BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 2782
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          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
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            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
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          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
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           Opposition 
           
          None received.
           
          Analysis Prepared by  :    Tracy Elwell / INS. / (916) 319-2086