AB 2884: Insurance.

(1)Existing law authorizes the Insurance Commissioner, under specified circumstances, to examine the business and affairs of an insurer. That examination is required to be at the expense of the insurer, organization, or person examined by the commissioner, as specified.

Existing law prohibits the revenue raised from the examination of insurers in the 199697 fiscal year from exceeding the examination fee revenue estimate for the 199697 Governors Budget by more than $2,000,000.

This bill would, among other things, make technical and nonsubstantive changes. The bill would also delete the provision relating to revenue raised during the 199697 fiscal year.

(2)The Insurance Holding Company System Regulatory Act requires each insurer that is authorized to do business in this state and that is a member of an insurance holding company system to register with the commissioner and to file a registration statement containing specified information, including the capital structure and general financial condition of the insurer and specified transactions between the insurer and its affiliates.

The act provides that the transactions by registered insurers with their affiliates are subject to various standards, including the requirement that the terms be fair and reasonable.

The act provides that any insurer or any director, officer, employee, or agent of the insurer that commits a willful violation of the act is subject to criminal proceedings.

This bill would require that the terms also be consistent with the current version of the NAIC Insurance Holding Company System Model Regulation.

Because a willful violation of this provision would be subject to criminal proceedings, the bill would create a state-mandated local program.

(3)Existing law prohibits a person from soliciting, negotiating, or effecting contracts of insurance, or acting in the capacity of various types of insurance agents, unless the person holds a valid license from the Insurance Commissioner authorizing the person to act in that capacity. Existing law authorizes the commissioner to deny an application for a license for various reasons including if the applicant committed a felony or a misdemeanor as shown by a plea of guilty or nolo contendere. Existing law also requires an applicant to pass the qualifying examination for the license prior to receiving a permanent license and allows the applicant to retake the qualifying examination subject to reasonable time limits limiting when a person who has failed the examination may retake.

This bill would add that the commissioner may deny an application for a license if the applicant has been convicted of a felony or misdemeanor, as specified. The bill would also prohibit a person who has failed any license qualification examination 10 times within the previous 12-month period from enrolling in any further license qualification examinations for a period of 12 months.

(4)Existing law requires a person who is licensed in this state as an insurance agent or broker, advertises insurance on the Internet, and transacts insurance in this state, to identify certain information on the Internet, regardless of whether the insurance agent or broker maintains his or her Internet presence or if the presence is maintained on his or her behalf. The required information includes, but is not limited to, his or her name as it appears on his or her license, and any fictitious name approved by the commissioner.

This bill would instead require that the person provide his or her name as filed with the commissioner that has not been disapproved pursuant to the provisions regarding the use of fictitious names.

(5)Existing law prohibits an insurer from executing an undertaking of bail except by and through a person holding a bail license, as provided. Existing law also prohibits the commissioner from suspending or revoking any license, issued as specified, without first granting a hearing, as specified.

This bill would prohibit the commissioner from denying a license to an applicant without first granting a hearing, as specified.

(6)Existing law provides that for the purpose of determining certain benefits, that in the case of annuity contracts under which an election may be made to have annuity payments commence at optional maturity dates, the maturity date shall be deemed to be the latest date for which election is permitted by the contract.

This bill would add that in the case of annuity contracts under which the fixed maturity date is later than the later of the anniversary of the contract next following the annuitants 70th birthday or the 10th anniversary of the contract, the maturity date shall be deemed to be the later of the anniversary of the contract next following the annuitants 70th birthday or the 10th anniversary of the contract.

(7)Existing law requires the commissioner to annually prepare a consumer rate guide for long-term care insurance and to include specified information, including a history of the rates of all policies issued in California for the current year and for the 4 preceding years.

This bill would require the history of the rates of all policies issued in California to be listed for the 9 preceding years.

(8)Existing law provides for the regulation of insurers, including insurers issuing policies of long-term care insurance, by the Insurance Commissioner. Existing law prohibits an insurer from increasing the premium for an individual or group long-term care insurance policy or certificate approved for sale unless the insurer has received prior approval for the increase from the commissioner and requires the insurer to submit to the commissioner for approval all premium rate schedule increases, as specified. Existing law further requires that approval of all premium rate schedule increases, and approved premium rate schedule increases be subject to various requirements, including filing updated projections annually for the next 3 years, as specified.

This bill would require that for the above-described rate schedules, the lifetime expected loss ratio be calculated as specified. The bill would also modify the requirements that approved premium rate schedule increases are subject to by requiring the insurer to file composite rate projections if it is necessary to maintain consistent premium rates for new certificates receiving a rate increase.

(9)Existing law requires an insurer, in order to be admitted in this state to transact specified workers compensation transactions, among other things, to deposit cash instruments or approved interest-bearing securities or approved stocks readily convertible into cash, investment certificates, or share accounts issued by a savings and loan association doing business in this state and insured by the Federal Deposit Insurance Corporation, certificates of deposit, or savings deposits in a bank licensed to do business in this state that is either domiciled in and with its principal place of business in this state or that is a national banking association with a trust office located in this state.

This bill would instead include a bank licensed to do business in this state, or a trust company, licensed to do business and located in this state that is either domiciled in and with its principal place of business in this state or that is a national banking association with a trust office located in this state.

(10)Existing law requires the Insurance Commissioner to establish a program to investigate complaints and respond to inquiries received regarding the handling of insurance claims and, when warranted, to bring enforcement actions against insurers or production agencies. Existing law requires the commissioner to promulgate a regulation that sets forth the criteria that the department shall apply to determine if a complaint is deemed to be justified prior to the public release of a complaint against a specifically named insurer or production agency.

This bill would authorize the commissioner to establish an Internet-accessible complaint response system to distribute and receive complaint information, as specified.

(11)The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.