BILL NUMBER: AB 1906	INTRODUCED
	BILL TEXT


INTRODUCED BY   Assembly Member Salas

                        FEBRUARY 7, 2008

   An act relating to insurance.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 1906, as introduced, Salas. Insurance: identity theft.
   Existing law requires various departments and agencies to issue
reports to the Legislature to assist it in enacting appropriate
legislation.
   This bill would make findings and declarations regarding identity
theft and direct the Department of Insurance to conduct a study,
utilizing its existing resources, to determine if current law gives
the department adequate oversight and regulatory authority of
identity theft insurance policies, as specified. This bill would
direct the department to consult with other agencies and departments
as needed. The department would be required to report its findings to
the Legislature and make recommendations, if needed, to improve the
insurance products designed to protect identity consumer security no
later than December 1, 2009.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.


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

  SECTION 1.  The Legislature finds and declares all of the
following:
   (a) Identity theft is one of the fastest growing financial crimes
in the United States. An estimated 9.9 million Americans fall victim
to identity theft each year.
   (b) Victims of identity theft come from all walks of life,
regardless of age, race, or sex.
   (c) The process of recovering from identity theft is long, costly,
and in many cases, very stressful. The Identity Theft Resource
Center reported in 2005, on average, an identity theft victim of a
new account and other fraud spent up to 60 hours resolving problems
brought on by identity theft, and those victims of existing accounts
spent an average of 15 hours resolving problems.
   (d) A 2003 Federal Trade Commission study found that identity
theft costs United States businesses nearly forty-eight billion
dollars ($48,000,000,000) annually and consumers an additional five
billion dollars ($5,000,000,000) per year.
   (e) The Federal Trade Commission has reported that identity theft
is the leading consumer fraud complaint tracked by law enforcement
agencies across the country.
   (f) In response to the growing consumer concern of identity theft,
a new type of insurance has been offered, called identity theft
insurance.
   (g) Identity theft insurance cannot protect an individual from
having their personal information stolen. The insurance typically
offers assistance to victims of identity theft to reestablish their
credit and cover the expenses associated with reclaiming financial
identity, ranging from long-distance phone calls to the cost of
hiring an attorney.
   (h) The number of companies offering identity theft insurance has
increased in the past several years.
   (i) In August 2007, the California Public Employees' Retirement
System (CalPERS) was victim to a data security breach and in response
to that incident, they purchased a one-year identity theft insurance
policy for all their customers subject to the breach. CalPERS plans
to do a followup study of customer satisfaction with the policy.
   (j) The increase in identity theft insurance policies and the
number of consumers purchasing these policies has raised the question
if current law is sufficient to protect consumers in their purchase
of identity theft insurance. California law does not have a direct
reference to identity theft insurance, and it is important that the
Department of Insurance has adequate oversight of this new product.
  SEC. 2.  The Department of Insurance shall conduct a study,
utilizing its existing resources, to determine if current law gives
the department adequate oversight and regulatory authority of
identity theft insurance policies in order to protect consumers in
their purchase of identity theft insurance. The department shall
consult other agencies and departments as needed. The department
shall report its findings to the Legislature and make
recommendations, if needed, to improve the insurance products
designed to protect consumer identity security, no later than
December 1, 2009.