BILL ANALYSIS
SENATE COMMITTEE ON BANKING, FINANCE,
AND INSURANCE
Senator Ronald Calderon, Chair
AB 2411 (Jones) Hearing Date: June 30, 2010
As Amended: April 15, 2010
Fiscal: Yes
Urgency: No
VOTES: Asm. Floor(06/01/10)52-22/Pass
Asm. Appr. (05/28/10)12-05/Pass
Asm. Ins. (04/07/10)08-02/Pass
SUMMARY Would define pet insurance as a separate line within
the Insurance Code distinct from other Miscellaneous lines,
would establish required policy terms for all pet insurance
policies serving California residents, regardless of situs of
the contract, and would increase clarity for consumers on what
their policy covers.
DIGEST
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.
This bill
Defines pet insurance as a separate line of Insurance, and
establishes new regulatory requirements for the sale of pet
insurance products. Specifically, this bill :
1.Would establish pet insurance as a separate line of insurance,
and define it as an individual or group policy of insurance
AB 2411 (Jones), Page 2
that covers veterinarian expenses.
2.Would provide any pet insurance policy issued, delivered, or
amended after July 1, 2011, is subject to California law,
regardless of the contract situs, so that a group policy
issued to a group policyholder in another state, but whose
coverage extends to a California resident, 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.Would require pet insurers to disclose, in the policy and on
the main page of its website, whether their policy excludes
coverage due to pre-existing conditions, hereditary disorders,
or congenital anomalies or disorders.
4.Would require 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.Would require a pet insurer to reasonably disclose whether it
varies coverage or premiums based on claims experience during
the preceding policy period.
6.Would require a pet 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.
7.Would require 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.Would require 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.Would specify that the disclosures required by the bill are in
addition to any other disclosures required by law.
10. Would makes conforming changes to several related
Insurance Code provisions.
AB 2411 (Jones), Page 3
COMMENTS
1.Purpose of the bill To define pet insurance more specifically
in the Insurance Code and increase clarity for consumers what
is covered by their policies.
2.Background The Department of Insurance indicates concern for
the fiscal effect of this bill, noting that creating pet
insurance as a new line of insurance will:
a. Require companies currently writing pet insurance
and reporting as miscellaneous line to amend their
certificates of authority to add this new line;
b. Require the Department to review these applications
to add this new line;
c. Require the Department to revise a number of
forms and applications to reflect this new class; and
d. Require companies to revise their financial
reporting forms to reflect this new class.
Based on this array of changes, the Department (Legal and FAD)
estimates it will incur additional costs of processing these
applications and need additional staff.
3.Support . According to the Author, between 2000 and 2005,
veterinary service costs rose over 70% to more than $19
billion a year in the U.S. In response, more pet owners are
considering pet insurance to ensure that they will be able to
cover veterinary care as it becomes more advanced and more
expensive.
4.Pet health policies are similar to other insurance policies;
typically they have premiums, deductibles, co-pays, coverage
limits and benefit schedules. The author indicates, however,
that policyholders have difficulty ascertaining the coverage
limits, benefit schedules, preexisting conditions and other
limitations of pet insurance policies, and can receive less
for their claims than they expect.
5.As a solution, the author believes AB 2411 will help pet
owners choose the most appropriate pet insurance by requiring
pet insurance companies to increase the information disclosed
during the transaction. The author believes the bill also
protects policyholders by requiring insurance companies to
improve disclosure of benefit limitations and exclusions,
AB 2411 (Jones), Page 4
while requiring a clear explanation of reimbursement rates.
6.Opposition None
7.Questions None
8.Suggested Amendments . None
9.Prior and Related Legislation None
POSITIONS
Support
Humane Society of the United States (HSUS)
Humane Society Veterinary Medical association
California Veterinary Medical Board
PAW - PAC
Gary Lucks, Esq.
Oppose
None
Consultant: Kenneth Cooley (916) 651-4102