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.


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          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  


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            proposed disclosure requirements was a recognition by some  
            insurers that there has been consumer confusion in the  


          Humane Society of the United States
          Several individuals

          None received.
          Analysis Prepared by  :    Mark Rakich / INS. / (916) 319-2086