BILL ANALYSIS
AB 2411
Page 1
Date of Hearing: April 7, 2010
ASSEMBLY COMMITTEE ON INSURANCE
Jose Solorio, Chair
AB 2411 (Jones) - As Introduced: February 19, 2010
And As Proposed To Be Amended
SUBJECT : Pet insurance
SUMMARY : Defies pet insurance as a separate line of insurance,
and establishes new regulatory requirements for the sale of pet
insurance products. Specifically, this bill :
1)Establishes pet insurance as a separate line of insurance, and
defines it as an individual or group policy of insurance that
covers veterinarian expenses.
2)Provides that any pet insurance policy issued, delivered, or
amended after July 1, 2011, is subject to California law,
regardless of the situs of the contract. The effect of this
provision is that a group policy issued to a group
policyholder in another state, but where a California resident
is eligible to participate in the group, will be covered by
California law even though the actual policy would otherwise
be subject to the law of the state where the group
policyholder resides.
3)Requires a pet insurer to disclose, both in the policy and on
the main page of its website, whether the policy excludes
coverage due to pre-existing conditions, hereditary disorders,
or congenital anomalies or disorders.
4)Requires a pet insurer to reasonably disclose any policy
provision that limits coverage through a deductible, a waiting
period, coinsurance, or annual or lifetime policy limits.
5)Requires a pet insurer to reasonably disclose whether it
reduces coverage or increases premiums based on claims
experience during the preceding policy period.
6)Requires a per insurer that uses a benefit schedule to
determine claim payments to include the applicable schedule in
each policy, and to disclose all schedules it uses via a link
on the main page of its website.
AB 2411
Page 2
7)Requires a pet insurer that determines claim payments on any
basis to clearly disclose the basis in the policy, and via a
link on the main page of its website.
8)Requires a pet insurer that bases claim payments on usual and
customary fees or other limitations based on prevailing
veterinary service provider charges to include a provision in
the policy that clearly explains how the claim will be
calculated, and disclose this information via a link on the
main page of its website.
9)Provides that the disclosures required by the bill are in
addition to any other disclosures required by law.
10)Makes a number of conforming changes to several Insurance
Code provisions.
EXISTING LAW :
1)Specifies 23 different lines of insurance, including a broad
category termed "miscellaneous." Currently, pet insurance is
within the miscellaneous line.
2)Provides for a comprehensive rate regulation system for
property-casualty insurance, which includes the miscellaneous
line of insurance.
FISCAL EFFECT : Undetermined.
COMMENTS :
1)Purpose . According to the author, pet insurance is not
adequately defined in the Insurance Code, and consumers are
too frequently confused or misled about what is covered by
their policies.
2)Amendments to be offered in Committee . This analysis is based
on discussions that the author has had with pet insurance
companies. Many of the provisions of the bill as introduced
are being deleted in favor of substantially bolstered
disclosure obligations. At the time this analysis was
finalized, it was not clear whether pet insurers would be
supporting the bill; however, they have clearly expressed that
the measure is fair and reasonable, and they are not in
opposition. In fact, part of the effort to establish the
AB 2411
Page 3
proposed disclosure requirements was a recognition by some
insurers that there has been consumer confusion in the
marketplace.
REGISTERED SUPPORT / OPPOSITION :
Support
Humane Society of the United States
Several individuals
Opposition
None received.
Analysis Prepared by : Mark Rakich / INS. / (916) 319-2086