BILL ANALYSIS
AB 76
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Date of Hearing: April 1, 2009
ASSEMBLY COMMITTEE ON INSURANCE
Joe Coto, Chair
AB 76 (Yamada) - As Amended: March 9, 2009
SUBJECT : Life and Annuity Insurance: Consumer Protection Fund
SUMMARY : Extends the sunset date on a special fund and the $1
assessment on each life insurance and annuity contract sold in
the state, and requires that the Insurance Commissioner (IC)
post specified information on the California Department of
Insurance (CDI) website. Specifically, this bill :
1)Extends the sunset date on the Life and Annuity Consumer
Protection Fund (Fund), and on the $1 per life insurance
policy and annuity contract fee that supports the Fund, until
January 1, 2015.
2)Requires the IC to annually post a consolidated report on the
CDI website that contains the following information:
a) The number of complaints related to life insurance and
annuity contracts received by the CDI;
b) The number of opened investigations related to these
products;
c) The number of investigations relating to these products
that are referred to or reported by prosecuting agencies;
d) The number of administrative or regulatory cases
relating to these products referred to the CDI legal
division, and the number of legal actions undertaken; and
e) Descriptions of educational and outreach programs
initiated by the CDI relating to these products.
EXISTING LAW :
1)Creates the Life and Annuity Consumer Protection Fund as a
special account within the Insurance Fund.
2)Authorizes the IC to impose a fee, not to exceed $1, on each
life insurance policy or annuity contract with a value over
AB 76
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$15,000 sold to a resident of California.
3)Specifies how the fee monies may be expended, including a
requirement that 50% of the funds be distributed to local
district attorneys who submit a specified application for the
funds.
4)Provides that the Fund and the fee sunset on January 1, 2010.
FISCAL EFFECT : According to the CDI, the fee generates
approximately $1 million per year.
COMMENTS :
1)Purpose of the bill. The author introduced this bill at the
request of the Los Angeles District Attorney, one of the local
district attorneys who has applied for and received funding
from the Fund. In order to provide the security of stable
funding, the District Attorney suggests an extension of 5
years. The program was originally created in 2004 by AB 2316
(Chan), and the initial sunset provision allowed 5 years.
Because the District Attorney believes the program is a
worthwhile law enforcement program that has proven its value,
he believes an additional 5 years is warranted.
2)CDI website. Representatives of the life insurance industry
have not objected to the funding extension, but have had
concerns with how the CDI was using the funds. As a result,
they negotiated the "sunshine" provisions of the bill,
requiring data to be made conveniently available on the CDI
website. With the ability to easily monitor how the funds are
being used and identify the results, there is broad support in
the industry for the bill.
REGISTERED SUPPORT / OPPOSITION :
Support
Los Angeles District Attorney
California District Attorneys Association
Association of California Life and Health Insurance Companies
National Association of Insurance and Financial Advisors of
California (NAIFA - CA)
American Federation of State, County and Municipal Employees
(AFSCME)
AB 76
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California Advocates for Nursing Home Reform
Opposition
None received.
Analysis Prepared by : Mark Rakich / INS. / (916) 319-2086