BILL ANALYSIS                                                                                                                                                                                                    


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                                 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.



                                                               AB 2411

           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  

          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

          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    
          CDI oversight and        $0                         less  
          than $150      less than $150                  Special*
            post information on website


                                                               AB 2411

           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

          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

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