AB 1140: Insurance.

(1)Existing law requires an owner or operator of a motor vehicle, or an owner of a vehicle used to transport passengers for hire not regulated by the Public Utilities Commission, to maintain liability insurance coverage for the named insured and any other person using the vehicle with permission in the amount of $15,000 for the bodily injury or death of any one person, $30,000 for the bodily injury or death of all persons, and $5,000 for damage to the property of others resulting from any one accident.

Commencing on January 1, 2025, existing law would increase those minimum coverage amounts to $30,000 for the bodily injury or death of any one person, $60,000 for the bodily injury or death of all persons, and $15,000 for damage to the property of others resulting from any one accident, and would again increase those amounts, as specified, on January 1, 2035.

This bill would limit application of the above-described increases for minimum liability insurance coverage to those policies and bonds that are issued or renewed on or after January 1, 2025, and on or after January 1, 2035, as applicable.

(2)Existing law creates the Department of Insurance, headed by the Insurance Commissioner, and generally regulates the business of insurance in the state. Existing law requires, biennially on July 1 of each even-numbered year after July 1, 2020, each admitted insurer with California premiums written of $75,000,000 or more to report to the commissioner on its minority, lesbian, gay, bisexual, and transgender (LGBT), veteran, and disabled veteran-owned business procurement efforts and its governing board and board diversity efforts during the previous 2 years. Existing law requires the commissioner to establish and appoint an Insurance Diversity Task Force with at least 13, but not more than 15, members, including 2 members who are representatives of a minority business enterprise and a member who is a representative of an LGBT business enterprise.

This bill would include persons with disabilities, as defined, as part of each admitted insurers procurement and diversity efforts that it reports to the commissioner biennially. The bill would require a member of the Insurance Diversity Task Force to be a member who is a representative of a persons with disabilities business enterprise, as defined.

(3)Existing law prescribes the commissioners powers and duties, including various duties to regulate the business of insurance in this state and to enforce the execution of those laws. Existing law provides for the issuance of various licenses under the jurisdiction of the commissioner.

Existing law requires specified businesses and corporations to file certain business-related information with the Secretary of State and to pay specified filing fees. Existing law authorizes the Secretary of State to suspend the powers, rights, and privileges of a corporation if the corporation fails to perform specified acts.

This bill would make inactive the license of a licensee that is suspended by the Secretary of State. The bill would prohibit the licensee from conducting any activity for which a license issued by the commissioner is required until the licensee is no longer suspended by the Secretary of State.

(4)Existing law requires the commissioner to submit to the Department of Justice fingerprint images and related information as specified by statute for specified applicants applying for a license, including a surplus line broker and a car rental agent. Existing law also requires the commissioner to give monthly qualifying examinations in each of the cities in which the commissioner has an office.

This bill would require the commissioner to submit fingerprint images and related information for applicants applying for a license as a self-service storage agent, a variable life and variable annuity agent, and a vehicle service contract provider. The bill would, instead, require the commissioner to administer qualifying license examinations at test centers designated by the commissioner and online, as specified.

(5)Existing law generally regulates the business of insurance in the state, including the conduct of insurance licensees. Existing law requires a specified licensee to include their license number in a type size, as specified, on business cards, written price quotations, and print advertisements and in an email that involves an activity for which a license is required. Existing law makes a person in violation of these provisions subject to a fine levied by the commissioner, as specified.

This bill would make those provisions applicable to bail licensees.

(6)Existing law authorizes the commissioner, after a hearing, to revoke the license, or issue an order suspending the license for a period, as specified, of a person to transact life settlements business if the commissioner concludes that it is contrary to the interests of the public for the licensee to continue.

This bill would authorize the commissioner, without a hearing, to suspend or revoke the license of a broker of life settlement contracts if the broker has been convicted of a felony, a specified misdemeanor, or had a previously issued professional, occupational, or vocational license suspended or revoked for cause within the preceding 5 years on grounds that would preclude the granting of a license by the commissioner.

(7)Existing law authorizes interindemnity, reciprocal, or interinsurance contracts to be entered into by physicians and surgeons, with respect to certain types of claims, including, but not limited to, bodily injury or property damage arising out of the conduct and of the operations of the members professional practice occurring on the members premises, in addition to medical malpractice claims. Existing law requires each participating member to enter into and receive an executed copy of a trust agreement that governs the collection and disposition of all funds of the interindemnity arrangement. Existing law requires the members to receive specified notifications and ballots by first-class mail.

This bill would allow the members to be also notified by electronic transmission as well as allow for electronic ballots.

(8)Existing law requires that prior to incurring an obligation under a vehicle service contract, an obligor file with the Insurance Commissioner, and receive the commissioners approval to use, a copy of an insurance policy covering 100% of the obligors vehicle service contract obligations. In lieu of complying with this provision, existing law allows the obligor or its parent company to establish to the commissioners satisfaction that it possesses a net worth of $100,000,000. Existing law authorizes an obligor to have on file with the commissioner only one active policy from one insurer at any time.

This bill would, instead, require the obligor to have on file only one active policy from one insurer at any time. The bill would specify that the obligor, unless exempted, is required to comply with either provision, but not both.

(9)Existing law authorizes the commissioner to impose a monetary penalty on a person, or an individual who aids or abets the person, who has acted in a capacity for which a license, registration, or certificate of authority from the commissioner was required but not possessed. Existing law prohibits the commissioner from imposing this monetary penalty on the person or individual who has held a specified license or registration within the prior 5 years, including as an insurance agent, broker, or solicitor, surplus line broker, a bail licensee, or life and disability insurance analyst.

This bill would delete this prohibition, thereby authorizing the commissioner to assess a monetary penalty against these licensees.

(10)Existing law authorizes the Director of Employment Development to approve a settlement of a civil employment tax matter in dispute involving a reduction of tax in settlement of $7,500 or less, and imposes specified procedures for settlements, including approval by the Attorney General, the administrative law judge, or the California Unemployment Insurance Appeals Board under certain conditions. For a settlement of any civil employment tax matter dispute involving a reduction of tax or penalties in settlement, existing law authorizes the director, and the administrative law judge or the appeals board, to approve settlements not exceeding $5,000 without prior submission to the Attorney General. Existing law authorizes the director to recommend to the appeals board a settlement of a civil employment tax matter dispute involving a reduction in tax exceeding $7,500, and requires the recommended proposed settlement to be submitted to the Attorney General, as specified.

This bill would increase the dollar limits of those settlements to $11,500 for purposes of the above-described provisions, thereby authorizing the director to approve settlements that are $11,500 or less with or without approval from the Attorney General, and, beginning on January 1, 2025, would require the Employment Development Department to compute annual adjustments of that $11,500 limitation by using a detailed calculation that considers the California Consumer Price Index.

(11)Existing law requires an insurer to file financial statements with the commissioner. For purposes of those financial statements, existing law authorizes a domestic insurer to take a credit for reinsurance when the reinsurance is ceded to an assuming insurer if specified requirements are met, including assurances from the assuming insurer that, among other assurances, the assuming insurer is not presently participating in any solvent scheme of arrangement, as defined, which involves ceding insurers in this state, and shall agree to provide security in an amount equal to 100% of the assuming insurers liabilities to the ceding insurer if the assuming insurer enters into a solvent scheme of arrangement.

This bill would specify that the assuming insurer shall provide its security consistent with the terms of the scheme.

(12)Existing law establishes a Fraud Division within the Department of Insurance to investigate fraudulent claims. Existing law requires an insurer or licensed rating organization to notify the local district attorneys office and the Fraud Division of the Department of Insurance when the insurer or licensed rating organization knows or reasonably believes it knows the identity of a person or entity that committed a fraudulent act relating to a workers compensation insurance claim or policy or reasonably believes that the fraudulent act was not reported to an authorized governmental agency.

This bill would delete the notification requirement for when the insurer or licensed rating organization reasonably believes the fraudulent act was not reported to an authorized governmental agency. The bill would also make a technical change to correct an erroneous reference in a related provision.

(13)Existing law creates the California Automobile Assigned Risk Plan to provide automobile insurance to those persons who would not otherwise be able to procure it, and requires the plan to issue policies affording coverage, with exceptions, in the amount of $15,000 for bodily injury to, or death of, each person as a result of any one accident and, subject to that limit as to one person, the amount of $30,000 for bodily injury to, or death of, all persons as a result of any one accident, and the amount of $5,000 for damage to property of others as a result of any one accident.

This bill would require a plan, for a policy or bond issued or renewed on or after January 1, 2025, to issue policies affording coverages, with exceptions, in the amount of $30,000 for bodily injury to, or death of, each person as a result of any one accident and, subject to that limit as to one person, the amount of $60,000 for bodily injury to, or death of, all persons as a result of any one accident, and the amount of $15,000 for damage to property of others as a result of any one accident. The bill would also require a plan, for a policy or bond issued or renewed on or after January 1, 2035, to issue policies affording coverages, with exceptions, in the amount of $50,000 for bodily injury to, or death of, each person as a result of any one accident and, subject to that limit as to one person, the amount of $100,000 for bodily injury to, or death of, all persons as a result of any one accident, and the amount of $25,000 for damage to property of others as a result of any one accident.

(14)Existing law establishes the California Partnership for Long-Term Care Program, administered by the State Department of Health Care Services, to link private long-term care insurance policies and health care service plan contracts that cover long-term care with the In-Home Supportive Services Program and the Medi-Cal program. Existing law requires a long-term care insurance policy or a health care service plan contract to contain certain provisions certified by the department, including protection against loss of benefits due to inflation. Existing law requires an insurer, if a premium increases, to offer the policyholder or certificate holder options to reduce coverage and lower the premium that would maintain partnership certification. Existing law requires a premium increase notification to include specified options, including additional options to reduce the daily benefit.

This bill would prohibit a premium rate schedule increase from exceeding a cumulative total of 40% over any 3-year period, and would require the amount of the increase to be spread equally over each of the 3 years. The bill would also require an insurer to send a premium increase notification each of the 3 years. The bill would require a premium increase notification to include these specified options, including additional options to reduce the daily benefit, if the Department of Insurance approves a premium rate schedule increase on or after January 1, 2023.