BILL NUMBER: AB 2404	AMENDED
	BILL TEXT

	AMENDED IN ASSEMBLY  APRIL 14, 2010

INTRODUCED BY   Assembly Member Hill

                        FEBRUARY 19, 2010

   An act to amend Sections 481  , 730, and 12938 
 and 730  of the Insurance Code, relating to insurance.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 2404, as amended, Hill. Insurance.
   (1) Existing law requires that unless the insurance contract
provides otherwise, an insured person is entitled to a return of his
or her premium if the policy is canceled, rejected, surrendered, or
rescinded, as provided.
   This bill would require that any insurance policy that includes a
provision to refund a premium other than on a pro rata basis,
including the assessment of cancellation fees, separately disclose
that fact in writing, including a description of the cancellation
process and the actual fees or penalties applied. The disclosure
would be required to be made prior to, or concurrent with, the
application and prior to each renewal, as provided. If an application
is made by telephone, the disclosure would be required to be mailed
to the applicant or insured within 3 business days.
   (2) Existing law requires the Insurance Commissioner to conduct an
examination of the business and affairs of insurers admitted in this
state at least once every 5 years. In scheduling and determining the
nature, scope, and frequency of the examinations, the commissioner
is required to 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 (NAIC) that are
in effect at the time of the examination.
   This bill would authorize the commissioner to forgo a market
conduct examination, otherwise required, for up to an additional 5
years if information derived from a market analysis process that
considers criteria, such as prior examination results, consumer
complaint data, market share, actions taken by other states, and
information from other sources, does not indicate that an examination
is warranted. 
   (3) Existing law requires the Department of Insurance to make
available for public inspection and publish on its Internet Web site,
every adopted report of an examination of unfair or deceptive
practices in the business of insurance, as defined, that is adopted
as filed, or as modified or corrected, by the commissioner, as
specified.  
   This bill would instead require the department to make available
for public inspection and publish on its Internet Web site, every
adopted market conduct report of an examination of an insurer's
claims handling practices, that is adopted as filed, or as modified
or corrected, by the commissioner, as specified.
   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 481 of the Insurance Code is amended to read:
   481.  (a) Unless the insurance contract otherwise provides, a
person insured is entitled to a return of his or her premium if the
policy is canceled, rejected, surrendered, or rescinded, as follows:
   (1) To the whole premium, if the insurer has not been exposed to
any risk of loss.
   (2) Where the insurance is made for a definite period of time and
the insured surrenders his policy, to such proportion of the premium
as corresponds with the unexpired time, after deducting from the
whole premium any claim for loss or damage under the policy which has
previously accrued. The provisions of Section 482 apply only to the
expired time.
   (b) No contract for individual motor vehicle liability or
homeowners' multiple-peril insurance may contain a provision which
mandates that the premium for the policy shall be fully earned upon
the happening of any contingency except the expiration of the policy
itself. This subdivision shall not apply to policy fees or membership
fees.
   (c) (1) Any insurance policy that includes a provision to refund
premium other than on a pro rata basis, including the assessment of
cancellation fees, shall separately disclose that fact in writing,
including a description of the cancellation process and the actual
fees or penalties to be applied. The disclosure shall be provided
prior to, or concurrent with, the application and prior to each
renewal.
   (2) If an application is made by telephone, the disclosure shall
be mailed to the applicant or insured within three business days.
   (3) The disclosure may be made electronically pursuant to Section
38.5.
   (4) This section does not apply to cancellations that are
calculated subject to paragraph (2) of subdivision (g) of Section
673.
   (d) This section shall not apply to policies of ocean marine
insurance. For purposes of this section, "ocean marine insurance"
means insurance of vessels or crafts, their cargos, marine builders'
risks, marine protection and indemnity, or other risks commonly
insured under marine insurance governed by the provisions of Chapter
1 (commencing with Section 1880) of Part 1 of Division 2, and as
distinguished from inland marine insurance policies.
  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 that 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.
   (e)  The commissioner may forgo a market conduct examination,
otherwise required by this article, for up to an additional five
years if information derived from a market analysis process that
considers criteria, such as prior examination results, consumer
complaint data, market share, actions taken by other states, and
information from other sources, does not indicate that an examination
is warranted. 
  SEC. 3.    Section 12938 of the Insurance Code is
amended to read:
   12938.  Notwithstanding any other provision of law, the department
shall make available for public inspection and publish on its
Internet Web site all of the information described in subdivisions
(a) and (b). This information shall be maintained in a current,
up-to-date condition. All identifying and privileged information
regarding individual policyholders shall be redacted from documents
available for public inspection and on the Internet Web site.
   (a) All fully executed stipulations, orders, decisions,
settlements, or other forms of agreement resolving market conduct
examinations, whether the examinations were finalized, terminated, or
suspended, that pertain to unfair or deceptive practices in the
business of insurance as defined in Section 790.03.
   (b) (1) Every adopted market conduct report of an examination of
an insurer's claims handling practices that is adopted as filed, or
as modified or corrected, by the commissioner pursuant to Section
734.1.
   (2) The commissioner upon adopting the report shall by certified
United States mail transmit a copy of the report to the examined
insurer's designated agent for service of process. Within 10 business
days after the transmittal, the examined insurer may submit comments
to the commissioner relating to the adopted report. The comments
shall be in a form and length as provided by regulation.
   (3) Ten business days after the transmittal the commissioner shall
publish on the department's Internet Web site the adopted report and
any comments submitted by the examined insurer unless a court of
competent jurisdiction has stayed the publication of the report.
   (c) This section may not be construed to require the disclosure of
company workpapers or other company documents discovered during the
course of an examination or any preliminary report of the
examination, except as otherwise permitted by law.