SB 1302: Basic property insurance: California FAIR Plan.
- Session Year: 2015-2016
- House: Senate
- Latest Version Date: 2016-09-23
Under existing law, the California FAIR (fair access to insurance requirements) Plan Association is a joint reinsurance association of state insurers that is established to, among other things, assist persons in securing basic property insurance for qualified property for which insurance cannot be obtained through the normal insurance market. Existing law requires the association to establish and maintain a toll-free telephone number through which a person may receive assistance in applying for basic property insurance. Existing law requires an insurer member of the plan to provide to an applicant who is denied coverage the toll-free telephone number for the plan for information and assistance in obtaining basic property insurance. Existing law requires an agent or broker transacting basic property insurance to either assist a person in making an application for insurance through the plan or to provide the person with that toll-free telephone number.
This bill would additionally require the association to establish and maintain an Internet Web site at which a person may receive information and assistance in applying for insurance through the plan and would require the association to include the toll-free telephone number and the Internet Web site address on all communications with an applicant or an insured. The bill, beginning March 1, 2017, would require an insurer member to provide an applicant denied coverage or a policyholder whose policy is canceled or not renewed both that Internet Web site address and toll-free telephone number. The bill would delete the provision permitting an agent or broker to provide the toll-free telephone number of the plan as an alternative to assisting a person in making an application for insurance through the plan, and would instead require an agent or broker to assist a person seeking his or her help in obtaining basic property insurance coverage by making an application for insurance through the plan by submitting an application at the persons request, by providing the person with the California FAIR Plans Internet Web site address and the toll-free telephone number, or by making an application for insurance, at the persons request, and placing that person with or through an insurer that offers, or a surplus line broker that procures, basic property insurance coverage.
This bill would declare that it is to take effect immediately as an urgency statute.
Under existing law, the California FAIR (fair access to insurance requirements) Plan Association is a joint reinsurance association of state insurers that is established to, among other things, assist persons in securing basic property insurance for qualified property for which insurance cannot be obtained through the normal insurance market. Existing law requires the association to establish and maintain a toll-free telephone number through which a person may receive assistance in applying for basic property insurance. Existing law requires an insurer member of the plan to provide to an applicant who is denied coverage the toll-free telephone number for the plan for information and assistance in obtaining basic property insurance. Existing law requires an agent or broker transacting basic property insurance to either assist a person in making an application for insurance through the plan or to provide the person with that toll-free telephone number.
This bill would additionally require the association to establish and maintain an Internet Web site at which a person may receive information and assistance in applying for insurance through the plan and would require the association to include the toll-free telephone number and the Internet Web site address on all communications with an applicant or an insured. The bill, beginning March 1, 2017, would require an insurer member to provide an applicant denied coverage or a policyholder whose policy is canceled or not renewed both that Internet Web site address and toll-free telephone number. The bill would delete the provision permitting an agent or broker to provide the toll-free telephone number of the plan as an alternative to assisting a person in making an application for insurance through the plan, and would instead require an agent or broker to assist a person seeking his or her help in obtaining basic property insurance coverage by making an application for insurance through the plan by submitting an application at the persons request, by providing the person with the California FAIR Plans Internet Web site address and the toll-free telephone number, or by making an application for insurance, at the persons request, and placing that person with or through an insurer that offers, or a surplus line broker that procures, basic property insurance coverage.
This bill would declare that it is to take effect immediately as an urgency statute.
Under existing law, the California FAIR (fair access to insurance requirements) Plan Association is a joint reinsurance association of state insurers that is established to, among other things, assist persons in securing basic property insurance for qualified property for which insurance cannot be obtained through the normal insurance market. Existing law requires the association to establish and maintain a toll-free telephone number through which a person may receive assistance in applying for basic property insurance. Existing law requires an insurer member of the plan to provide to an applicant who is denied coverage the toll-free telephone number for the plan for information and assistance in obtaining basic property insurance. Existing law requires an agent or broker transacting basic property insurance to either assist a person in making an application for insurance through the plan or to provide the person with that toll-free telephone number.
This bill would additionally require the association to establish and maintain an Internet Web site at which a person may receive information and assistance in applying for insurance through the plan and would require the association to include the toll-free telephone number and the Internet Web site address on all communications with an applicant or an insured. The bill, beginning March 1, 2017, would require an insurer member to provide an applicant denied coverage or a policyholder whose policy is canceled or not renewed both that Internet Web site address and toll-free telephone number. The bill would delete the provision permitting an agent or broker to provide the toll-free telephone number of the plan as an alternative to assisting a person in making an application for insurance through the plan, and would instead require an agent or broker to assist a person in seeking his or her help in obtaining basic property insurance coverage by making an application for insurance through the plan by submitting an application at the persons request or request, by providing the person with the California FAIR Plans Internet Web site address and the toll-free telephone number. number, or by making an application for insurance, at the persons request, and placing that person with or through an insurer that offers, or a surplus line broker that procures, basic property insurance coverage.
This bill would declare that it is to take effect immediately as an urgency statute.
Under existing law, the California FAIR (fair access to insurance requirements) Plan Association is a joint reinsurance association of state insurers that is established to, among other things, assist persons in securing basic property insurance for qualified property for which insurance cannot be obtained through the normal insurance market. Existing law requires the association to establish and maintain a toll-free telephone number through which a person may receive assistance in applying for basic property insurance. Existing law requires an insurer member of the plan to provide to an applicant who is denied coverage the toll-free telephone number for the plan for information and assistance in obtaining basic property insurance. Existing law requires an agent or broker transacting basic property insurance to either assist a person in making an application for insurance through the plan or to provide the person with that toll-free telephone number.
This bill would additionally require the association to establish and maintain an Internet Web site at which a person may receive information and assistance in applying for insurance through the plan. plan and would require the association to include the toll-free telephone number and the Internet Web site address on all communications with an applicant or an insured. The bill, beginning March 1, 2017, would require an insurer member to provide an applicant denied coverage or a policyholder whose policy is canceled or not renewed both that Internet Web site address and toll-free telephone number. The bill would require the association to cause that toll-free telephone number and Internet Web site address to be included in all communications with an applicant or insured. The bill would require an insurance agent or broker transacting basic property insurance to assist a person in making an application for insurance through the plan, and would delete the provision that permitted the agent or broker, as an alternative, to provide the person the toll-free telephone number. The bill would delete the provision permitting an agent or broker to provide the toll-free telephone number of the plan as an alternative to assisting a person in making an application for insurance through the plan, and would instead require an agent or broker to assist a person in making an application through the plan by submitting an application at the persons request or by providing the person with the California FAIR Plans Internet Web site address and the toll-free telephone number.
This bill would declare that it is to take effect immediately as an urgency statute.
Under existing law, the California FAIR (fair access to insurance requirements) Plan Association is a joint reinsurance association of state insurers that is established to, among other things, assist persons in securing basic property insurance for qualified property for which insurance cannot be obtained through the normal insurance market. Existing law requires the association to establish and maintain a toll-free telephone number through which a person may receive assistance in applying for basic property insurance. Existing law requires an insurer member of the plan to provide to an applicant who is denied coverage the toll-free number for the plan for information and assistance in obtaining basic property insurance. Existing law requires an agent or broker transacting basic property insurance to either assist a person in making an application for insurance through the plan or to provide the person with that toll-free telephone number.
This bill would additionally require the association to establish and maintain an Internet Web site at which a person may receive information and assistance in applying for insurance through the plan. The bill would require an insurer member to provide an applicant denied coverage or a policyholder whose policy is canceled or not renewed both that Internet Web site address and toll-free telephone number. The bill would require the association to cause that toll-free telephone number and Internet Web site address to be included in all communications with an applicant or insured. The bill would require an insurance agent or broker transacting basic property insurance to assist a person in making an application for insurance through the plan, and would delete the provision that permitted the agent or broker, as an alternative, to provide the person the toll-free telephone number.
This bill would declare that it is to take effect immediately as an urgency statute.
(a)Within 30 days following the effective date of this chapter, the association shall submit to the commissioner, for his or her review, a proposed plan of operation, consistent with the provisions of this chapter, creating an association consisting of all insurers licensed to write and engaged in writing in this state, on a direct basis, basic property insurance or any component of basic property insurance in homeowners or other dwelling multiperil policies. An insurer described in this subdivision shall be a member of the association and shall remain a member as a condition of its authority to transact those kinds of insurance in this state.
(b)The proposed plan shall authorize the association to assume and cede reinsurance on risks written by insurers in conformity with the program.
(c)Under the plan, an insurer shall participate in the writings, expenses, and profits and losses of the association in the proportion that its premiums written during the second preceding calendar year bear to the aggregate premiums written by all insurers in the program, excluding that portion of the premiums written attributable to the operation of the association. Premiums written on a policy of basic residential earthquake insurance issued by the California Earthquake Authority pursuant to Section 10089.6 shall be attributed to the insurer that writes the underlying policy of residential property insurance.
(d)The plan shall provide for administration by a governing committee under rules to be adopted by the governing committee with the approval of the commissioner. Voting on administrative questions of the association and facility shall be weighted in accordance with each insurers premiums written during the second preceding calendar year as disclosed in the reports filed by the insurer with the commissioner.
(e)The plan shall provide for a plan to encourage persons to secure basic property insurance through normal channels from an admitted insurer or a licensed surplus line broker by informing those persons what steps they must take in order to secure the insurance through normal channels.
(f)The plan shall be subject to the approval of the commissioner and shall go into effect upon the tentative approval of the commissioner. The commissioner may, at any time, withdraw his or her tentative approval or he or she may, at any time after he or she has given his or her final approval, revoke that approval if he or she feels it is necessary to carry out the purposes of the chapter. The withdrawal or revocation of that approval shall not affect the validity of any policies executed prior to the date of the withdrawal. If the commissioner disapproves or withdraws or revokes his or her approval to all or any part of the plan of operation, the association shall, within 30 days, submit for review an appropriately revised plan or part of a revised plan, and, if the association fails to do so, or if the revised plan is unacceptable, the commissioner shall promulgate a plan of operation or part of a plan as he or she may deem necessary to carry out the purposes of this chapter.
(g)The association may, on its own initiative or at the request of the commissioner, amend the plan of operation, subject to approval by the commissioner, who shall have supervision of the inspection bureau, the facility, and the association. The commissioner or any person designated by him or her, shall have the power of visitation of and examination into the operation and free access to all the books, records, files, papers, and documents that relate to operation of the facility and association, and may summon, qualify, and examine as witnesses all persons having knowledge of those operations, including officers, agents, or employees thereof.
(h)Every insurer member of the plan shall provide to applicants who are denied coverage the statewide toll-free telephone number for the plan established pursuant to Section 10095.5 for the purpose of obtaining information and assistance in obtaining basic property insurance.
(i)This section shall remain in effect only until March 1, 2017, and as of that date is repealed, unless a later enacted statute, that is enacted before March 1, 2017, deletes or extends that date.
SEC. 2.Section 10095 is added to the Insurance Code, to read:10095.(a)Within 30 days following the effective date of this chapter, the association shall submit to the commissioner, for his or her review, a proposed plan of operation, consistent with the provisions of this chapter, creating an association consisting of all insurers licensed to write and engaged in writing in this state, on a direct basis, basic property insurance or any component of basic property insurance in homeowners or other dwelling multiperil policies. An insurer described in this subdivision shall be a member of the association and shall remain a member as a condition of its authority to transact those kinds of insurance in this state.
(b)The proposed plan shall authorize the association to assume and cede reinsurance on risks written by insurers in conformity with the program.
(c)Under the plan, an insurer shall participate in the writings, expenses, and profits and losses of the association in the proportion that its premiums written during the second preceding calendar year bear to the aggregate premiums written by all insurers in the program, excluding that portion of the premiums written attributable to the operation of the association. Premiums written on a policy of basic residential earthquake insurance issued by the California Earthquake Authority pursuant to Section 10089.6 shall be attributed to the insurer that writes the underlying policy of residential property insurance.
(d)The plan shall provide for administration by a governing committee under rules to be adopted by the governing committee with the approval of the commissioner. Voting on administrative questions of the association and facility shall be weighted in accordance with each insurers premiums written during the second preceding calendar year as disclosed in the reports filed by the insurer with the commissioner.
(e)The plan shall provide for a plan to encourage persons to secure basic property insurance through normal channels from an admitted insurer or a licensed surplus line broker by informing those persons what steps they must take in order to secure the insurance through normal channels.
(f)The plan shall be subject to the approval of the commissioner and shall go into effect upon the tentative approval of the commissioner. The commissioner may, at any time, withdraw his or her tentative approval or he or she may, at any time after he or she has given his or her final approval, revoke that approval if he or she feels it is necessary to carry out the purposes of the chapter. The withdrawal or revocation of that approval shall not affect the validity of any policies executed prior to the date of the withdrawal. If the commissioner disapproves or withdraws or revokes his or her approval to all or any part of the plan of operation, the association shall, within 30 days, submit for review an appropriately revised plan or part of a revised plan, and, if the association fails to do so, or if the revised plan is unacceptable, the commissioner shall promulgate a plan of operation or part of a plan as he or she may deem necessary to carry out the purposes of this chapter.
(g)The association may, on its own initiative or at the request of the commissioner, amend the plan of operation, subject to approval by the commissioner, who shall have supervision of the inspection bureau, the facility, and the association. The commissioner or any person designated by him or her, shall have the power of visitation of and examination into the operation and free access to all the books, records, files, papers, and documents that relate to operation of the facility and association, and may summon, qualify, and examine as witnesses all persons having knowledge of those operations, including officers, agents, or employees thereof.
(h)An insurer member of the plan shall provide to an applicant who is denied coverage, or a policyholder whose policy is canceled or not renewed, the Internet Web site address and statewide toll-free telephone number for the plan established pursuant to Section 10095.5 for the purpose of obtaining information and assistance in obtaining basic property insurance.
(i)This section shall become operative March 1, 2017.
SEC. 3.Section 10095.5 of the Insurance Code is amended to read:10095.5.(a)The association shall establish and maintain an Internet Web site and a statewide toll-free telephone number through which a person may receive information and assistance in applying for insurance through the plan. The association shall cause the toll-free telephone number to be published in all general distribution telephone directories in the state and shall include the toll-free telephone number and Internet Web site address on all communications with an applicant or insured.
(b)An insurance agent or broker transacting basic property insurance shall assist a person seeking his or her help in obtaining basic property insurance coverage by any one of the following methods:
(1)Making an application for insurance through the plan by submitting an application at the persons request.
(2)Providing the person with the California FAIR Plans Internet Web site address and the toll-free telephone number.
(3)Making an application for insurance, at the persons request, and placing that person with or through an insurer that offers, or a surplus line broker that procures, basic property insurance coverage.
SEC. 4.This act is an urgency statute necessary for the immediate preservation of the public peace, health, or safety within the meaning of Article IV of the Constitution and shall go into immediate effect. The facts constituting the necessity are:
In order to have the consumer protections proposed in this act become operative as soon as possible for homeowners who are having difficulty obtaining insurance coverage for their property because they are located in high-risk brush and wildfire areas, and to provide insurers adequate time to amend and prepare their required notices to customers about the availability of coverage through the California FAIR (fair access to insurance requirements) Plan, it is necessary for this act to take effect immediately.
(a)Within 30 days following the effective date of this chapter, the association shall submit to the commissioner, for his or her review, a proposed plan of operation, consistent with the provisions of this chapter, creating an association consisting of all insurers licensed to write and engaged in writing in this state, on a direct basis, basic property insurance or any component of basic property insurance in homeowners or other dwelling multiperil policies. An insurer described in this subdivision shall be a member of the association and shall remain a member as a condition of its authority to transact those kinds of insurance in this state.
(b)The proposed plan shall authorize the association to assume and cede reinsurance on risks written by insurers in conformity with the program.
(c)Under the plan, an insurer shall participate in the writings, expenses, and profits and losses of the association in the proportion that its premiums written during the second preceding calendar year bear to the aggregate premiums written by all insurers in the program, excluding that portion of the premiums written attributable to the operation of the association. Premiums written on a policy of basic residential earthquake insurance issued by the California Earthquake Authority pursuant to Section 10089.6 shall be attributed to the insurer that writes the underlying policy of residential property insurance.
(d)The plan shall provide for administration by a governing committee under rules to be adopted by the governing committee with the approval of the commissioner. Voting on administrative questions of the association and facility shall be weighted in accordance with each insurers premiums written during the second preceding calendar year as disclosed in the reports filed by the insurer with the commissioner.
(e)The plan shall provide for a plan to encourage persons to secure basic property insurance through normal channels from an admitted insurer or a licensed surplus line broker by informing those persons what steps they must take in order to secure the insurance through normal channels.
(f)The plan shall be subject to the approval of the commissioner and shall go into effect upon the tentative approval of the commissioner. The commissioner may, at any time, withdraw his or her tentative approval or he or she may, at any time after he or she has given his or her final approval, revoke that approval if he or she feels it is necessary to carry out the purposes of the chapter. The withdrawal or revocation of that approval shall not affect the validity of any policies executed prior to the date of the withdrawal. If the commissioner disapproves or withdraws or revokes his or her approval to all or any part of the plan of operation, the association shall, within 30 days, submit for review an appropriately revised plan or part of a revised plan, and, if the association fails to do so, or if the revised plan is unacceptable, the commissioner shall promulgate a plan of operation or part of a plan as he or she may deem necessary to carry out the purposes of this chapter.
(g)The association may, on its own initiative or at the request of the commissioner, amend the plan of operation, subject to approval by the commissioner, who shall have supervision of the inspection bureau, the facility, and the association. The commissioner or any person designated by him or her, shall have the power of visitation of and examination into the operation and free access to all the books, records, files, papers, and documents that relate to operation of the facility and association, and may summon, qualify, and examine as witnesses all persons having knowledge of those operations, including officers, agents, or employees thereof.
(h)Every insurer member of the plan shall provide to applicants who are denied coverage the statewide toll-free telephone number for the plan established pursuant to Section 10095.5 for the purpose of obtaining information and assistance in obtaining basic property insurance.
(i)This section shall remain in effect only until March 1, 2017, and as of that date is repealed, unless a later enacted statute, that is enacted before March 1, 2017, deletes or extends that date.
SEC. 2.Section 10095 is added to the Insurance Code, to read:10095.(a)Within 30 days following the effective date of this chapter, the association shall submit to the commissioner, for his or her review, a proposed plan of operation, consistent with the provisions of this chapter, creating an association consisting of all insurers licensed to write and engaged in writing in this state, on a direct basis, basic property insurance or any component of basic property insurance in homeowners or other dwelling multiperil policies. An insurer described in this subdivision shall be a member of the association and shall remain a member as a condition of its authority to transact those kinds of insurance in this state.
(b)The proposed plan shall authorize the association to assume and cede reinsurance on risks written by insurers in conformity with the program.
(c)Under the plan, an insurer shall participate in the writings, expenses, and profits and losses of the association in the proportion that its premiums written during the second preceding calendar year bear to the aggregate premiums written by all insurers in the program, excluding that portion of the premiums written attributable to the operation of the association. Premiums written on a policy of basic residential earthquake insurance issued by the California Earthquake Authority pursuant to Section 10089.6 shall be attributed to the insurer that writes the underlying policy of residential property insurance.
(d)The plan shall provide for administration by a governing committee under rules to be adopted by the governing committee with the approval of the commissioner. Voting on administrative questions of the association and facility shall be weighted in accordance with each insurers premiums written during the second preceding calendar year as disclosed in the reports filed by the insurer with the commissioner.
(e)The plan shall provide for a plan to encourage persons to secure basic property insurance through normal channels from an admitted insurer or a licensed surplus line broker by informing those persons what steps they must take in order to secure the insurance through normal channels.
(f)The plan shall be subject to the approval of the commissioner and shall go into effect upon the tentative approval of the commissioner. The commissioner may, at any time, withdraw his or her tentative approval or he or she may, at any time after he or she has given his or her final approval, revoke that approval if he or she feels it is necessary to carry out the purposes of the chapter. The withdrawal or revocation of that approval shall not affect the validity of any policies executed prior to the date of the withdrawal. If the commissioner disapproves or withdraws or revokes his or her approval to all or any part of the plan of operation, the association shall, within 30 days, submit for review an appropriately revised plan or part of a revised plan, and, if the association fails to do so, or if the revised plan is unacceptable, the commissioner shall promulgate a plan of operation or part of a plan as he or she may deem necessary to carry out the purposes of this chapter.
(g)The association may, on its own initiative or at the request of the commissioner, amend the plan of operation, subject to approval by the commissioner, who shall have supervision of the inspection bureau, the facility, and the association. The commissioner or any person designated by him or her, shall have the power of visitation of and examination into the operation and free access to all the books, records, files, papers, and documents that relate to operation of the facility and association, and may summon, qualify, and examine as witnesses all persons having knowledge of those operations, including officers, agents, or employees thereof.
(h)An insurer member of the plan shall provide to an applicant who is denied coverage, or a policyholder whose policy is canceled or not renewed, the Internet Web site address and statewide toll-free telephone number for the plan established pursuant to Section 10095.5 for the purpose of obtaining information and assistance in obtaining basic property insurance.
(i)This section shall become operative March 1, 2017.
SEC. 3.Section 10095.5 of the Insurance Code is amended to read:10095.5.(a)The association shall establish and maintain an Internet Web site and a statewide toll-free telephone number through which a person may receive information and assistance in applying for insurance through the plan. The association shall cause the toll-free telephone number to be published in all general distribution telephone directories in the state and shall include the toll-free telephone number and Internet Web site address on all communications with an applicant or insured.
(b)An insurance agent or broker transacting basic property insurance shall assist a person seeking his or her help in obtaining basic property insurance coverage by any one of the following methods:
(1)Making an application for insurance through the plan by submitting an application at the persons request.
(2)Providing the person with the California FAIR Plans Internet Web site address and the toll-free telephone number.
(3)Making an application for insurance, at the persons request, and placing that person with or through an insurer that offers, or a surplus line broker that procures, basic property insurance coverage.
SEC. 4.This act is an urgency statute necessary for the immediate preservation of the public peace, health, or safety within the meaning of Article IV of the Constitution and shall go into immediate effect. The facts constituting the necessity are:
In order to have the consumer protections proposed in this act become operative as soon as possible for homeowners who are having difficulty obtaining insurance coverage for their property because they are located in high-risk brush and wildfire areas, and to provide insurers adequate time to amend and prepare their required notices to customers about the availability of coverage through the California FAIR (fair access to insurance requirements) Plan, it is necessary for this act to take effect immediately.
(a)Within 30 days following the effective date of this chapter, the association shall submit to the commissioner, for his or her review, a proposed plan of operation, consistent with the provisions of this chapter, creating an association consisting of all insurers licensed to write and engaged in writing in this state, on a direct basis, basic property insurance or any component of basic property insurance in homeowners or other dwelling multiperil policies. An insurer described in this subdivision shall be a member of the association and shall remain a member as a condition of its authority to transact those kinds of insurance in this state.
(b)The proposed plan shall authorize the association to assume and cede reinsurance on risks written by insurers in conformity with the program.
(c)Under the plan, an insurer shall participate in the writings, expenses, and profits and losses of the association in the proportion that its premiums written during the second preceding calendar year bear to the aggregate premiums written by all insurers in the program, excluding that portion of the premiums written attributable to the operation of the association. Premiums written on a policy of basic residential earthquake insurance issued by the California Earthquake Authority pursuant to Section 10089.6 shall be attributed to the insurer that writes the underlying policy of residential property insurance.
(d)The plan shall provide for administration by a governing committee under rules to be adopted by the governing committee with the approval of the commissioner. Voting on administrative questions of the association and facility shall be weighted in accordance with each insurers premiums written during the second preceding calendar year as disclosed in the reports filed by the insurer with the commissioner.
(e)The plan shall provide for a plan to encourage persons to secure basic property insurance through normal channels from an admitted insurer or a licensed surplus line broker by informing those persons what steps they must take in order to secure the insurance through normal channels.
(f)The plan shall be subject to the approval of the commissioner and shall go into effect upon the tentative approval of the commissioner. The commissioner may, at any time, withdraw his or her tentative approval or he or she may, at any time after he or she has given his or her final approval, revoke that approval if he or she feels it is necessary to carry out the purposes of the chapter. The withdrawal or revocation of that approval shall not affect the validity of any policies executed prior to the date of the withdrawal. If the commissioner disapproves or withdraws or revokes his or her approval to all or any part of the plan of operation, the association shall, within 30 days, submit for review an appropriately revised plan or part of a revised plan, and, if the association fails to do so, or if the revised plan is unacceptable, the commissioner shall promulgate a plan of operation or part of a plan as he or she may deem necessary to carry out the purposes of this chapter.
(g)The association may, on its own initiative or at the request of the commissioner, amend the plan of operation, subject to approval by the commissioner, who shall have supervision of the inspection bureau, the facility, and the association. The commissioner or any person designated by him or her, shall have the power of visitation of and examination into the operation and free access to all the books, records, files, papers, and documents that relate to operation of the facility and association, and may summon, qualify, and examine as witnesses all persons having knowledge of those operations, including officers, agents, or employees thereof.
(h)Every insurer member of the plan shall provide to applicants who are denied coverage the statewide toll-free telephone number for the plan established pursuant to Section 10095.5 for the purpose of obtaining information and assistance in obtaining basic property insurance.
(i)This section shall remain in effect only until March 1, 2017, and as of that date is repealed, unless a later enacted statute, that is enacted before March 1, 2017, deletes or extends that date.
SEC. 2.Section 10095 is added to the Insurance Code, to read:10095.(a)Within 30 days following the effective date of this chapter, the association shall submit to the commissioner, for his or her review, a proposed plan of operation, consistent with the provisions of this chapter, creating an association consisting of all insurers licensed to write and engaged in writing in this state, on a direct basis, basic property insurance or any component of basic property insurance in homeowners or other dwelling multiperil policies. An insurer described in this subdivision shall be a member of the association and shall remain a member as a condition of its authority to transact those kinds of insurance in this state.
(b)The proposed plan shall authorize the association to assume and cede reinsurance on risks written by insurers in conformity with the program.
(c)Under the plan, an insurer shall participate in the writings, expenses, and profits and losses of the association in the proportion that its premiums written during the second preceding calendar year bear to the aggregate premiums written by all insurers in the program, excluding that portion of the premiums written attributable to the operation of the association. Premiums written on a policy of basic residential earthquake insurance issued by the California Earthquake Authority pursuant to Section 10089.6 shall be attributed to the insurer that writes the underlying policy of residential property insurance.
(d)The plan shall provide for administration by a governing committee under rules to be adopted by the governing committee with the approval of the commissioner. Voting on administrative questions of the association and facility shall be weighted in accordance with each insurers premiums written during the second preceding calendar year as disclosed in the reports filed by the insurer with the commissioner.
(e)The plan shall provide for a plan to encourage persons to secure basic property insurance through normal channels from an admitted insurer or a licensed surplus line broker by informing those persons what steps they must take in order to secure the insurance through normal channels.
(f)The plan shall be subject to the approval of the commissioner and shall go into effect upon the tentative approval of the commissioner. The commissioner may, at any time, withdraw his or her tentative approval or he or she may, at any time after he or she has given his or her final approval, revoke that approval if he or she feels it is necessary to carry out the purposes of the chapter. The withdrawal or revocation of that approval shall not affect the validity of any policies executed prior to the date of the withdrawal. If the commissioner disapproves or withdraws or revokes his or her approval to all or any part of the plan of operation, the association shall, within 30 days, submit for review an appropriately revised plan or part of a revised plan, and, if the association fails to do so, or if the revised plan is unacceptable, the commissioner shall promulgate a plan of operation or part of a plan as he or she may deem necessary to carry out the purposes of this chapter.
(g)The association may, on its own initiative or at the request of the commissioner, amend the plan of operation, subject to approval by the commissioner, who shall have supervision of the inspection bureau, the facility, and the association. The commissioner or any person designated by him or her, shall have the power of visitation of and examination into the operation and free access to all the books, records, files, papers, and documents that relate to operation of the facility and association, and may summon, qualify, and examine as witnesses all persons having knowledge of those operations, including officers, agents, or employees thereof.
(h)An insurer member of the plan shall provide to an applicant who is denied coverage, or a policyholder whose policy is canceled or not renewed, the Internet Web site address and statewide toll-free telephone number for the plan established pursuant to Section 10095.5 for the purpose of obtaining information and assistance in obtaining basic property insurance.
(i)This section shall become operative March 1, 2017.
SEC. 3.Section 10095.5 of the Insurance Code is amended to read:10095.5.(a)The association shall establish and maintain an Internet Web site and a statewide toll-free telephone number through which a person may receive information and assistance in applying for insurance through the plan. The association shall cause the toll-free telephone number to be published in all general distribution telephone directories in the state and shall include the toll-free telephone number and Internet Web site address on all communications with an applicant or insured.
(b)An insurance agent or broker transacting basic property insurance shall assist a person in making an application for insurance through the plan by submitting an application at the persons request or by providing the person with the California FAIR Plans Internet Web site address and the toll-free telephone number.
(b)An insurance agent or broker transacting basic property insurance shall assist a person seeking his or her help in obtaining basic property insurance coverage by any one of the following methods:
(1)Making an application for insurance through the plan by submitting an application at the persons request.
(2)Providing the person with the California FAIR Plans Internet Web site address and the toll-free telephone number.
(3)Making an application for insurance, at the persons request, and placing that person with or through an insurer that offers, or a surplus line broker that procures, basic property insurance coverage.
SEC. 4.This act is an urgency statute necessary for the immediate preservation of the public peace, health, or safety within the meaning of Article IV of the Constitution and shall go into immediate effect. The facts constituting the necessity are:
In order to have the consumer protections proposed in this act become operative as soon as possible for homeowners who are having difficulty obtaining insurance coverage for their property because they are located in high-risk brush and wildfire areas, and to provide insurers adequate time to amend and prepare their required notices to customers about the availability of coverage through the California FAIR (fair access to insurance requirements) Plan, it is necessary for this act to take effect immediately.
(a)Within 30 days following the effective date of this chapter, the association shall submit to the commissioner, for his or her review, a proposed plan of operation, consistent with the provisions of this chapter, creating an association consisting of all insurers licensed to write and engaged in writing in this state, on a direct basis, basic property insurance or any component of basic property insurance in homeowners or other dwelling multiperil policies. An insurer described in this subdivision shall be a member of the association and shall remain a member as a condition of its authority to transact those kinds of insurance in this state.
(b)The proposed plan shall authorize the association to assume and cede reinsurance on risks written by insurers in conformity with the program.
(c)Under the plan, an insurer shall participate in the writings, expenses, and profits and losses of the association in the proportion that its premiums written during the second preceding calendar year bear to the aggregate premiums written by all insurers in the program, excluding that portion of the premiums written attributable to the operation of the association. Premiums written on a policy of basic residential earthquake insurance issued by the California Earthquake Authority pursuant to Section 10089.6 shall be attributed to the insurer that writes the underlying policy of residential property insurance.
(d)The plan shall provide for administration by a governing committee under rules to be adopted by the governing committee with the approval of the commissioner. Voting on administrative questions of the association and facility shall be weighted in accordance with each insurers premiums written during the second preceding calendar year as disclosed in the reports filed by the insurer with the commissioner.
(e)The plan shall provide for a plan to encourage persons to secure basic property insurance through normal channels from an admitted insurer or a licensed surplus line broker by informing those persons what steps they must take in order to secure the insurance through normal channels.
(f)The plan shall be subject to the approval of the commissioner and shall go into effect upon the tentative approval of the commissioner. The commissioner may, at any time, withdraw his or her tentative approval or he or she may, at any time after he or she has given his or her final approval, revoke that approval if he or she feels it is necessary to carry out the purposes of the chapter. The withdrawal or revocation of that approval shall not affect the validity of any policies executed prior to the date of the withdrawal. If the commissioner disapproves or withdraws or revokes his or her approval to all or any part of the plan of operation, the association shall, within 30 days, submit for review an appropriately revised plan or part of a revised plan, and, if the association fails to do so, or if the revised plan is unacceptable, the commissioner shall promulgate a plan of operation or part of a plan as he or she may deem necessary to carry out the purposes of this chapter.
(g)The association may, on its own initiative or at the request of the commissioner, amend the plan of operation, subject to approval by the commissioner, who shall have supervision of the inspection bureau, the facility facility, and the association. The commissioner or any person designated by him or her, shall have the power of visitation of and examination into the operation and free access to all the books, records, files, papers, and documents that relate to operation of the facility and association, and may summon, qualify, and examine as witnesses all persons having knowledge of those operations, including officers, agents, or employees thereof.
(h)An insurer member of the plan shall provide to an applicant who is denied coverage, or a policyholder whose policy is canceled or not renewed, the Internet Web site address and statewide toll-free telephone number for the plan established pursuant to Section 10095.5 for the purpose of obtaining information and assistance in obtaining basic property insurance.
(h)Every insurer member of the plan shall provide to applicants who are denied coverage the statewide toll-free telephone number for the plan established pursuant to Section 10095.5 for the purpose of obtaining information and assistance in obtaining basic property insurance.
(i)This section shall remain in effect only until March 1, 2017, and as of that date is repealed, unless a later enacted statute, that is enacted before March 1, 2017, deletes or extends that date.
SEC. 2.Section 10095 is added to the Insurance Code, to read:10095.(a)Within 30 days following the effective date of this chapter, the association shall submit to the commissioner, for his or her review, a proposed plan of operation, consistent with the provisions of this chapter, creating an association consisting of all insurers licensed to write and engaged in writing in this state, on a direct basis, basic property insurance or any component of basic property insurance in homeowners or other dwelling multiperil policies. An insurer described in this subdivision shall be a member of the association and shall remain a member as a condition of its authority to transact those kinds of insurance in this state.
(b)The proposed plan shall authorize the association to assume and cede reinsurance on risks written by insurers in conformity with the program.
(c)Under the plan, an insurer shall participate in the writings, expenses, and profits and losses of the association in the proportion that its premiums written during the second preceding calendar year bear to the aggregate premiums written by all insurers in the program, excluding that portion of the premiums written attributable to the operation of the association. Premiums written on a policy of basic residential earthquake insurance issued by the California Earthquake Authority pursuant to Section 10089.6 shall be attributed to the insurer that writes the underlying policy of residential property insurance.
(d)The plan shall provide for administration by a governing committee under rules to be adopted by the governing committee with the approval of the commissioner. Voting on administrative questions of the association and facility shall be weighted in accordance with each insurers premiums written during the second preceding calendar year as disclosed in the reports filed by the insurer with the commissioner.
(e)The plan shall provide for a plan to encourage persons to secure basic property insurance through normal channels from an admitted insurer or a licensed surplus line broker by informing those persons what steps they must take in order to secure the insurance through normal channels.
(f)The plan shall be subject to the approval of the commissioner and shall go into effect upon the tentative approval of the commissioner. The commissioner may, at any time, withdraw his or her tentative approval or he or she may, at any time after he or she has given his or her final approval, revoke that approval if he or she feels it is necessary to carry out the purposes of the chapter. The withdrawal or revocation of that approval shall not affect the validity of any policies executed prior to the date of the withdrawal. If the commissioner disapproves or withdraws or revokes his or her approval to all or any part of the plan of operation, the association shall, within 30 days, submit for review an appropriately revised plan or part of a revised plan, and, if the association fails to do so, or if the revised plan is unacceptable, the commissioner shall promulgate a plan of operation or part of a plan as he or she may deem necessary to carry out the purposes of this chapter.
(g)The association may, on its own initiative or at the request of the commissioner, amend the plan of operation, subject to approval by the commissioner, who shall have supervision of the inspection bureau, the facility, and the association. The commissioner or any person designated by him or her, shall have the power of visitation of and examination into the operation and free access to all the books, records, files, papers, and documents that relate to operation of the facility and association, and may summon, qualify, and examine as witnesses all persons having knowledge of those operations, including officers, agents, or employees thereof.
(h)An insurer member of the plan shall provide to an applicant who is denied coverage, or a policyholder whose policy is canceled or not renewed, the Internet Web site address and statewide toll-free telephone number for the plan established pursuant to Section 10095.5 for the purpose of obtaining information and assistance in obtaining basic property insurance.
(i)This section shall become operative March 1, 2017.
SEC. 2.SEC. 3.Section 10095.5 of the Insurance Code is amended to read:10095.5.(a)The association shall establish and maintain an Internet Web site and a statewide toll-free telephone number through which a person may receive information and assistance in applying for insurance through the plan. The association shall cause the toll-free telephone number to be published in all general distribution telephone directories in the state and shall include the toll-free telephone number and Internet Web site address on all communications with an applicant or insured.
(b)An insurance agent or broker transacting basic property insurance shall assist a person in making an application for insurance through the plan. plan by submitting an application at the persons request or by providing the person with the California FAIR Plans Internet Web site address and the toll-free telephone number.
SEC. 3.SEC. 4.This act is an urgency statute necessary for the immediate preservation of the public peace, health, or safety within the meaning of Article IV of the Constitution and shall go into immediate effect. The facts constituting the necessity are:
In order to have the consumer protections proposed in this act become operative as soon as possible for homeowners who are having difficulty obtaining insurance coverage for their property because they are located in high-risk brush and wildfire areas, and to provide insurers adequate time to amend and prepare their required notices to customers about the availability of coverage through the California FAIR (fair access to insurance requirements) Plan, it is necessary for this act to take effect immediately.
(a)Within 30 days following the effective date of this chapter, the association shall submit to the commissioner, for his or her review, a proposed plan of operation, consistent with the provisions of this chapter, creating an association consisting of all insurers licensed to write and engaged in writing in this state, on a direct basis, basic property insurance or any component thereof of basic property insurance in homeowners or other dwelling multiperil policies. Every An insurer so described in this subdivision shall be a member of the association and shall remain a member as a condition of its authority to transact those kinds of insurance in this state.
(b)The proposed plan shall authorize the association to assume and cede reinsurance on risks written by insurers in conformity with the program.
(c)Under the plan, each an insurer shall participate in the writings, expenses, profits and losses of the association in the proportion that its premiums written during the second preceding calendar year bear to the aggregate premiums written by all insurers in the program, excluding that portion of the premiums written attributable to the operation of the association. Premiums written on a policy of basic residential earthquake insurance issued by the California Earthquake Authority pursuant to Section 10089.6 shall be attributed to the insurer that writes the underlying policy of residential property insurance.
(d)The plan shall provide for administration by a governing committee under rules to be adopted by it the governing committee with the approval of the commissioner. Voting on administrative questions of the association and facility shall be weighted in accordance with each insurers premiums written during the second preceding calendar year as disclosed in the reports filed by the insurer with the commissioner.
(e)The plan shall provide for a plan to encourage persons to secure basic property insurance through normal channels from an admitted insurer or a licensed surplus line broker by informing those persons what steps they must take in order to secure the insurance through normal channels.
(f)The plan shall be subject to the approval of the commissioner and shall go into effect upon the tentative approval of the commissioner. The commissioner may, at any time, withdraw his or her tentative approval or he or she may, at any time after he or she has given his or her final approval, revoke that approval if he or she feels it is necessary to carry out the purposes of the chapter. The withdrawal or revocation of that approval shall not affect the validity of any policies executed prior to the date of the withdrawal. If the commissioner disapproves or withdraws or revokes his or her approval to all or any part of the plan of operation, the association shall, within 30 days, submit for review an appropriately revised plan or part thereof, of a revised plan, and, if the association fails to do so, or if the revised plan so filed is unacceptable, the commissioner shall promulgate a plan of operation or part thereof of a plan as he or she may deem necessary to carry out the purpose purposes of this chapter.
(g)The association may, on its own initiative or at the request of the commissioner, amend the plan of operation, subject to approval by the commissioner, who shall have supervision of the inspection bureau, the facility and the association. The commissioner or any person designated by him or her, shall have the power of visitation of and examination into the operation and free access to all the books, records, files, papers, and documents that relate to operation of the facility and association, and may summon, qualify, and examine as witnesses all persons having knowledge of those operations, including officers, agents, or employees thereof.
(h)Every An insurer member of the plan shall provide to applicants an applicant who are is denied coverage coverage, or a policyholder whose policy is canceled or not renewed, the Internet Web site address and statewide toll-free 800 telephone number for the plan established pursuant to Section 10095.5 for the purpose of obtaining information and assistance in obtaining basic property insurance.
SEC. 2.Section 10095.5 of the Insurance Code is amended to read:10095.5.(a)The association shall establish and maintain an Internet Web site and a statewide toll-free 800 telephone number through which persons a person may receive information and assistance in applying for insurance through the plan. The association shall cause the toll-free telephone number to be published in all general distribution telephone directories in California. the state and shall include the toll-free telephone and Internet Web site address on all communications with an applicant or insured.
(b)Every An insurance agent or broker transacting basic property insurance shall either assist persons a person in making an application for insurance through the plan or provide persons who desire that insurance with the toll-free number established pursuant to subdivision (a). plan.
SEC. 3.This act is an urgency statute necessary for the immediate preservation of the public peace, health, or safety within the meaning of Article IV of the Constitution and shall go into immediate effect. The facts constituting the necessity are:
In order to have the consumer protections proposed in this act become operative as soon as possible for homeowners who are having difficulty obtaining insurance coverage for their property because they are located in high-risk brush and wildfire areas, and to provide insurers adequate time to amend and prepare their required notices to customers about the availability of coverage through the FAIR (fair access to insurance requirements) Plan, it is necessary for this act to take effect immediately.
|
Date
|
Status
|
|---|---|
| Jun 6, 2016 | Referred to Com. on INS. |
| Sep 8, 2016 | Enrolled and presented to the Governor at 5 p.m. |
| Aug 30, 2016 | Assembly amendments concurred in. (Ayes 39. Noes 0.) Ordered to engrossing and enrolling. |
| Aug 30, 2016 | Assembly amendments concurred in. (Ayes 39. Noes 0. Page 5513.) Ordered to engrossing and enrolling. |
| Aug 29, 2016 | In Senate. Concurrence in Assembly amendments pending. |
| Aug 22, 2016 | Read third time. Urgency clause adopted. Passed. (Ayes 79. Noes 0. Page 6023.) Ordered to the Senate. |
| Aug 22, 2016 | Read third time. Urgency clause adopted. Passed. Ordered to the Senate. |
| Aug 18, 2016 | Read third time and amended. |
| Aug 18, 2016 | Ordered to third reading. |
| Aug 8, 2016 | Ordered to third reading. |
| Aug 8, 2016 | From consent calendar on motion of Assembly Member Calderon. |
| Aug 4, 2016 | Read second time. Ordered to consent calendar. |
| Aug 3, 2016 | From committee: Do pass. Ordered to consent calendar. (Ayes 20. Noes 0.) (August 3). |
| Jun 22, 2016 | From committee: Do pass and re-refer to Com. on APPR. with recommendation: To consent calendar. (Ayes 13. Noes 0.) (June 22). Re-referred to Com. on APPR. |
| Feb 19, 2016 | Introduced. To Com. on RLS. for assignment. To print. |
| May 26, 2016 | Read third time. Urgency clause adopted. Passed. (Ayes 39. Noes 0.) Ordered to the Assembly. |
| May 26, 2016 | Read third time. Urgency clause adopted. Passed. (Ayes 39. Noes 0. Page 3955.) Ordered to the Assembly. |
| May 26, 2016 | In Assembly. Read first time. Held at Desk. |
| May 17, 2016 | Read second time. Ordered to third reading. |
| May 16, 2016 | From committee: Be ordered to second reading pursuant to Senate Rule 28.8. |
| May 6, 2016 | Set for hearing May 16. |
| Apr 19, 2016 | Read second time and amended. Re-referred to Com. on APPR. |
| Apr 18, 2016 | From committee: Do pass as amended and re-refer to Com. on APPR. (Ayes 8. Noes 0.) (April 13). |
| Apr 18, 2016 | From committee: Do pass as amended and re-refer to Com. on APPR. (Ayes 8. Noes 0. Page 3560.) (April 13). |
| Mar 18, 2016 | Set for hearing April 13. |
| Mar 3, 2016 | Referred to Com. on INS. |
| Feb 22, 2016 | Read first time. |
| Feb 22, 2016 | From printer. May be acted upon on or after March 23. |
|
Date
|
Description
|
Location
|
Votes
|
|
|---|---|---|---|---|
| Aug 30, 2016 | Unfinished Business SB1302 McGuire Urgency Clause Concurrence | Senate Floor |
Passed |
|
| Aug 22, 2016 | SB 1302 McGuire Third Reading Urgency By COOLEY | Assembly Floor |
Passed |
|
| Aug 3, 2016 | Do pass. To Consent Calendar. | Assembly Standing Committee on Appropriations |
Passed |
|
| Jun 22, 2016 | Do pass and be re-referred to the Committee on [Appropriations] with recommendation: To Consent Calendar | Assembly Standing Committee on Insurance |
Passed |
|
| May 26, 2016 | Senate 3rd Reading SB1302 McGuire Urgency Clause | Senate Floor |
Passed |
|
| Apr 13, 2016 | Do pass as amended, but first amend, and re-refer to the Committee on [Appropriations] | Senate Standing Committee on Insurance |
Passed |
This list shows positions taken on this bill by organizations on the date displayed, which is linked to the original source.
Positions by individuals are not included.
|
Organization
|
Position
|
Date
|
|---|---|---|
| California Apartment Association | ** Support | Aug 30, 2016 |
| California Association Of Realtors | ** Support | Aug 30, 2016 |
| California Department of Insurance | ** Support | Aug 30, 2016 |
| California Professional Firefighters | ** Support | Aug 30, 2016 |
| Consumer Federation Of California | ** Support | Aug 30, 2016 |
| Independent Insurance Agents and Brokers of California | ** Support | Aug 18, 2016 |
| Personal Insurance Federation Of California | ** Support | Aug 30, 2016 |
| Rural County Representatives of California | ** Support | Aug 30, 2016 |
Office of Senate Floor Analyses (916) 651-1520 Fax: (916) 327-4478 | SB |
UNFINISHED BUSINESS
Bill No: SB 1302
:
SENATE INSURANCE COMMITTEE: 8-0, 4/13/16
AYES: Roth, Gaines, Berryhill, Glazer, Hall, Liu, Mitchell, Wieckowski
NO VOTE RECORDED: Hernandez
SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8
SENATE FLOOR: 39-0, 5/26/16
AYES: Allen, Anderson, Bates, Beall, Berryhill, Block, Cannella, De León, Fuller, Gaines, Galgiani, Glazer, Hall, Hancock, Hernandez, Hertzberg, Hill, Hueso, Huff, Jackson, Lara, Leno, Leyva, Liu, McGuire, Mendoza, Mitchell, Monning, Moorlach, Morrell, Nguyen, Nielsen, Pan, Pavley, Roth, Stone, Vidak, Wieckowski, Wolk
NO VOTE RECORDED: Runner
ASSEMBLY FLOOR: 79-0, 8/22/16 - See last page for vote
SOURCE: California Department of Insurance
DIGEST: This bill requires insurers admitted to sell property insurance in the state to provide the California FAIR (fair access to insurance requirements) Plan (FAIR Plan) Internet Web site address and statewide toll-free telephone number to an applicant for insurance who is denied coverage, or a policyholder whose policy is canceled or non-renewed; requires the FAIR Plan to establish and maintain an Internet Web site through which a person may receive information and assistance in applying for insurance; requires an insurance agent or broker transacting basic property insurance to assist a person in making an application for insurance through the FAIR Plan, another insurer offering coverage, or provide the person with the FAIR Plan Web site and phone number; and declares that it is an urgency statute.
Assembly Amendments add obtaining a policy for the consumer through an admitted or non-admitted insurer to the options for insurance agents and brokers to assist a person seeking property insurance, in addition to submitting an application to the Fair Plan at the person’s request or providing the Fair Plan Web site and phone number.
Existing law:
- Establishes the FAIR Plan to assure stability in the property insurance market in California, to assure the availability of basic property insurance as defined, to encourage maximum use of the normal market provided by admitted insurers and licensed surplus line brokers, and to provide for the equitable distribution among admitted insurers of the basic responsibility for insuring qualified property for which basic property insurance cannot be obtained through the normal market;
- Requires all insurers admitted to transact property insurance in the state to participate in the FAIR Plan;
- Defines “basic property insurance” as insurance against direct loss to real or tangible personal property at a fixed location in those geographic or urban areas designated by the IC, from perils insured under the standard fire policy and extended coverage endorsement and vandalism and malicious mischief and such other coverages as may be added with the approval of the Insurance Commissioner (IC), as specified;
- Requires the FAIR Plan to establish and maintain a statewide toll-free “800” number for persons interested in applying for insurance through the plan, and to have that number published in general distribution telephone directories;
- Requires every insurer member of the FAIR Plan to provide applicants who are denied coverage the FAIR Plan’s toll-free number;
- Requires every insurance agent or broker transacting basic property insurance to either assist persons in making an application for FAIR Plan insurance, or provide them with the FAIR Plan toll-free number.
This bill:
- Requires insurers admitted to sell property insurance in the state to provide the FAIR Plan Internet Web site address and statewide toll-free number telephone number to an applicant for insurance who is denied coverage, or a policyholder whose policy is canceled or non-renewed, beginning on March 1, 2017;
- Requires the FAIR Plan to establish and maintain an Internet Web site through which a person may receive information and assistance in applying for insurance in addition to a statewide toll-free telephone number, and deletes a reference to an “800” number;
- Requires an insurance agent or broker transacting basic property insurance to assist a person by making an application for insurance through the FAIR Plan at the person’s request, by providing the person with the FAIR Plan’s Internet Web site and toll-free number, or by making an application for insurance at the person’s request with an admitted or non-admitted insurer that offers basic property insurance coverage;
- Declares it is an urgency statute in order to have the consumer protections in the bill to become operative as soon as possible for homeowners who are located in high-risk brush and wildfire areas and are having difficulty obtaining insurance coverage for their property, and to provide insurers with adequate time to prepare their required notices.
Background
As the insurer of last resort, the FAIR Plan does not advertise, and many homeowners in high fire risk areas who have been non-renewed or are having difficulty finding insurance may be unaware of the FAIR Plan insurance option. Until recently only about 6,600 out of 90,000 agents and brokers in the state were registered to sell FAIR Plan policies, although according the California Department of Insurance (CDI) that number has increased to about 10,000 as a result of CDI outreach to the agent and broker community since the fires of 2015. It takes about two days for an agent or broker to register with the FAIR Plan and requires little more than submitting a copy of the agent or broker’s license. No fees or testing are required, and the FAIR Plan offers a 10% commission for new business and 8% commission for renewals. At the same time, some insurance agents or brokers may be unable to place insurance with the FAIR Plan because they are “captive” agents and can contractually only sell policies of their contracting company.
There remains a big gap in understanding of the FAIR Plan among many agents and brokers who are currently only required by statute to provide homeowners looking for insurance the FAIR Plan “800” toll-free phone number. They are not required to actually help the consumer apply for such coverage, and many do not understand the options for coverage provided by the FAIR Plan.
The FAIR Plan reports that it has not seen an increase of new business in wildland-urban interface areas even with the drought and recent fires. With approximately 126,000 FAIR Plan dwelling policies in place in the state, 76% of those policies are in urban areas, largely in the Los Angeles area. As of February, the FAIR Plan had 24,538 policies in high and extreme wildfire risk areas, about 20% of its total policies.
Until recently, applicants for FAIR Plan coverage in specific geographic areas had to provide the names of three insurance companies that had denied insurance coverage for their property in order to qualify for a FAIR Plan policy. After a review following the Valley and Butte fires last year, the IC in January directed the FAIR Plan to make several changes to its operations, including some enhanced coverage options, eliminating the requirement that homeowners prove they were rejected three times for standard insurance policies, and giving more access to brokers registered with the FAIR Plan.
To improve the ability of consumers to access the FAIR Plan and identify brokers who can help them place such policies, the FAIR Plan recently developed a broker lookup feature on its website that allows the consumer to enter their zip code or city to identify FAIR Plan registered brokers in their area.
This bill will help encourage greater public awareness of the availability of the FAIR Plan insurance option by requiring insurers to include a reference to the FAIR Plan Web site and toll-free phone number in a notice of cancellation or non-renewal, and by requiring active property insurance agents and brokers to assist a person in applying for FAIR Plan coverage or other insurance coverage or by providing the FAIR Plan Web site and toll-free number.
FISCAL EFFECT: Appropriation: Fiscal Com.: Local:
California Department of Insurance (source)
California Apartment Association
California Association of Realtors
California Professional Firefighters
Consumer Federation of California
Personal Insurance Federation of California
Rural County Representatives of California
OPPOSITION: (Verified 8/22/16)
None received
ARGUMENTS IN SUPPORT: The CDI has sponsored SB 1302 because it heard from many consumers affected by the catastrophic Valley and Butte fires in 2015 who were facing cancellation or non-renewal of their homeowners’ policies that they were unaware of the FAIR Plan. This bill is a modest but important step in closing this information gap so that consumers facing very difficult and expensive insurance decisions have sufficient information to make the best possible decision to protect their families.
The Rural County Representatives of California reports its members have noticed a recent increase in the number of property owners being non-renewed, particularly those in high fire severity areas around the state. In these instances, homeowners must be made aware of their options for purchasing property insurance including the availability of homeowners’ insurance through the FAIR Plan. The California Association of Realtors supports SB 1302 because homeowners are often completely unaware of the basic coverage that is available through the FAIR Plan and risk losing the ability to close a transaction or risk a technical default on their mortgage because of that lack of knowledge.
ASSEMBLY FLOOR: 79-0, 8/22/16
AYES: Achadjian, Alejo, Travis Allen, Arambula, Atkins, Baker, Bigelow, Bloom, Bonilla, Bonta, Brough, Brown, Burke, Calderon, Campos, Chang, Chau, Chávez, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle, Daly, Dodd, Eggman, Frazier, Beth Gaines, Gallagher, Cristina Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray, Grove, Hadley, Harper, Roger Hernández, Holden, Irwin, Jones, Jones-Sawyer, Kim, Lackey, Levine, Linder, Lopez, Low, Maienschein, Mathis, Mayes, McCarty, Medina, Mullin, Nazarian, Obernolte, O'Donnell, Olsen, Patterson, Quirk, Ridley-Thomas, Rodriguez, Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber, Wilk, Williams, Wood, Rendon
NO VOTE RECORDED: Melendez
8/29/16 10:34:37
**** END ****
SENATE THIRD READING
STR Bill Id:SB 1302
Author:(McGuire)
As Amended Ver:August 18, 2016
2/3 vote. Urgency
SENATE VOTE: 39-0
Committee | Votes | Ayes | Noes |
Insurance | 13-0 | Daly, Melendez, Travis Allen, Bigelow, Calderon, Chu, Cooley, Cooper, Dababneh, Dahle, Frazier, Gatto, Rodriguez | |
Appropriations | 20-0 | Gonzalez, Bigelow, Bloom, Bonilla, Bonta, Calderon, Chang, Daly, Eggman, Gallagher, Eduardo Garcia, Holden, Jones, Obernolte, Quirk, Santiago, Wagner, Weber, Wood, Chau |
SUMMARY: Increases the level of support insurance agents and brokers (agent) must provide to homeowner's who have been denied homeowner's insurance coverage. Specifically, this bill:
- Requires, effective March 1, 2017, the California FAIR Plan Association (FAIR Plan) to maintain a website and include that website address on all communications.
- Requires an agent to assist a consumer seeking a homeowner's insurance policy to either
- Submit a coverage application to the FAIR Plan on behalf of the consumer.
- Provide the consumer with contact information for the FAIR Plan.
- Obtain a policy for the consumer through an admitted or non-admitted insurer.
- Declares the bill to be an urgency statute and take effect immediately.
EXISTING LAW:
- Requires property insurers to establish the FAIR Plan to be the insurer of last resort for property insurance.
- Requires the FAIR Plan to function according to a plan of operations approved by the Insurance Commissioner (commissioner).
- Requires the FAIR Plan to issue basic property insurance to property owners unable to obtain coverage after making a diligent effort.
FISCAL EFFECT: The Assembly Appropriations Committee found that the bill would have negligible fiscal effect.
COMMENTS:
- Purpose. There remains a big gap in understanding of the FAIR Plan among many agents and brokers who are currently only required by statute to provide homeowners looking for insurance the FAIR Plan "800" toll-free phone number. They are not required to actually help the consumer apply for such coverage, and many do not understand the options for coverage provided by the FAIR Plan.
- FAIR Plan. The FAIR Plan was created by the Legislature in 1968 to assure stability in the property insurance market following brush fires and riots in the 1960's that led many insurers to exit urban areas regarded as too risky to insure. It is a private association based in Los Angeles comprised of all insurers admitted to write property insurance in California. The FAIR Plan is not a state agency and no taxpayer funds are involved.
The FAIR Plan offers a standard fire insurance policy for both structure and contents of residential and commercial properties. A FAIR Plan policy does not provide coverage for liability, theft or water damage typically found in most homeowners' policies, however. The homeowner or business generally must also purchase a "Difference in Condition" policy or other supplemental coverage from the voluntary insurance market when purchasing a FAIR Plan policy.
As the insurer of last resort, the FAIR Plan does not advertise, and many homeowners who have been non-renewed or are having difficulty finding insurance may be unaware of the FAIR Plan. Until recently only about 6,600 out of 90,000 agents and brokers in the state were registered to sell FAIR Plan policies, although according the Department of Insurance (DOI) that number has increased to about 10,000 as a result of outreach to the agent and broker community since the fires of 2015. It takes about two days for an agent or broker to register with the FAIR Plan and requires little more than submitting a copy of the agent or broker's license. No fees or testing are required, and the FAIR Plan offers a 10% commission for new business and 8% commission for renewals. At the same time, some insurance agents or brokers may be unable to place insurance with the FAIR Plan because they are "captive" agents and can contractually only sell policies of their contracting company.
With approximately 126,000 FAIR Plan dwelling policies in place in the state, approximately 75% of those policies are in urban areas (largely Los Angeles) and about 20% in high and extreme wildfire risk areas. Until recently, applicants for FAIR Plan coverage in specific geographic areas had to provide the names of three insurance companies that had denied insurance coverage for their property in order to qualify for a FAIR Plan policy. Following the Valley and Butte fires last year the commissioner directed the FAIR Plan to make several changes to its operations, including some enhanced coverage options, eliminating the requirement that homeowners prove they were rejected three times for standard insurance policies, and giving more access to brokers registered with the FAIR Plan
To improve the ability of consumers to access the FAIR Plan and identify brokers who can help them place such policies, the FAIR Plan recently developed a broker lookup feature on its website that allows the consumer to enter their zip code or city to identify FAIR Plan registered brokers in their area.
Analysis Prepared by: Paul Riches / INS. / (916) 319-2086 FN: 0004446
SENATE THIRD READING
STR Bill Id:SB 1302
Author:(McGuire)
As Amended Ver:April 19, 2016
2/3 vote. Urgency
SENATE VOTE: 39-0
Committee | Votes | Ayes | Noes |
Insurance | 13-0 | Daly, Melendez, Travis Allen, Bigelow, Calderon, Chu, Cooley, Cooper, Dababneh, Dahle, Frazier, Gatto, Rodriguez | |
Appropriations | 20-0 | Gonzalez, Bigelow, Bloom, Bonilla, Bonta, Calderon, Chang, Daly, Eggman, Gallagher, Eduardo Garcia, Holden, Jones, Obernolte, Quirk, Santiago, Wagner, Weber, Wood, Chau |
SUMMARY: Increases the level of support insurance agents and brokers (agent) must provide to homeowners who have been denied homeowner's insurance coverage. Specifically, this bill:
- Requires, effective March 1, 2017, the California FAIR Plan Association (FAIR Plan) to maintain a Web site and include that Web site address on all communications.
- Requires an agent, when requested by the consumer, to submit a coverage application to the FAIR Plan.
- Declares the bill to be an urgency statute and take effect immediately.
EXISTING LAW:
- Requires property insurers to establish the FAIR Plan to be the insurer of last resort for property insurance.
- Requires the FAIR Plan to function according to a plan of operations approved by the Insurance Commissioner (commissioner).
- Requires the FAIR Plan to issue basic property insurance to property owners unable to obtain coverage after making a diligent effort.
FISCAL EFFECT: According to the Assembly Appropriations Committee, negligible fiscal effect.
COMMENTS:
- Purpose. There remains a big gap in understanding of the FAIR Plan among many agents and brokers who are currently only required by statute to provide homeowners looking for insurance the FAIR Plan "800" toll-free phone number. They are not required to actually help the consumer apply for such coverage, and many do not understand the options for coverage provided by the FAIR Plan.
- FAIR Plan. The FAIR Plan was created by the Legislature in 1968 to assure stability in the property insurance market following brush fires and riots in the 1960s that led many insurers to exit urban areas regarded as too risky to insure. It is a private association based in Los Angeles comprised of all insurers admitted to write property insurance in California. The FAIR Plan is not a state agency and no taxpayer funds are involved.
The FAIR Plan offers a standard fire insurance policy for both structure and contents of residential and commercial properties. A FAIR Plan policy does not provide coverage for liability, theft or water damage typically found in most homeowners' policies, however. The homeowner or business generally must also purchase a "Difference in Condition" policy or other supplemental coverage from the voluntary insurance market when purchasing a FAIR Plan policy.
As the insurer of last resort, the FAIR Plan does not advertise, and many homeowners who have been non-renewed or are having difficulty finding insurance may be unaware of the FAIR Plan. Until recently only about 6,600 out of 90,000 agents and brokers in the state were registered to sell FAIR Plan policies, although according the Department of Insurance (DOI) that number has increased to about 10,000 as a result of outreach to the agent and broker community since the fires of 2015. It takes about two days for an agent or broker to register with the FAIR Plan and requires little more than submitting a copy of the agent or broker's license. No fees or testing are required, and the FAIR Plan offers a 10% commission for new business and 8% commission for renewals. At the same time, some insurance agents or brokers may be unable to place insurance with the FAIR Plan because they are "captive" agents and can contractually only sell policies of their contracting company.
With approximately 126,000 FAIR Plan dwelling policies in place in the state, approximately 75% of those policies are in urban areas (largely Los Angeles) and about 20% in high and extreme wildfire risk areas. Until recently, applicants for FAIR Plan coverage in specific geographic areas had to provide the names of three insurance companies that had denied insurance coverage for their property in order to qualify for a FAIR Plan policy. Following the Valley and Butte fires last year the commissioner directed the FAIR Plan to make several changes to its operations, including some enhanced coverage options, eliminating the requirement that homeowners prove they were rejected three times for standard insurance policies, and giving more access to brokers registered with the FAIR Plan
To improve the ability of consumers to access the FAIR Plan and identify brokers who can help them place such policies, the FAIR Plan recently developed a broker lookup feature on its Web site that allows the consumer to enter their zip code or city to identify FAIR Plan registered brokers in their area.
Analysis Prepared by: Paul Riches / INS. / (916) 319-2086 FN: 0003899
Date of Hearing: August 3, 2016
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Lorena Gonzalez, Chair
SBPCA Bill Id:SB 1302
Author:(McGuire) – As Amended Ver:April 19, 2016
Policy Committee: | Insurance | Vote: | 13 - 0 |
Urgency: Yes State Mandated Local Program: No Reimbursable: No
SUMMARY:
This bill, an urgency measure, increases the level of support insurance agents and brokers must provide to homeowners who have been denied homeowner's insurance coverage. Specifically, this bill:
- Requires, effective March 1, 2017, the California Fair Access to Insurance Requirements Plan Association (FAIR Plan) to maintain a website and include that website address on all communications.
- Requires an agent, when requested by the consumer, to submit a coverage application to the FAIR Plan.
- Declares the bill to be an urgency statute and take effect immediately, in order to expedite access to coverage for homeowners in high-risk fire areas.
FISCAL EFFECT:
Negligible state fiscal effect.
COMMENTS:
- Purpose. According to the author, there remains a big gap in understanding of the FAIR Plan among many agents and brokers who are currently only required by statute to provide homeowners looking for insurance the FAIR Plan “800” toll-free phone number. Agents are not required to actually help the consumer apply for such coverage, and many do not understand the options for coverage provided by the FAIR Plan. This bill seeks to improve access to coverage under the FAIR Plan. The bill is supported by the industry and has no opposition.
- Background. Current law requires property insurers to establish the FAIR Plan to be the insurer of last resort for property insurance. The FAIR plan functions according to a plan of operations approved by the Insurance Commissioner, and the plan is required to issue basic property insurance to property owners unable to obtain coverage after making a diligent effort. It is a private association based in Los Angeles comprised of all insurers admitted to write property insurance in California. The FAIR Plan is not a state agency and is not state-funded. FAIR Plan profits and losses are shared by its members in direct proportion to their market share of property insurance written in California.
Analysis Prepared by: Lisa Murawski / APPR. / (916) 319-2081
Date of Hearing: June 22, 2016
ASSEMBLY COMMITTEE ON INSURANCE
Tom Daly, Chair
SBPCA Bill Id:SB 1302
Author:(McGuire) – As Amended Ver:April 19, 2016
SENATE VOTE: 39-0
SUBJECT: Basic property insurance: California FAIR Plan
SUMMARY: Increases the level of support insurance agents and brokers (agent) must provide to homeowner's who have been denied homeowner's insurance coverage. Specifically, this bill:
- Requires, effective March 1, 2017, the California FAIR Plan Association (FAIR Plan) to maintain a website and include that website address on all communications.
- Requires an agent, when requested by the consumer, to submit a coverage application to the FAIR Plan.
- Declares the bill to be an urgency statute and take effect immediately.
EXISTING LAW:
- Requires property insurers to establish the FAIR Plan to be the insurer of last resort for property insurance.
- Requires the FAIR Plan to function according to a plan of operations approved by the Insurance Commissioner (commissioner).
- Requires the FAIR Plan to issue basic property insurance to property owners unable to obtain coverage after making a diligent effort.
FISCAL EFFECT: The bill was reported out of the Senate Appropriations Committee pursuant to Senate Rule 28.8.
COMMENTS:
- Purpose. There remains a big gap in understanding of the FAIR Plan among many agents and brokers who are currently only required by statute to provide homeowners looking for insurance the FAIR Plan “800” toll-free phone number. They are not required to actually help the consumer apply for such coverage, and many do not understand the options for coverage provided by the FAIR Plan.
- FAIR Plan. The FAIR Plan was created by the Legislature in 1968 to assure stability in the property insurance market following brush fires and riots in the 1960’s that led many insurers to exit urban areas regarded as too risky to insure. It is a private association based in Los Angeles comprised of all insurers admitted to write property insurance in California. The FAIR Plan is not a state agency and no taxpayer funds are involved.
The FAIR Plan offers a standard fire insurance policy for both structure and contents of residential and commercial properties. A FAIR Plan policy does not provide coverage for liability, theft or water damage typically found in most homeowners’ policies, however. The homeowner or business generally must also purchase a "Difference in Condition" policy or other supplemental coverage from the voluntary insurance market when purchasing a FAIR Plan policy.
As the insurer of last resort, the FAIR Plan does not advertise, and many homeowners who have been non-renewed or are having difficulty finding insurance may be unaware of the FAIR Plan. Until recently only about 6,600 out of 90,000 agents and brokers in the state were registered to sell FAIR Plan policies, although according the Department of Insurance (DOI) that number has increased to about 10,000 as a result of outreach to the agent and broker community since the fires of 2015. It takes about two days for an agent or broker to register with the FAIR Plan and requires little more than submitting a copy of the agent or broker’s license. No fees or testing are required, and the FAIR Plan offers a 10% commission for new business and 8% commission for renewals. At the same time, some insurance agents or brokers may be unable to place insurance with the FAIR Plan because they are “captive” agents and can contractually only sell policies of their contracting company.
With approximately 126,000 FAIR Plan dwelling policies in place in the state, approximately 75% of those policies are in urban areas (largely Los Angeles) and about 20% in high and extreme wildfire risk areas. Until recently, applicants for FAIR Plan coverage in specific geographic areas had to provide the names of three insurance companies that had denied insurance coverage for their property in order to qualify for a FAIR Plan policy. Following the Valley and Butte fires last year the commissioner directed the FAIR Plan to make several changes to its operations, including some enhanced coverage options, eliminating the requirement that homeowners prove they were rejected three times for standard insurance policies, and giving more access to brokers registered with the FAIR Plan
To improve the ability of consumers to access the FAIR Plan and identify brokers who can help them place such policies, the FAIR Plan recently developed a broker lookup feature on its website that allows the consumer to enter their zip code or city to identify FAIR Plan registered brokers in their area.
REGISTERED SUPPORT / OPPOSITION:
Support
Independent Insurance Agents and Brokers of California
Personal Insurance Federation of California
Rural County Representatives of California
Opposition
None received
Analysis Prepared by: Paul Riches / INS. / (916) 319-2086
Office of Senate Floor Analyses (916) 651-1520 Fax: (916) 327-4478 | SB |
THIRD READING
Bill No: SB 1302
:
SENATE INSURANCE COMMITTEE: 8-0, 4/13/16
AYES: Roth, Gaines, Berryhill, Glazer, Hall, Liu, Mitchell, Wieckowski
NO VOTE RECORDED: Hernandez
SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8
SOURCE: California Department of Insurance
DIGEST: This bill requires insurers admitted to sell property insurance in the state to provide the California FAIR (fair access to insurance requirements) Plan (FAIR Plan) Internet Web site address and statewide toll-free telephone number to an applicant for insurance who is denied coverage, or a policyholder whose policy is canceled or non-renewed; requires the FAIR Plan to establish and maintain an Internet Web site through which a person may receive information and assistance in applying for insurance; requires an insurance agent or broker transacting basic property insurance to assist a person in making an application for insurance through the FAIR Plan, as specified; and declares that it is an urgency statute.
Existing law:
- Establishes the FAIR Plan to assure stability in the property insurance market in California, to assure the availability of basic property insurance as defined, to encourage maximum use of the normal market provided by admitted insurers and licensed surplus line brokers, and to provide for the equitable distribution among admitted insurers of the basic responsibility for insuring qualified property for which basic property insurance cannot be obtained through the normal market;
- Requires all insurers admitted to transact property insurance in the state to participate in the FAIR Plan;
- Defines “basic property insurance” as insurance against direct loss to real or tangible personal property at a fixed location in those geographic or urban areas designated by the Insurance Commissioner (IC), from perils insured under the standard fire policy and extended coverage endorsement and vandalism and malicious mischief and such other coverages as may be added with the approval of the IC, as specified;
- Requires the FAIR Plan to establish and maintain a statewide toll-free “800” number for persons interested in applying for insurance through the plan, and to have that number published in general distribution telephone directories;
- Requires every insurer member of the FAIR Plan to provide applicants who are denied coverage the FAIR Plan’s toll-free number;
- Requires every insurance agent or broker transacting basic property insurance to either assist persons in making an application for FAIR Plan insurance, or provide them with the FAIR Plan toll-free number.
This bill:
- Requires insurers admitted to sell property insurance in the state to provide the FAIR Plan Internet Web site address and statewide toll-free number telephone number to an applicant for insurance who is denied coverage, or a policyholder whose policy is canceled or non-renewed, beginning on March 1, 2017;
- Requires the FAIR Plan to establish and maintain an Internet Web site through which a person may receive information and assistance in applying for insurance in addition to a statewide toll-free telephone number, and deletes a reference to an “800” number;
- Requires an insurance agent or broker transacting basic property insurance to assist a person in making an application for insurance through the FAIR Plan by submitting an application at the person’s request or providing the person with the FAIR Plan’s Internet Web site and toll-free number;
- Declares it is an urgency statute in order to have the consumer protections in the bill to become operative as soon as possible for homeowners who are located in high-risk brush and wildfire areas and are having difficulty obtaining insurance coverage for their property, and to provide insurers with adequate time to prepare their required notices.
Comments
The FAIR Plan was created by statute in 1968 following brush fires and riots in the 1960’s that led many insurers to exit urban areas or neighborhoods as too risky to insure. Its stated purpose is “to assure stability in the property insurance market for property located in the State of California,” and to “assure the availability of basic property insurance….” It is a private association based in Los Angeles comprised of all insurers admitted to write property insurance in California. FAIR Plan profits and losses are shared by its members in direct proportion to their market share of property insurance written in California. The FAIR Plan is not a state agency and no taxpayer funds are involved.
The FAIR Plan offers a standard fire insurance policy for both structure and contents of residential and commercial properties. Its basic requirements are that the home or property be in insurable condition, it cannot have been vacant for more than one year, and no illegal activities take place at the property. A FAIR Plan policy does not provide coverage for liability, theft or water damage typically found in most homeowners’ policies, however. The homeowner or business generally must also purchase a "Difference in Condition" policy or other supplemental coverage from the voluntary insurance market when purchasing a FAIR Plan policy. Several major insurance companies, but not all, write such policies, including Farmers, Travelers and Nationwide.
As the insurer of last resort, the FAIR Plan does not advertise, and many homeowners in high fire risk areas who have been non-renewed or are having difficulty finding insurance may be unaware of the FAIR Plan insurance option. Until recently only about 6,600 out of 90,000 agents and brokers in the state were registered to sell FAIR Plan policies, although according the California Department of Insurance (CDI) that number has increased to about 10,000 as a result of CDI outreach to the agent and broker community since the fires of 2015. It takes about two days for an agent or broker to register with the FAIR Plan and requires little more than submitting a copy of the agent or broker’s license. No fees or testing are required, and the FAIR Plan offers a 10% commission for new business and 8% commission for renewals. At the same time, some insurance agents or brokers may be unable to place insurance with the FAIR Plan because they are “captive” agents and can contractually only sell policies of their contracting company.
There remains a big gap in understanding of the FAIR Plan among many agents and brokers who are currently only required by statute to provide homeowners looking for insurance the FAIR Plan “800” toll-free phone number. They are not required to actually help the consumer apply for such coverage, and many do not understand the options for coverage provided by the FAIR Plan.
The FAIR Plan reports that it has not seen an increase of new business in wildland-urban interface areas as a result of the drought and recent fires. With approximately 126,000 FAIR Plan dwelling policies in place in the state, 76% of those policies are in urban areas, largely in the Los Angeles area. As of February, the FAIR Plan had 24,538 policies in high and extreme wildfire risk areas, about 20% of its total policies.
Until recently, applicants for FAIR Plan coverage in specific geographic areas had to provide the names of three insurance companies that had denied insurance coverage for their property in order to qualify for a FAIR Plan policy. After a review following the Valley and Butte fires last year, the IC in January directed the FAIR Plan to make several changes to its operations, including some enhanced coverage options, eliminating the requirement that homeowners prove they were rejected three times for standard insurance policies, and giving more access to brokers registered with the FAIR Plan.
To improve the ability of consumers to access the FAIR Plan and identify brokers who can help them place such policies, the FAIR Plan recently developed a broker lookup feature on its website that allows the consumer to enter their zip code or city to identify FAIR Plan registered brokers in their area.
FISCAL EFFECT: Appropriation: Fiscal Com.: Local:
California Department of Insurance (source)
California Apartment Association
California Association of Realtors
California Professional Firefighters
Consumer Federation of California
Independent Insurance Agents and Brokers of California
Personal Insurance Federation of California
Rural County Representatives of California
OPPOSITION: (Verified 5/17/16)
None received
ARGUMENTS IN SUPPORT: The CDI has sponsored SB 1302 because it heard from many consumers affected by the catastrophic Valley and Butte fires in 2015 who were facing cancellation or non-renewal of their homeowners’ policies that they were unaware of the FAIR Plan. This bill is a modest but important step in closing this information gap so that consumers facing very difficult and expensive insurance decisions have sufficient information to make the best possible decision to protect their families.
The Rural County Representatives of California reports its members have noticed a recent increase in the number of property owners being non-renewed, particularly those in high fire severity areas around the state. In these instances, homeowners must be made aware of their options for purchasing property insurance including the availability of homeowners’ insurance through the FAIR Plan. The California Association of Realtors supports SB 1302 because homeowners are often completely unaware of the basic coverage that is available through the FAIR Plan and risk losing the ability to close a transaction or risk a technical default on their mortgage because of that lack of knowledge.
5/18/16 16:28:03
**** END ****
SENATE COMMITTEE ON INSURANCE
Senator Richard Roth, Chair
2015 - 2016 Regular
Bill No: SB 1302 Hearing Date: April 13, 2016
Author: | McGuire | ||
Version: | February 19, 2016 | ||
Urgency: | Yes | Fiscal: | Yes |
Consultant: | Erin Ryan | ||
Subject: Basic property insurance: California FAIR Plan
SUMMARY
Requires insurers admitted to sell property insurance in the state to provide the California FAIR (fair access to insurance requirements) Plan (FAIR Plan) Internet Web site address and statewide toll-free telephone number to an applicant for insurance who is denied coverage, or a policyholder whose policy is canceled or non-renewed; requires the FAIR Plan to establish and maintain an Internet Web site through which a person may receive information and assistance in applying for insurance; requires an insurance agent or broker transacting basic property insurance to assist a person in making an application for insurance through the FAIR Plan; and declares that it is an urgency statute in order to have the consumer protections in the bill to become operative as soon as possible for homeowners who are located in high-risk brush and wildfire areas and are having difficulty obtaining insurance coverage for their property.
DIGEST
Existing law
- Establishes the FAIR Plan to assure stability in the property insurance market in California, to assure the availability of basic property insurance as defined, to encourage maximum use of the normal market provided by admitted insurers and licensed surplus line brokers, and to provide for the equitable distribution among admitted insurers of the basic responsibility for insuring qualified property for which basic property insurance cannot be obtained through the normal market;
- Requires all insurers admitted to transact property insurance in the state to participate in the FAIR Plan;
- Defines “basic property insurance” as insurance against direct loss to real or tangible personal property at a fixed location in those geographic or urban areas designated by the IC, from perils insured under the standard fire policy and extended coverage endorsement and vandalism and malicious mischief and such other coverages as may be added with the approval of the Insurance Commissioner (IC), as specified;
- Requires the FAIR Plan to establish and maintain a statewide toll-free “800” number for persons interested in applying for insurance through the plan, and to have that number published in general distribution telephone directories;
- Requires every insurer member of the FAIR Plan to provide applicants who are denied coverage the FAIR Plan’s toll-free number;
- Requires every insurance agent or broker transacting basic property insurance to either assist persons in making an application for FAIR Plan insurance, or provide them with the FAIR Plan toll-free number
This bill
- Requires insurers admitted to sell property insurance in the state to provide the FAIR Plan Internet Web site address and statewide toll-free number telephone number to an applicant for insurance who is denied coverage, or a policyholder whose policy is canceled or non-renewed;
- Requires the FAIR Plan to establish and maintain an Internet Web site through which a person may receive information and assistance in applying for insurance in addition to a statewide toll-free telephone number, and deletes a reference to an “800” number;
- Requires an insurance agent or broker transacting basic property insurance to assist a person in making an application for insurance through the FAIR Plan;
- Declares that it is an urgency statute in order to have the consumer protections in the bill to become operative as soon as possible for homeowners who are located in high-risk brush and wildfire areas and are having difficulty obtaining insurance coverage for their property, and to provide insurers with adequate time to prepare their required notices.
COMMENTS
- Purpose of the bill To ensure greater public awareness of the availability of the FAIR Plan insurance option by requiring insurers to include a reference to the FAIR Plan Web site and toll-free phone number in a notice of cancellation or non-renewal, and by requiring active property insurance agents and brokers to either assist a person in applying for FAIR Plan coverage or providing the FAIR Plan Web site and toll-free number.
- Background The FAIR Plan was created by state legislation in 1968 following brush fires and riots in the 1960’s that led many insurers to exit urban areas or neighborhoods as too risky to insure. Its stated purpose is “to assure stability in the property insurance market for property located in the State of California,” and to “assure the availability of basic property insurance….” It is a private association based in Los Angeles comprised of all insurers admitted to write property insurance in California. FAIR Plan profits and losses are shared by its members in direct proportion to their market share of property insurance written in California. The FAIR Plan is not a state agency and no taxpayer funds are involved.
The FAIR Plan offers a standard fire insurance policy for both structure and contents of residential and commercial properties. Its basic requirements are that the home or property be in insurable condition, it cannot have been vacant for more than one year, and no illegal activities take place at the property. A FAIR Plan policy does not provide coverage for liability, theft or water damage typically found in most homeowners’ policies, however. The homeowner or business generally must also purchase a "Difference in Condition" policy or other supplemental coverage from the voluntary insurance market when purchasing a FAIR Plan policy. Several major insurance companies, but not all, write such policies, including Farmers, Travelers and Nationwide.
As the insurer of last resort, the FAIR Plan does not advertise, and many homeowners who have been non-renewed or are having difficulty finding insurance may be unaware of the FAIR Plan insurance option. Until recently only about 6,600 out of 90,000 agents and brokers in the state were registered to sell FAIR Plan policies, although according the California Department of Insurance (CDI) that number has increased to about 10,000 as a result of CDI outreach to the agent and broker community since the fires of 2015. It takes about two days for an agent or broker to register with the FAIR Plan and requires little more than submitting a copy of the agent or broker’s license. No fees or testing are required, and the FAIR Plan offers a 10% commission for new business and 8% commission for renewals. At the same time, some insurance agents or brokers may be unable to place insurance with the FAIR Plan because they are “captive” agents and can contractually only sell policies of their contracting company.
There remains a big gap in understanding of the FAIR Plan among many agents and brokers who are currently only required by statute to provide homeowners looking for insurance the FAIR Plan “800” toll-free phone number. They are not required to actually help the consumer apply for such coverage, and many do not understand the options for coverage provided by the FAIR Plan.
The FAIR Plan reports that it has not seen an increase of new business in wildland-urban interface areas as a result of the drought and recent fires. With approximately 126,000 FAIR Plan dwelling policies in place in the state, 76% of those policies are in urban areas, largely in the Los Angeles area. As of February, the FAIR Plan had 24,538 policies in high and extreme wildfire risk areas, about 20% of its total policies.
Until recently, applicants for FAIR Plan coverage in specific geographic areas had to provide the names of three insurance companies that had denied insurance coverage for their property in order to qualify for a FAIR Plan policy. After a review following the Valley and Butte fires last year, the IC in January directed the FAIR Plan to make several changes to its operations, including some enhanced coverage options, eliminating the requirement that homeowners prove they were rejected three times for standard insurance policies, and giving more access to brokers registered with the FAIR Plan
To improve the ability of consumers to access the FAIR Plan and identify brokers who can help them place such policies, the FAIR Plan recently developed a broker lookup feature on its website that allows the consumer to enter their zip code or city to identify FAIR Plan registered brokers in their area.
- Support The CDI has sponsored SB 1302 because it heard from many consumers affected by the catastrophic Valley and Butte fires in 2015 who were facing cancellation or non-renewal of their homeowners’ policies that they were unaware of the FAIR Plan. This bill is a modest but important step in closing this information gap so that consumers facing very difficult and expensive insurance decisions have sufficient information to make the best possible decision to protect their families.
The Rural County Representatives of California reports its members have noticed a recent increase in the number of property owners being non-renewed, particularly those in high fire severity areas around the state. In these instances, homeowners must be made aware of their options for purchasing property insurance including the availability of homeowners’ insurance through the FAIR Plan. The California Association of Realtors supports SB 1302 because homeowners are often completely unaware of the basic coverage that is available through the FAIR Plan and risk losing the ability to close a transaction or risk a technical default on their mortgage because of that lack of knowledge.
- Opposition None received.
- Questions The bill requires agents and brokers transacting basic property insurance to “assist” a person in making an application to the FAIR Plan, but does not define what counts as assistance. See suggested amendment “c” below
- Suggested Amendments
- The bill requires insurers to make changes to their operations and cancellation and nonrenewal notices to consumers upon enactment. This may be unrealistic. The interested parties have agreed to amend the bill to delay implementation of this requirement to six months after the effective date of this bill becoming enacted;
- On page 4, line 18 ADD “number” after “toll-free telephone”;
- On page 4, line 25, after plan ADD “by submitting an application at the person’s request or providing the person with the FAIR Plan’s Internet Web site and toll-free number”;
- Add Assemblymembers Bigelow and Maienschein as co-authors.
POSITIONS
Support
California Apartment Association
California Association of Realtors
California Department of Insurance (Sponsor)
California Professional Firefighters
Consumer Federation of California
Rural County Representatives of California
Oppose
None received
-- END --
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