BILL NUMBER: AB 1180 CHAPTERED 07/25/01 CHAPTER 102 FILED WITH SECRETARY OF STATE JULY 25, 2001 APPROVED BY GOVERNOR JULY 25, 2001 PASSED THE ASSEMBLY JULY 12, 2001 PASSED THE SENATE JULY 5, 2001 AMENDED IN SENATE JUNE 26, 2001 AMENDED IN SENATE JUNE 14, 2001 AMENDED IN ASSEMBLY MAY 14, 2001 AMENDED IN ASSEMBLY MARCH 28, 2001 INTRODUCED BY Assembly Member Calderon FEBRUARY 23, 2001 An act to amend Sections 678.1 and 11664 of, and to add Sections 679.7 and 11663.5 to, the Insurance Code, relating to insurance. LEGISLATIVE COUNSEL'S DIGEST AB 1180, Calderon. Insurance. Existing law requires an insurer with respect to commercial insurance, as defined, and workers' compensation insurance to give the insured a written notice of nonrenewal of the policy. Existing law also requires the insurer to provide, upon the request of the insured or the agent or broker of record, a premium and loss history report for the account's tenure or the past 3 years, whichever is shorter, plus loss experience during the current policy year, within 10 business days from the receipt of the request. This bill would instead require that the insurer provide the premium and loss history report with respect to certain policies of commercial insurance and workers' compensation upon the request of the insured or the agent or broker of record where authorized by the insured, irrespective of nonrenewal. The bill would also provide that the requirement that the insurer furnish the insured with the loss covering the current policy period, but that the requirement does not apply except under specified conditions. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. Section 678.1 of the Insurance Code is amended to read: 678.1. (a) This section applies only to policies of insurance of commercial insurance that are subject to Sections 675.5 and 676.6. (b) A notice of nonrenewal shall be in writing and shall be delivered or mailed to the producer of record and to the named insured at the mailing address shown on the policy. Subdivision (a) of Section 1013 of the Code of Civil Procedure shall be applicable if the notice is mailed. (c) An insurer, at least 60 days, but not more than 120 days, in advance of the end of the policy period, shall give notice of nonrenewal, and the reasons for the nonrenewal, if the insurer intends not to renew the policy, or to condition renewal upon reduction of limits, elimination of coverages, increase in deductibles, or increase of more than 25 percent in the rate upon which the premium is based. (d) If an insurer fails to give timely notice required by subdivision (c), the policy of insurance shall be continued, with no change in its terms or conditions, for a period of 60 days after the insurer gives the notice. (e) With respect to policies defined in subdivision (b) of Section 676.6, in addition to the bases for conditional renewal set forth in subdivision (c), an insurer may also condition renewal upon requirements relating to the underlying policy or policies. If the requirements are not satisfied as of (1) the expiration date of the policy, or (2) 30 days after mailing or delivery of such notice, whichever is later, the conditional renewal notice shall be treated as an effective notice of nonrenewal, provided the insurer has sent written confirmation to the first named insured and the producer of record that the conditions were not met and that coverage ceased at the expiration date shown in the expiring policy. (f) A notice of nonrenewal shall not be required in any of the following situations. (1) The transfer of, or renewal of, a policy without a change in its terms or conditions or the rate on which the premium is based between insurers that are members of the same insurance group. (2) The policy has been extended for 90 days or less, if the notice required in subdivision (c) has been given prior to the extension. (3) The named insured has obtained replacement coverage or has agreed, in writing, within 60 days of the termination of the policy, to obtain that coverage. (4) The policy is for a period of no more than 60 days and the insured is notified at the time of issuance that it may not be renewed. (5) The named insured requests a change in the terms or conditions or risks covered by the policy within 60 days prior to the end of the policy period. (6) The insurer has made a written offer to the insured, within the time period specified in subdivision (c), to renew the policy under changed terms or conditions or at a changed premium rate. As used herein, "terms or conditions" includes, but is not limited to, a reduction in limits, elimination of coverages, or an increase in deductibles. SEC. 2. Section 679.7 is added to the Insurance Code, to read: 679.7. (a) Upon receiving a written request from an insured or the agent or broker of record where authorized by the insured, an insurer shall provide a premium and loss history report to the requesting party for the account's tenure or the three-year period ending with the inception of the current policy period, whichever is shorter, plus loss experience during the current policy period that is in force if any of the following occur: (1) The policy is canceled or nonrenewed. (2) The policyholder requests the information within 60 days prior to the renewal date of an existing policy. (3) The policyholder's current insurer's rating is downrated by a nationally recognized insurance rating service to a financial rating below secure or good or to a rating that would negatively impact the ability of the policyholder to conduct its business operations. (4) The policyholder's current insurer is conserved by the department under Section 1011, or is ordered to cease writing business under Sections 1065.1 and 1065.2. The premium and loss history report, and the loss experience information for the current policy period, shall be provided within 10 business days of receiving the request. (b) This section applies only to policies of commercial insurance that are subject to Sections 675.5 and 676.6, except for professional liability insurance. (c) This section shall not apply to a policyholder who, through automated or other means, is provided direct, ongoing access to claims information by the insurer. (d) For purposes of this section, a loss history report includes, but is not limited to, a list of individual claims detailed by date of claim and total incurred and paid losses. SEC. 3. Section 11663.5 is added to the Insurance Code, to read: 11663.5. (a) Upon receiving a written request from an insured or the agent or broker of record where authorized by the insured, an insurer shall provide a premium and loss history report to the requesting party for the account's tenure or the three-year period ending with the inception of the current policy period, whichever is shorter, plus loss experience during the current policy period that is in force if any of the following occur. (1) The policy is canceled or nonrenewed. (2) The policyholder requests the information within 60 days prior to the renewal date of an existing policy. (3) The policyholder's current insurer's rating is downrated by a nationally recognized insurance rating service to a financial rating below secure or good or to a rating that would negatively impact the ability of the policyholder to conduct its business operations. (4) The policyholder's current insurer is conserved by the department under Section 1011, or is ordered to cease writing business under Sections 1065.1 and 1065.2. The premium and loss history report, and the loss experience information for the current policy period, shall be provided within 10 business days of receiving the request. (b) This section applies only to workers' compensation insurance. (c) This section shall not apply to a policyholder who, through automated or other means, is provided direct, ongoing access to claims information by the insurer. (d) For purposes of this section, a loss history report includes, but is not limited to, a list of individual claims detailed by date of claim and total incurred and paid losses. SEC. 4. Section 11664 of the Insurance Code is amended to read: 11664. (a) This section applies only to policies of workers' compensation insurance. (b) A notice of nonrenewal shall be in writing and shall be delivered or mailed to the producer of record and to the named insured at the mailing address shown on the policy. Subdivision (a) of Section 1013 of the Code of Civil Procedure shall be applicable if the notice is mailed. (c) An insurer, at least 30 days, but not more than 120 days, in advance of the end of the policy period, shall give notice of nonrenewal, and the reasons for the nonrenewal, if the insurer intends not to renew the policy. (d) If an insurer fails to give timely notice required by subdivision (c), the policy of insurance shall be continued, with no change in its premium rate, for a period of 60 days after the insurer gives the notice. (e) A notice of nonrenewal shall not be required in any of the following situations. (1) The transfer of, or renewal of, a policy without a change in its terms or conditions or the rate on which the premium is based between insurers that are members of the same insurance group. (2) The policy has been extended for 90 days or less, if the notice required in subdivision (c) has been given prior to the extension. (3) The named insured has obtained replacement coverage or has agreed, in writing, within 60 days of the termination of the policy, to obtain that coverage. (4) The policy is for a period of no more than 60 days and the insured is notified at the time of issuance that it may not be renewed. (5) The named insured requests a change in the terms or conditions or risks covered by the policy within 60 days prior to the end of the policy period. (6) The insurer has made a written offer to the insured to renew the policy at a premium rate increase of less than 25 percent. (A) If the premium rate in the governing classification for the insured is to be increased 25 percent or greater and the insurer intends to renew the policy, the insurer shall provide a written notice of a renewal offer not less than 30 days prior to the policy renewal date. The governing classification shall be determined by the rules and regulations established in accordance with subdivision (c) of Section 11750.3. (B) For purposes of this section, "premium rate" means the cost of insurance per unit of exposure prior to the application of individual risk variations based on loss or expense considerations such as scheduled rating and experience rating.