BILL ANALYSIS
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|SENATE RULES COMMITTEE | AB 328|
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CONSENT
Bill No: AB 328
Author: Charles Calderon (D)
Amended: 7/2/09 in Senate
Vote: 21
SENATE BANKING, FINANCE, AND INS. COMMITTEE : 11-0, 7/9/09
AYES: Calderon, Cogdill, Correa, Cox, Florez, Kehoe, Liu,
Lowenthal, Padilla, Price, Runner
NO VOTE RECORDED: Harman
ASSEMBLY FLOOR : 72-0, 5/14/09 - See last page for vote
SUBJECT : Electronic transactions: exceptions
SOURCE : Association of California Insurance Companies
DIGEST : This bill authorizes insurance companies to send
various notices required by the California Insurance Code,
electronically by agreement with the recipient using
procedures that conform to the Uniform Electronic
Transactions Act and applicable substantive law and
authorizes insurance companies to pay claims by electronic
funds transfers.
ANALYSIS : Existing law generally permits parties to
contract to conduct transactions by electronic means.
Existing law exempts specific transactions from this
permission, including various provisions regarding
insurance.
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Existing law generally requires, unless otherwise provided,
that any required notice related to insurance transactions
be made by mail, as specified.
Existing law requires insurers to pay certain covered
claims by check or draft, as specified.
This bill:
1.Authorizes five specific insurance notices in common use
in California which are now specifically excluded from
being provided electronically under the Uniform
Electronic Transactions Act (UETA) to be provided
electronically with the prior agreement of the recipient
and otherwise as required by UETA:
A. Notice of Reasons for Refusal to Issue Good
Driver Policy (Section 658)
B. Notice of Reasons for Auto Policy Cancellation
(Section 666)
C. Mandatory EQ coverage offer to H/O insureds
(Section 10083)
D. Proof of Mailing of EQ Offer (Section 10087)
E. Mandatory California Residential Property
Insurance Disclosure (Section 10102)
2.Amends the Insurance Code to expressly authorize, if
each party has so agreed, any written notice that must
be given or mailed to any person by specified insurers
to be provided by electronic transmission pursuant to
the UETA, including, if applicable, its exclusions.
Insurers subject to the provisions of this bill are
those casualty insurers subject to Proposition 103
rate-making and prior approval oversight.
3.States that the affidavit of the person who initiated
the electronic transmission, stating the facts of that
transmission beyond the control of the sender as defined
by UETA, is prima facie evidence that the notice was
transmitted and shall be sufficient proof of notice
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except if a person has knowledge a notice was not
actually sent or received, then UETA preserves the
application of substantive law. Any notice provided by
electronic transmission shall be treated as if mailed or
given for the purposes of any provision of the Insurance
Code.
4.Requires insurance companies transmitting records
electronically to maintain a system for confirming that
any notice or document that is to be provided by
electronic means has been sent in a manner consistent
with UETA and provides that a valid electronic signature
shall be sufficient for any provision of law requiring a
written signature. The insurance company must retain a
copy of the confirmation and electronic signature, when
required along with the policy information so it is
retrievable upon request by the Department of Insurance
while the policy is in force and for five years
thereafter.
5.Requires insurers to maintain a system for
electronically confirming a policyholder's decision to
opt in to an agreement to conduct transactions
electronically and a system that will allow the
policyholder to electronically opt out of the agreement
to conduct business electronically as required by UETA.
The insurer is required to maintain the electronic
records for as long as the insurer would be required to
maintain those records if the records were in written
form.
6.Revises various provisions governing the duty of payment
by or on the behalf of insurers to authorize payment by
electronic funds transfer, with the consent of the
repair vendor or other recipient, in addition to payment
by check or draft and specifies that an insurer may not
require an insured to consent to payment by an
electronic funds transfer.
7.Authorizes a lienholder's notice of cancellation of an
auto policy to be transmitted electronically with the
lienholder's consent.
8.Specifies that the duty under current law for a lender
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or mortgage purchaser to provide a copy of the insurance
policy or other evidence of insurance to the subsequent
purchaser of the mortgage, servicing agent, or insurance
tracking service may be performed with an electronic
copy if the receiving party agrees to electronic
service.
9.Prohibits the Notice of Reasons for Refusal to Issue
Good Driver Policy to be transmitted electronically
unless the application for the good driver discount was
transmitted electronically to the insurer.
10.Prohibits the Notice of Reasons for Auto Policy
Cancellation to be transmitted electronically unless the
insured electronically delivered the request for a
statement of the reasons for the cancellation to the
insurer.
Background
The enactment of California's 1999 UETA law was sponsored
by the California Commission on Uniform State Laws. Its
intended scope was all transactions in which records or
signatures are transmitted electronically, but exclusions
from its coverage included transactions involving the laws
of wills, codicils or testamentary trusts and other
specified transactions. Most of the provisions in
California's UETA law were drawn from the model Uniform
Electronic Transactions Act prepared by a Drafting
Committee of the National Conference of Commissioners on
Uniform State Laws. In 1999, California was the first
state in which parts of the UETA model had been introduced
for adoption.
Prior legislation
SB 820 (Sher), Chapter 428, Statutes of 1999, enacting
California's Uniform Electronic Transactions Act as.
On June 30, 2000, the President of the United States signed
the "Electronic Signatures in Global and National Commerce
Act" (ESIGN Act, Pub.L. 106-229, 14 Stat.464, enacted June
30, 2000, 15 U.S.C. ch.96) establishing the validity of
electronic signatures for interstate and international
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commerce.
FISCAL EFFECT : Appropriation: No Fiscal Com.: No
Local: No
SUPPORT : (Verified 7/14/09)
Association of California Insurance Companies (source)
ARGUMENTS IN SUPPORT : The author's office states this
bill is to allow consumers to agree to receive additional
insurance documents by electronic transmission. The bill
will also allow insurance companies, with the consent of
the policyholder or other recipients, to make payments by
electronic funds transfer.
The author's office states this bill will allow for more
insurance transactions to be conducted electronically while
still providing important consumer protections. This bill
maintains the two important consumer protections found in
the existing UETA law, a consumer must agree to have the
transaction conducted electronically and can not be
compelled by the business to conduct the business
electronically.
Finally, the author notes UETA was passed in 1999 to
establish uniform standards for conducting business,
including the formation of legally enforceable contracts,
electronically in California. Today, 47 states, the
District of Columbia and the U.S. Virgin Islands have all
adopted similar laws to facilitate "E-commerce." Since
1999, consumers have grown more and more comfortable
conducting business on the Internet and through e-mail and
this bill will make UETA requirements the basis upon which
California insurance companies can conduct electronic
commerce in compliance with California law.
ASSEMBLY FLOOR :
AYES: Adams, Anderson, Arambula, Beall, Bill Berryhill,
Tom Berryhill, Blakeslee, Block, Blumenfield, Brownley,
Buchanan, Caballero, Charles Calderon, Carter, Chesbro,
Conway, Cook, Coto, Davis, De La Torre, De Leon, DeVore,
Duvall, Emmerson, Eng, Evans, Feuer, Fletcher, Fuller,
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Furutani, Galgiani, Garrick, Gilmore, Hagman, Hall,
Harkey, Hayashi, Hernandez, Hill, Huber, Huffman,
Jeffries, Jones, Knight, Krekorian, Lieu, Logue, Bonnie
Lowenthal, Ma, Mendoza, Miller, Monning, Nava, Niello,
Nielsen, John A. Perez, V. Manuel Perez, Portantino,
Price, Ruskin, Salas, Silva, Skinner, Solorio, Audra
Strickland, Swanson, Torlakson, Torres, Torrico, Tran,
Villines, Yamada
NO VOTE RECORDED: Ammiano, Fong, Fuentes, Gaines,
Nestande, Saldana, Smyth, Bass
JJA:do 7/14/09 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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