BILL NUMBER: SB 1872	CHAPTERED  07/09/04

	CHAPTER  123
	FILED WITH SECRETARY OF STATE  JULY 9, 2004
	APPROVED BY GOVERNOR  JULY 8, 2004
	PASSED THE ASSEMBLY  JUNE 24, 2004
	PASSED THE SENATE  MAY 17, 2004

INTRODUCED BY   Senator Denham

                        FEBRUARY 20, 2004

   An act to amend Section 770.3 of the Insurance Code, relating to
life and disability insurance.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 1872, Denham.  Insurance:  state departments.
   Existing law, with certain exceptions, places specified
restrictions on the ability of a state department or agency to
negotiate life or disability insurance or an annuity, or to require
the placing of that insurance or annuity through particular agents,
brokers, or companies.
   This bill would exempt the University of California from those
restrictions.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  Section 770.3 of the Insurance Code is amended to read:

   770.3.  No state department or agency shall negotiate any life or
disability insurance or require the placing of that insurance through
particular agents, brokers, or companies, except to the extent that
the state has a direct financial interest in the subject of the
insurance.  The state has no financial interest in an annuity
purchased for an employee if the premium therefor is paid from a
deduction from or reduction in the employee's salary, and any annuity
paid for through a deduction or reduction shall not be deemed to
have been provided by the state for its employees for purposes of
this section, and the state shall not negotiate or require the
placing of the annuity through particular agents, brokers, or
companies.  Nothing contained in this section shall affect the
program of life and disability insurance in connection with veterans'
farm and home purchases through the Department of Veterans Affairs
except that the total life insurance benefit under that program shall
in no event exceed 120% of the unpaid contract balance.  Except in
those cases where the premium for an annuity is paid entirely from a
deduction from or reduction in an employee's salary, nothing
contained in this section shall affect life or disability insurance
programs which may be provided by the state for its employees.
   Notwithstanding anything in this section to the contrary, in any
case in which a tax-sheltered annuity under an annuity plan which
meets the requirements of Section 403(b) of the Internal Revenue Code
of 1954 is to be placed or purchased for an employee, the employee
shall have the right to designate the licensed agent, broker, or
company through whom the employee's employer shall arrange for the
placement or purchase of the tax-sheltered annuity.  In any case in
which the employee has designated an agent, broker, or company, the
employer shall comply with that designation, except in the case of
designations subject to Sections 1153 and 12420.2 of the Government
Code.
   As used in this section, "state department or agency" shall
include, but not be limited to, school districts.
   This section shall apply to all local governmental agencies, as
well as state departments and agencies.