BILL NUMBER: AB 299 INTRODUCED
BILL TEXT
INTRODUCED BY Committee on Insurance (Coto (Chair), Garrick (Vice
Chair), Blakeslee, Carter, Feuer, Hayashi, Nava, Niello, and Torres)
FEBRUARY 17, 2009
An act to amend Sections 706.7, 730, 735.5, 736, 900.2, 942, 1170,
1182, 1197, and 11580.011 of, and to amend and renumber Section
10123.83 of, the Insurance Code, relating to insurance.
LEGISLATIVE COUNSEL'S DIGEST
AB 299, as introduced, Committee on Insurance. Insurance.
Existing law provides that annually the Insurance Commissioner
shall mail to every domestic insurer a report specifying the
reciprocal states.
This bill would provide that every 4 years the commissioner shall
mail to every domestic insurer a report specifying the reciprocal
states.
Existing law provides that at specified times the commissioner
may, and at specified times shall, examine the business and affairs
of insurers. In conducting an examination the commissioner shall
consider the results of specified data, reports, and criteria.
This bill would add other criteria that the commissioner must
consider as well as allowing the consideration of any other criteria
deemed appropriate by the commissioner.
Existing law provides that the commissioner may disclose the
content of an examination report, preliminary examination report or
results, or any matter relating thereto, to the insurance department
of this or any other state or country, or to law enforcement
officials of this or any other state or agency of the federal
government at any time, or to the National Association of Insurance
Commissioners (NAIC), as specified.
This bill would add market analysis data to the information that
the commissioner may disclose, as specified.
Existing law provides that all examinations shall be at the
expense of the insurer, organization, or person examined, except that
special examinations which are in addition to regular examinations
may be at the expense of the state in the discretion of the
commissioner.
This bill would provide that all analyses performed pursuant to
the provisions discussed above authorizing examinations by the
commissioner would be at the expense of the insurer, as specified.
Existing law provides that all insurers doing business in this
state shall have an annual audit by an independent certified public
accountant. The audit shall be conducted and the audit report
prepared and filed in conformity with the Annual Audited Financial
Reports instructions contained in the annual statement instructions
as adopted from time to time by the NAIC. Existing law authorizes the
commissioner to grant a 30-day extension of the filing date upon a
showing of substantial cause.
This bill would provide that the annual audit, including required
auditor and management reporting, be conducted in conformity with the
standards adopted by the NAIC. The bill would instead authorize the
commissioner to grant multiple 30-day extensions, as specified.
Existing law provides that domestic incorporated insurers may
invest in an account or accounts in one or more banks or savings and
loan associations to the extent the account or accounts are insured
by an agency or instrumentality of the federal government, as
specified.
This bill would add credit unions to the financial institutions in
which domestic incorporated insurers may invest.
Existing law provides that excess funds investments shall not be
made in a loan to any one borrower, as defined, in an amount
exceeding 10% of the capital stock and surplus or 1% of the admitted
assets of the lending insurer, whichever amount is greater.
This bill would provide that excess fund investments shall not be
made in a loan or any other obligation to any one borrower or
obligor, as specified.
Existing law provides that every policy of automobile liability
insurance, as specified, or collision coverage, as specified, shall
provide coverage for replacement of a child passenger restraint
system (child seat) that was in use by a child during an accident for
which liability coverage under the policy is applicable due to the
liability of an insured. Existing law provides that upon the filing
of a claim for replacement, unless otherwise determined, an insurer
shall have an obligation to ask whether a child seat was in use by a
child during an accident that is covered by the policy, and must
replace the child seat if it was in use by a child during the
accident or reimburse the claimant for the cost of purchasing a new
child seat.
This bill would provide that every policy of automobile liability
insurance, as specified, shall provide coverage for replacement of a
child seat that was damaged in a covered accident, and that every
policy that provides collision coverage, as defined, shall include a
child seat within the definition of covered property, as specified.
This bill would provide that upon the filing of a claim for
replacement, unless otherwise determined, an insurer would have an
obligation to ask whether a child seat was in use by a child during
an accident or was in the vehicle at the time of a loss that is
covered by the policy, and must replace the child seat or reimburse
the claimant for the costs of buying a new child seat if it was in
use by a child during the accident or if it sustained a covered loss
while in the vehicle.
This bill would also make changes to obsolete cross-references in
insurance provisions.
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. Section 706.7 of the Insurance Code is amended to read:
706.7. As used in this section, the term "reciprocal
State" state" means a State
state the laws of which prohibit an insurer domiciled
therein from insuring the lives or persons of residents of, or
property or operations located in, the State of California unless it
then holds a valid and subsisting certificate of authority issued by
the Insurance Commissioner of this State. Such
state. This prohibition may be subject to the exceptions
herein set forth.
Subject to the exceptions herein set forth, a domestic insurer
shall not enter into a contract of insurance upon the life or person
of a resident of, or property or operations located in, a reciprocal
State state unless it is authorized
pursuant to the laws of that State state
to transact such insurance therein. The commissioner shall,
annually every four years , mail notice
to every domestic insurer, specifying the reciprocal States
states .
The exceptions to the provisions of this section are the
following:
(a) Contracts entered into where the prospective insurant is
personally present in the State state
in which the insurer is authorized to transact insurance when he
or she signs the application.
(b) The issuance of certificates under a lawfully transacted group
life or group disability policy, where the master policy was entered
into in a State state in which the
insurer was then authorized to transact insurance.
(c) The renewal or continuance in force, with or without
modification, of contracts otherwise lawful and which were not
originally executed in violation of this section.
SEC. 2. Section 730 of the Insurance Code is amended to read:
730. (a) The commissioner, whenever he or she deems necessary or
whenever he or she is requested by verified petition, signed by 25
persons interested as shareholders, policyholders, or creditors of
any admitted insurer showing that the insurer is insolvent under this
code, or upon information that any insurer has violated any
provision of Article 7 (commencing with Section 800), shall examine
the business and affairs of the insurer. The commissioner shall so
examine every domestic insurer before issuing to it a certificate of
authority other than a renewal.
(b) The commissioner may conduct an examination under this article
of any company as often as the commissioner in his or her discretion
deems appropriate but shall, at a minimum, conduct an examination of
every insurer admitted in this state not less frequently than once
every five years. In scheduling and determining the nature, scope,
and frequency of the examinations, the commissioner shall consider
the results of financial statement analyses and ratios, changes in
management or ownership, actuarial opinions, reports of independent
certified public accountants, market analysis results, including
consumer complaint analysis, evaluation of ongoing regulatory
activities, analysis of data derived from industry surveys or
interrogatories, and other criteria as set forth in the
Examiner's Handbook or in the Market Regulation Handbook
adopted by the National Association of Insurance Commissioners which
are in effect when the commissioner exercises discretion under this
section.
(c) For purposes of completing an examination of any company under
this article, the commissioner may examine or investigate any
person, or the business of any person, insofar as the examination or
investigation is, in the discretion of the commissioner, necessary or
material to the examination of the company.
(d) In lieu of an examination under this article of any foreign or
alien insurer admitted in this state, the commissioner may accept an
examination report on the company as prepared by the insurance
department of the company's state of domicile or port-of-entry state
until January 1, 1994. Thereafter, these reports may only be accepted
if (1) the insurance department was at the time of the examination
accredited under the National Association of Insurance Commissioner's
Financial Regulation Standards and Accreditation Program, or (2) the
examination is performed under the supervision of an accredited
insurance department or with the participation of one or more
examiners who are employed by an accredited state insurance
department and who, after a review of the examination work papers and
report, state under oath that the examination was performed in a
manner consistent with the standards and procedures required by their
insurance department.
SEC. 3. Section 735.5 of the Insurance Code is amended to read:
735.5. (a) Nothing contained in this article shall be construed
to limit the commissioner's authority to use and, if appropriate, to
make public, any final or preliminary examination report, any
examiner or company workpapers or other documents, or any other
information discovered or developed during the course of any
examination in the furtherance of any legal or regulatory action
which the commissioner may, in his or her discretion, deem
appropriate.
(b) Nothing contained in this code shall prevent or be construed
as prohibiting the commissioner from disclosing the content of an
examination report, preliminary examination report or results,
market analysis data, or any matter relating
thereto, to the insurance department of this or any other state or
country, or to law enforcement officials of this or any other state
or agency of the federal government at any time, or to the National
Association of Insurance Commissioners, provided the recipient of the
report or matters relating thereto agrees in writing to hold it
confidential and in a manner consistent with this article, unless the
prior written consent of the company to which it pertains has been
obtained.
(c) All working papers, recorded information, documents, and
copies thereof produced by, obtained by, or disclosed to the
commissioner or any other person in the course of an examination made
pursuant to this article shall be given confidential treatment and
are not subject to subpoena and shall not be made public by the
commissioner or any other person, except to the extent provided in
subdivision (a) or (b).
SEC. 4. Section 736 of the Insurance Code is amended to read:
736. All examinations and analyses performed purs
uant to Section 730 shall be at the expense of the insurer,
organization , or person examined, except that special
examinations which are in addition to regular examinations may be at
the expense of the state in the discretion of the commissioner. The
costs and expenses of all such of those
examinations shall be paid from the support appropriation for the
Department of Insurance current at the time of the examination but
shall be charged to and collected from the insurer, organization or
person examined. If any such insurer,
organization, or person refuses to pay such
those costs and expenses promptly when due, the commissioner
may refuse to issue its certificate of authority, certificate of
exemption , or license, as the case may be, and may revoke
any existing certificate of authority, certificate of exemption
, or license.
SEC. 5. Section 900.2 of the Insurance Code is amended to read:
900.2. (a) All insurers doing business in this state shall have
an annual audit by an independent certified public accountant. The
audit , including required auditor and management reporting,
shall be conducted and the audit report prepared and filed in
conformity with the Annual Audited Financial Reports
instructions contained in the annual statement instructions as
adopted from time to time standards adopted by
the National Association of Insurance Commissioners.
(b) The commissioner may grant a 30-day
extension extensions of the filing date
upon a showing by the insurer and its independent certified public
accountant of the reasons for requesting that
each extension and the determination by the commissioner of
substantial cause for an extension. The request for an extension
shall be submitted in writing not less than 20
10 days prior to the due date in sufficient detail to
permit the commissioner to make an informed decision on the requested
extension.
(c) The commissioner may promulgate regulations to further the
purposes of this section.
SEC. 6. Section 942 of the Insurance Code is amended to read:
942. The commissioner shall permit a deposit of those securities
in the State Treasury, subject to the provisions of Sections
11715 and 11716 Section 11691 , if applicable.
The securities deposited with the State Treasurer
shall be maintained in electronic book entry or certificate form as
security for policyholders or policyholders and creditors of the
insurer to whom they respectively belong. The state is responsible
for the custody and safe return of any money or securities so
deposited. The State Treasurer shall deposit
any such these moneys under the
provisions of Sections 16370 and 16375 of the Government Code.
SEC. 7. Section 1170 of the Insurance Code is amended to read:
1170. Domestic incorporated insurers may invest their assets in
the purchase of any of the securities specified in this article, or
in loans upon such securities, if such purchase or loan
conforms those purchases or loans conform to all
the following conditions:
(a) Such securities are not in default as to principal or interest
at the date of investment.
(b) In the case of a purchase, the purchase price does not exceed
the market value of the securities at the date of investment.
(c) In the case of a loan not governed by the provisions of
section 1176 Section 1194.81 , the
amount loaned does not exceed eighty-five per cent of such market
value at the date of investment.
SEC. 8. Section 1182 of the Insurance Code is amended to read:
1182. Domestic incorporated insurers may invest in an account or
accounts in one or more banks or ,
savings and loan associations , or credit unions to the
extent the account or accounts are insured by an agency or
instrumentality of the federal government. As used in this section,
an account may include a certificate of deposit.
SEC. 9. Section 1197 of the Insurance Code is amended to read:
1197. Excess funds investments shall not be made in a loan to any
one borrower or obligor , including all affiliates which
shall be treated as one borrower or obligor , in an amount
exceeding 10 percent of the capital stock and surplus or 1 percent
of the admitted assets of the lending insurer, whichever amount is
greater.
SEC. 10. Section 10123.83 of the Insurance Code, as added by
Section 2 of Chapter 839 of the Statutes of 1998, is amended and
renumbered to read:
10123.83. 10123.835. (a) Every
individual or group policy of disability insurance that covers
hospital, medical, or surgical benefits that is issued, amended, or
renewed on or after January 1, 1999, shall be deemed to provide
coverage for the screening and diagnosis of prostate cancer,
including, but not limited to, prostate-specific antigen testing and
digital rectal examinations, when medically necessary and consistent
with good professional practice.
(b) Nothing in this section shall be construed to require an
individual or group policy to cover the surgical and other procedures
known as radical prostatectomy, external beam radiation therapy,
radiation seed implants, and combined hormonal therapy, or to prevent
application of deductible or copayment provisions contained in the
policy, nor shall this section be construed to require that coverage
under an individual or group policy be extended to any other
procedures.
(c) This section shall not apply to specified accident, specified
disease, hospital indemnity, Medicare supplement, or long-term care
health insurance policies.
SEC. 11. Section 11580.011 of the Insurance Code is amended to
read:
11580.011. (a) As used in this section, "child passenger
restraint system" means a system as described in Section 27360 of the
Vehicle Code.
(b) Every policy of automobile liability insurance, as described
in Section 16054 of the Vehicle Code, shall provide liability
coverage for replacement of a child passenger restraint system that
was damaged or was in use by a child during an accident
for which liability coverage under the policy is applicable due to
the liability of an insured.
(c) Every policy of automobile liability insurance that provides
uninsured motorist property damage coverage, as described in
paragraph (2) of subdivision (a) of Section 11580.26, shall provide
coverage for replacement of a child passenger restraint system that
was damaged or was in use by a child during an accident
for which uninsured motorist property damage coverage under the
policy is applicable due to the liability of an uninsured motorist.
(d) Every policy that provides automobile collision coverage
or , as described in Section 660, or every
policy that provides automobile physical damage coverage, as
described in Section 660, shall include a child passenger restraint
system within the definition of covered property, if the child
passenger restraint system was in use by a child during an accident
or, if the child passenger restraint system was in the vehicle
and it sustained a loss covered by the policy .
(e) Upon the filing of a claim pursuant to a policy described in
subdivision (b), (c), or (d), unless otherwise determined, an insurer
shall have an obligation to ask whether a child passenger restraint
system was in use by a child during an accident or was in the
vehicle at the time of a loss that is covered by the policy,
and an obligation to replace the child passenger restraint system
or reimburse the claimant for the cost of purchasing a new
passenger restraint system in accordance with this
section if it was in use by a child during the accident or
reimburse the claimant for the cost of purchasing a new child
passenger restraint system if it sustained a covered
loss while in the vehicle .
(f) An insured, upon acquiring a replacement child passenger
restraint system, may surrender the child passenger restraint system
that was replaced to the nearest office of the Department of the
California Highway Patrol.