AB 1104: California Life and Health Insurance Guarantee Association.

Existing law creates the Department of Insurance, headed by the Insurance Commissioner, and prescribes the departments powers and duties. Existing law establishes the Office of Principle-Based Reserving within the department and authorizes the commissioner to hire and assign department staff, and to retain actuaries and consultants, to assist with the preparation and implementation of principle-based valuation. Existing law authorizes the commissioner to impose an annual assessment on an insurer, based on the insurers position in a tiered system relating to the gross annual life insurance premium written by the insurer in California during the immediately preceding year. Existing law requires an insurer with long-term care insurance contracts covering more than 10,000 lives to annually file disclosure reports with the commissioner and the departments Office of Principle-Based Reserving.

Existing law requires the formation of the California Life and Health Insurance Guarantee Association to provide coverage for persons for direct, nongroup life, health, annuity, and supplemental policies or contracts of insurance, except as specified, in case of failure in the performance of contractual obligations under policies and contracts because of the impairment or insolvency of the member insurer that issued the policies or contracts. Existing law requires the board of directors of the association consist of not less than 9 nor more than 13 member insurers, as specified. Existing law authorizes the board to assess the member insurers for the purpose of providing funds necessary to carry out the powers and duties of the association. Existing law requires the association to annually provide a financial report to the commissioner and the chairs of the Senate Insurance Committee and the Assembly Insurance Committee that includes the maximum amount of coverage that the association may provide based on the assessments.

This bill would direct the Insurance Commissioner to appoint 2 additional members to the board of directors who represent the public generally. The bill would prohibit an officer, director, or employee of an insurance company or health maintenance organization, or any person engaged in the business of insurance from serving as a public representative. The bill would authorize the commissioner to impose an annual assessment on an insurer that issues or renews long-term care policies in an amount up to $1,000,000 based on the insurers pro rata share of the costs the department incurs reviewing, analyzing, and reporting on disclosure reports submitted by long-term care insurers and the association, but not to exceed reasonable regulatory costs.