BILL ANALYSIS AB 2782 Page 1 Date of Hearing: April 21, 2010 ASSEMBLY COMMITTEE ON INSURANCE Jose Solorio, Chair AB 2782 (Insurance Committee) - As Amended: April 5, 2010 And As Proposed To Be Amended SUBJECT : Insurance. SUMMARY : Makes various licensing-related changes including several to align California law with the National Association of Insurance Commissioners (NAIC) Producer Licensing Model Act (PLMA). Specifically, this bill : 1) Requires a person to be licensed as an accident and health agent in order to transact disability insurance; 2) Separates the current fire and casualty broker-agent license into two separate licenses - property broker-agent license and casualty broker-agent license. It also adjusts the pre-licensing education requirement to 20 hours for each respective license so there is no net change resulting from the bifurcation, and modifies the continuing education requirement for individuals licensed less than four years to 24 hours every two years; 3) Provides the Department of Insurance (DOI) the authority to summarily issue a restricted license to a business entity when an officer or controlling person of the entity holds a restricted individual license, but maintains the business entity's right to request DOI to reconsider the decision for the restricted license; 4) Aligns the definition of "Credit Insurance Agent" in the Insurance Code with the NAIC PLMA definition, which permits these credit insurance agents to transact guaranteed automobile protection (GAP) insurance; 5) Changes the bail agent and solicitor license from a one-year term to a two-year term, and modifies the continuing education requirement to 12 hours biennially so there is a no net change from current requirements. 6) Specifies that the expiration date on new bail and insurance adjuster licenses issued after December 31, 2010, is AB 2782 Page 2 the last day of the month in which the original license was issued; 7) Clarifies the DOI's authority to summarily revoke a bail license if the licensee is convicted of a felony; 8) Specifies that three hours of the 24 hours of continued education that independent public insurance adjusters must complete as a condition of license renewal must be in ethics training. 9) Repeals the sunset date of December 31, 2010, on the law that provides the Insurance Commissioner the authority to receive attorney fees and costs as part of a judgment in "qui tam" cases (suits brought in the state's name by private parties) in which the department intervenes. The cases impacted by this provision involve insurance fraud and the department's involvement in such cases serves as a significant fraud deterrent. EXISTING LAW 1)Prevents fire and casualty broker-agents from transacting life insurance, but permits these agents to transact disability insurance; 2)Provides that the combined fire and casualty broker-agent license requires a pre-licensing education requirement of 40 hour, and 25 hours of continued education annually for the first four years of licensure and 24 hours every two years thereafter as a condition for license renewal; 3)Requires an administrative hearing to be conducted to consider a business entity license application when one of its officers or controlling persons holds a restricted license; 4)Provides that the insurance that may be sold in connection with the sale of, or incidental to a loan for, real property may include, under specified conditions, credit life, credit disability, credit involuntary unemployment or credit loss of income, and credit property insurance. 5)Specifies that bail licenses are for a one year term expiring on June 30 and insurance adjusters licenses are for a two-year term expiring on May 31 of even-numbered years. AB 2782 Page 3 6)Specifies the continuing education for bail agent and solicitor license renewal is 6 hours; 7)Authorizes DOI to summarily revoke a license, including a bail license, if the licensee is convicted of a felony. However, Insurance Code Section 1807.5 specifies that a hearing is required prior to the suspension of a bail agent license; 8)Requires independent and public insurance adjusters to complete 24 hours of continued education as a condition of license renewal, but does not specify the number of hours that must involve ethics training. 9)Authorizes DOI to intervene in "qui tam" cases, but sunsets those provisions on December 31, 2010. FISCAL EFFECT : Minor absorbable to CDI. COMMENTS : 1)Qui Tam : The committee bill is proposed to be amended and the proposed amendment repeals the sunset on the provision that permits CDI to receive attorney fees and costs in judgments for qui tam cases in which the department intervenes. These cases involve insurance fraud, and the department's involvement serves as a significant fraud deterrent. CDI has intervened in two of qui tam cases since this statute was enacted without any concerns arising. 2)Supporters agree with efforts by the California Department of Insurance to ensure that California's insurance regulatory system reflects the uniformity that NAIC strives to achieve nationally and will enhance the operation of California's agent licensing system by making California's law consistent with that of other jurisdiction. REGISTERED SUPPORT / OPPOSITION : Support California Department of Insurance (CDI) (Sponsor) Association of California Insurance Companies (ACIC) California Bail Agents Association (CBAA) AB 2782 Page 4 Opposition None received. Analysis Prepared by : Tracy Elwell / INS. / (916) 319-2086