BILL ANALYSIS ------------------------------------------------------------ |SENATE RULES COMMITTEE | AB 2411| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ THIRD READING Bill No: AB 2411 Author: Jones (D) Amended: 8/2/10 in Senate Vote: 21 SENATE BANKING, FINANCE, AND INS. COMMITTEE : 8-2, 6/30/10 AYES: Calderon, Correa, Florez, Kehoe, Liu, Lowenthal, Padilla, Price NOES: Cogdill, Runner NO VOTE RECORDED: Cox SENATE APPROPRIATIONS COMMITTEE : 8-1, 8/2/10 AYES: Kehoe, Alquist, Corbett, Emmerson, Leno, Wolk, Wyland, Yee NOES: Ashburn NO VOTE RECORDED: Price, Walters ASSEMBLY FLOOR : 52-22, 6/1/10 - See last page for vote SUBJECT : Pet insurance SOURCE : Author DIGEST : This bill defines 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. CONTINUED AB 2411 Page 2 ANALYSIS : 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. Establishes pet insurance as a separate line of insurance, and define it as an individual or group policy of insurance that covers veterinarian expenses. 2. Provides 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. Requires 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. 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 varies coverage or premiums based on claims experience during the preceding policy period. AB 2411 Page 3 6. Requires 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. 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. Specifies that the disclosures required by the bill are in addition to any other disclosures required by law. 10. Makes conforming changes to several related Insurance Code provisions. 11. Requires the Department of Insurance to post on its Internet Web site a list of the insurers that offer, issue, or underwrite pet insurance in the state, the names of the products that those insurers offer, issue, or underwrite, the names of their general agents with authority to offer, issue, or underwrite pet insurance, and a link to insurers' company profiles maintained by the Department. FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes Local: No According to the Senate Appropriations Committee: Fiscal Impact (in thousands) Major Provisions 2010-11 2011-12 2012-13 Fund CDI oversight and $0 less than $150 less than $150 Special* post information on website AB 2411 Page 4 SUPPORT : (Verified 8/4/10) Humane Society of the United States Humane Society Veterinary Medical association California Veterinary Medical Board PAW - PAC ARGUMENTS IN SUPPORT : According to the author's office, between 2000 and 2005, veterinary service costs rose over 70 percent 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. 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. As a solution, the author believes this bill 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, while requiring a clear explanation of reimbursement rates. ASSEMBLY FLOOR : AYES: Adams, Ammiano, Arambula, Bass, Beall, Blakeslee, Block, Blumenfield, Bradford, Brownley, Buchanan, Caballero, Charles Calderon, Carter, Chesbro, Coto, Davis, De La Torre, De Leon, Eng, Evans, Feuer, Fong, Fuentes, Furutani, Galgiani, Hall, Hayashi, Hernandez, Hill, Huffman, Jones, Lieu, Bonnie Lowenthal, Ma, Mendoza, Monning, Nava, V. Manuel Perez, Portantino, Ruskin, Salas, Saldana, Skinner, Smyth, Solorio, Swanson, Torlakson, Torres, Torrico, Yamada, John A. Perez AB 2411 Page 5 NOES: Anderson, Bill Berryhill, Conway, DeVore, Fletcher, Fuller, Gaines, Garrick, Gilmore, Harkey, Huber, Jeffries, Knight, Logue, Miller, Nestande, Niello, Nielsen, Norby, Silva, Tran, Villines NO VOTE RECORDED: Tom Berryhill, Cook, Emmerson, Hagman, Audra Strickland, Vacancy JA:nl 8/4/10 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE **** END ****