life insurance record
electronically,   record listed in subdivision (a)
electronically,  a licensee shall comply with all of the
following:
   (1) A licensee, or licensee's representative, acquires the consent
of the person to opt in to receive the record by electronic
transmission, and the person has not withdrawn that consent, prior to
providing the record by electronic transmission. A person's consent
may be acquired verbally, in writing, or electronically. If consent
is acquired verbally, the licensee shall confirm consent in writing
or electronically. The licensee shall retain a record of the person's
consent to receive the record by electronic transmission with the
policy information so that it is retrievable upon request by the
department while the policy is in force and for five years
thereafter.
   (2) A licensee discloses, in writing or electronically, to the
person all of the following:
   (A) The opt in to receive the record by electronic transmission is
voluntary.
   (B) That the person may opt out of receiving the record by
electronic transmission at any time, and the process or system for
the person to opt out.
   (C) A description of the record that the person will receive by
electronic transmission.
   (D) The process or system to report a change or correction in the
person's email address.
   (E) The licensee's contact information, which includes, but is not
limited to, a toll-free number or the licensee's Internet Web site
address.
   (3) The opt-in consent disclosure required by paragraph (2) may be
set forth in the application or in a separate document that is part
of the policy approved by the commissioner and shall be bolded or
otherwise set forth in a conspicuous manner. The person's signature
shall be set forth immediately below the opt-in consent disclosure.
If the licensee seeks consent at any time prior to the completion of
the application, consent and signature shall be obtained before the
application is completed. If the person has not opted in at the time
the application is completed, the licensee may receive the opt-in
consent at any time thereafter, pursuant to the same opt in
requirements that apply at the time of the application. The licensee
shall retain a copy of the signed opt-in consent disclosure with the
policy information so that each is retrievable upon request by the
department while the policy is in force and for five years
thereafter.
   (4) The email address of the person who has consented to
electronic transmission shall be set forth on the consent disclosure.
In addition, if the person who consented receives an annual
statement, the email address of the person who has consented shall be
set forth on that record.
   (5) The licensee shall annually provide one free printed copy of
any record described in this subdivision upon request by the person.
   (6) If a provision of this code requires a licensee to transmit a
record by first class mail, regular mail, does not specify a method
of delivery, or is a record that is required to be provided pursuant
to Article 6.6 (commencing with Section 791), and if the licensee is
not otherwise prohibited from transmitting the record electronically
under subdivision (b) of Section 1633.8 of the Civil Code, then the
record may be transmitted by electronic transmission if the licensee
complies with all of the requirements of Sections 1633.15 and 1633.16
of the Civil Code.
   (7) Notwithstanding subdivision (b) of Section 1633.8 of the Civil
Code, if a provision of this code requires a licensee to transmit a
record by return receipt, registered mail, certified mail, signed
written receipt of delivery, or other method of delivery evidencing
actual receipt by the person, and if the licensee is not otherwise
prohibited from transmitting the record electronically under Section
1633.3 of the Civil Code and the provisions of this section, then the
licensee shall maintain a process or system that demonstrates proof
of delivery and actual receipt of the record by the person consistent
with this paragraph. The licensee shall document and retain
information demonstrating delivery and actual receipt so that it is
retrievable, upon request, by the department at least five years
after the policy is no longer in force. The record provided by
electronic transmission shall be treated as if actually received if
the licensee delivers the record to the person in compliance with
applicable statutory delivery deadlines. A licensee may demonstrate
actual delivery and receipt by any of the following:
   (A) The person acknowledges receipt of the electronic transmission
of the record by returning an electronic receipt or by executing an
electronic signature.
   (B) The record is made part of, or attached to, an email sent to
the email address designated by the person, and there is a
confirmation receipt, or some other evidence that the person received
the email in his or her email account and opened the email.
   (C) The record is posted on the licensee's secure Internet Web
site, and there is evidence demonstrating that the person logged onto
the licensee's secure Internet Web site and downloaded, printed, or
otherwise acknowledged receipt of the record.
   (D) If a licensee is unable to demonstrate actual delivery and
receipt pursuant to this paragraph, the licensee shall resend the
record by regular mail to the person in the manner originally
specified by the underlying provision of this code.
   (8) Notwithstanding any other law, a notice of lapse, nonrenewal,
cancellation, or termination of any product subject to this section
may be transmitted electronically if the licensee demonstrates proof
of delivery as set forth in paragraph (7) and complies with the other
provisions in this section.
   (9) If the record is not delivered directly to the electronic
address designated by the person but placed at an electronic address
accessible to the person, a licensee shall notify the person in
plain, clear, and conspicuous language at the electronic address
designated by the person that describes the record, informs that
person that it is available at another location, and provides
instructions to the person as to how to obtain the record.
   (10) (A) Upon a licensee receiving information indicating that the
record sent by electronic transmission was not received by the
person, the licensee shall, within five business days, comply with
either clause (i) or (ii):
   (i) Contact the person to confirm or update the person's email
address and resend the record by electronic transmission. If the
licensee elects to resend the record by electronic transmission, the
licensee shall demonstrate the transmission was received by the
person, pursuant to paragraph (6), (7), or (8). If the licensee is
unable to confirm or update the person's email address, the licensee
shall resend the record by regular mail to the licensee at the
address shown on the policy, or, if the underlying statute requires
delivery in a specified manner, send the record in that specified
manner.
   (ii) Resend the record initially provided by electronic
transmission by regular mail to the insured at the address shown on
the policy, or, if the underlying statute requires delivery in a
specified manner, send the record in that specified manner.
   (B) If the licensee sends the first electronic record within the
time period required by law and the licensee complies with both
paragraph (5) and subparagraph (A) of this paragraph, the record sent
pursuant to clause (i) or (ii) of subparagraph (A) shall be treated
as if mailed in compliance with the applicable statutory regular mail
delivery deadlines.
   (11) The licensee shall not charge any person who declines to opt
in to receive a record through electronic transmission from receiving
a record electronically. The licensee shall not provide a discount
or an incentive to any person to opt in to receive electronic
records.
   (12) The licensee shall verify a person's email address via paper
writing sent by regular mail when more than 12 months have elapsed
since the license's last electronic communication.
   (c) An insurance agent or broker acting under the direction of a
party that enters into a contract by means of an electronic record or
electronic signature shall not be held liable for any deficiency in
the electronic procedures agreed to by the parties under that
contract if all of the following are met:
   (1) The insurance agent or broker has not engaged in negligent,
reckless, or intentional tortious conduct.
   (2) The insurance agent or broker was not involved in the
development or establishment of the electronic procedures.
   (3) The insurance agent or broker did not deviate from the
electronic procedures.
   (d) On or before January 1, 2020, the commissioner shall submit a
report to the Governor and to the committees of the Senate and
Assembly having jurisdiction over insurance and the judiciary,
regarding the impact and implementation of the authorization of the
electronic transmission of certain insurance renewal offers, notices,
or disclosures as authorized by this section. The report shall
include input from insurers, consumers, and consumer organizations,
and shall include an assessment of the department's experience
pertaining to the authorization of the electronic transmission of
insurance renewals as authorized by this section.
   (e) Notwithstanding paragraph (4) of subdivision (b) of Section
1633.3 of the Civil Code, for any policy of life insurance, as
defined in Section 101, any statutory requirement for a separate
acknowledgment, signature, or initial, which is not expressly
prohibited by subdivision (c) of Section 1633.3 of the Civil Code,
may be transacted using an electronic signature, or by electronic
transaction, subject to all applicable provisions of this section.
   (f) The department may suspend a licensee from providing records
by electronic transmission if there is a pattern or practices that
demonstrate the licensee has failed to comply with the requirements
of this section. A licensee may appeal the suspension and resume its
electronic transmission of records upon communication from the
department that the changes the licensee made to its process or
system to comply with the requirements of this section are
satisfactory.
   (g) This section shall remain in effect only until January 1,
2021, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2021, deletes or extends
that date. 
  SECTION 1.    It is the intent of the Legislature
to enact legislation that would expand the authority of an insurer to
provide required documents to its consumers through electronic
transmission.