BILL NUMBER: AB 690 INTRODUCED
BILL TEXT
INTRODUCED BY Assembly Member Solorio
FEBRUARY 17, 2011
An act to amend Sections 1758.6, 1758.61, 1758.62, 1758.63,
1758.64, 1758.65, 1758.66, 1758.661, 1758.67, 1758.68, 1758.69,
1758.691, and 1758.692 of, and to repeal Section 1758.693 of, the
Insurance Code, relating to portable electronics insurance.
LEGISLATIVE COUNSEL'S DIGEST
AB 690, as introduced, Solorio. Portable electronics insurance.
(1) Existing law provides for the Insurance Commissioner to issue
a communications equipment insurance agent license to a
communications equipment vendor, as defined, authorizing the vendor
to sell or offer to its customers insurance covering communications
equipment and the sale or provision of services for communications
equipment. Existing law authorizes employees and franchisees of the
vendor to be listed as endorsees on the license for the purpose of
selling or offering communications equipment insurance under the
authority of the agent's license. Existing law imposes certain
requirements on the licensees and endorsees with respect to training
and other related matters. Existing law makes it a crime to sell or
offer for sale communications equipment insurance without a
production agency license.
This bill would revise and recast the above provisions by deleting
communications equipment and replacing it with portable electronics,
as defined. The bill would authorize employees and authorized
representatives of the portable electronics vendor to sell or offer
portable electronics insurance pursuant to the authority of the
vendor's portable electronics insurance agent license, as provided.
The bill would also make changes to vendor reporting, employee and
authorized representative compensation, and recordkeeping
requirements, and would expand the portable electronics insurance
license to include the sale or provision of accessories related to
the use of portable electronics.
Because this bill would expand the scope of a crime by expanding
the scope of the products for which portable electronics insurance
license is required, the bill would impose a state-mandated local
program.
(2) The California Constitution requires the state to reimburse
local agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
This bill would provide that no reimbursement is required by this
act for a specified reason.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 1758.6 of the Insurance Code is amended to
read:
1758.6. No communications equipment A
portable electronics vendor shall not offer or sell
any form of communications equipment portable
electronics insurance in this state unless that person is
licensed as an insurance agent or broker pursuant to Article 3
(commencing with Section 1631) or has complied with the requirements
of this article and has been issued a license by the commissioner as
provided in this article.
SEC. 2. Section 1758.61 of the Insurance Code is amended to read:
1758.61. The commissioner may issue to an applicant that has
complied with the requirements of this article a
communications equipment portable electronics
insurance agent license that authorizes the licensee and its
employees and authorized representatives to offer or sell
insurance in connection with, and incidental to, the sale of
communications equipment portable electronics
or the sale or provision of service for communications
equipment by a retail vendor accessories or services
related to the use of portable electronics .
SEC. 3. Section 1758.62 of the Insurance Code is amended to read:
1758.62. (a) An applicant for a communications equipment
portable electronics insurance agent license
under this article shall submit all of the following to the
commissioner:
(1) A written application for licensure, signed by the applicant
or an officer of the applicant, in the form prescribed by the
commissioner.
(2) A certificate by the insurer that is to be named in the
communications equipment portable electronics
insurance agent license, stating that the insurer
has satisfied itself that the named applicant is trustworthy and
competent to act as its insurance agent limited to this purpose and
that the insurer will appoint the applicant to act as its agent to
transact the kind or kinds of insurance that are permitted by this
article, if the communications equipment
portable electronics insurance agent license applied for is
issued by the commissioner. The certification shall be subscribed by
an officer or managing agent of the insurer on a form prescribed by
the commissioner.
(3) An application fee, and for each license period thereafter, a
renewal fee, in an amount or amounts determined by the department as
sufficient to defray the department's actual cost of processing the
application or renewal and implementing this article. The limitation
on fee increases of 10 percent without prior approval of the
Legislature set forth in Section 12978 shall not apply to the
application or renewal fee set forth in this subdivision during the
years 2003, 2004, and 2005.
(b) Notwithstanding any other provision of law to the contrary,
the provisions set forth in Sections 1667, 1668, 1668.5, 1669, 1670,
1738, and 1739 apply to any application for or issuance of a license
pursuant to this article.
(c) Costs associated with any enforcement action or investigation
shall be paid for by the person or organization licensed pursuant to
this article.
SEC. 4. Section 1758.63 of the Insurance Code is amended to read:
1758.63. (a) An employee of a communications equipment
vendor or franchisee of a communications equipment vendor that has
been issued a communications equipment agent license pursuant to this
article may be an endorsee authorized to offer insurance products
under the authority of the communications equipment or
authorized representative of a portable electronics vendor that has
been issued a portable electronics insurance agent license pursuant
to this article may sell or offer insurance products under the
authority of the vendor's portable electronics insurance agent
license if all of the following conditions have been met:
(1) The employee or authorized representative is 18
years of age or older.
(2) The communications equipment portable
electronics vendor, at the time it submits its
communications equipment portable electronics
insurance agent's license application pursuant to Section
1758.62, also establishes a list of the names of all
endorsees to its communications equipment agent license
all locations in this state at which it offers coverage under a
policy of portable electronics insurance . The list shall be
maintained by the communications equipment
portable electronics vendor in a form prescribed by, or format
acceptable to, the commissioner , and shall be updated
annually . The list shall be retained by the
communications equipment vendor for three years
maintained by the portable electronics vendor and made
available to the commissioner for review and inspection upon
request .
(3) The communications equipment portable
electronics vendor submits to the commissioner with its initial
communications equipment portable
electronics insurance agent license application and annually
thereafter a certification, subscribed by an officer of the company
on a form prescribed by the commissioner, stating all of the
following:
(A) The number of endorsees offering
locations at which the portable electronics vendor offers
insurance products under the authority of the communications
equipment portable electronics insurance agent
license in this state for the applicable period.
(B) A statement that no person other than an endorsee
employee or authorized representative of the portable
electronics vendor sells or offers insurance on its behalf.
(C) That all endorsees employees or
authorized representatives offering insurance have completed
training as required by this article.
(b) Each communications equipment portable
electronics vendor licensed pursuant to this article shall
provide for the training of its endorsees
employees and authorized representatives under a program
developed by a licensed fire and casualty broker or agent prior to
allowing its endorsees employees and a
uthorized representatives to offer or sell insurance
products. The training shall meet the following minimum standards:
(1) Each communications equipment agent endorsee
employee and authorized representative shall
receive instruction about the types of insurance specified in
subdivision (d) of Section 1758.69 that are offered for sale to
prospective customers.
(2) Each communications equipment agent endorsee
employee and authorized representative shall
receive training about ethical sales practices.
(3) Each communications equipment agent endorsee
employee and authorized representative shall receive
training about the disclosures to be given to prospective customers
pursuant to Section 1758.66.
(c) The training materials used by or on behalf of the
communications equipment portable electronics
vendor to train its endorsees shall be submitted
to the department by the licensed fire and casualty
property or casualty agent or broker that
develops the materials at the time the licensee applies for its
communications equipment portable electronics
insurance agent license. Any changes to previously submitted
training materials shall be submitted to the department with the
changes highlighted at least 30 days prior to their use by the
licensee. Training materials and changes to those materials submitted
to the department pursuant to this subdivision shall be deemed
approved for use by the company unless it is notified by the
department to the contrary. Failure by the communications
equipment portable electronics insurance agent
licensee to submit training materials or changes for department
review or use of unapproved or disapproved training materials shall
constitute grounds for denial of an application for a license,
nonrenewal of a license, or suspension of a license, as appropriate.
(d) The retraining of endorsees employees
and authorized representatives shall be conducted whenever there
is a material change in the insurance products sold that requires
modification of the training materials, but in no event less
frequently than every two years for each endorsee
employee and auth orized representative .
SEC. 5. Section 1758.64 of the Insurance Code is amended to read:
1758.64. (a) The manager at each location of a
communications equipment portable electronics
vendor or a franchisee of a communications equipment
portable electronics vendor licensed pursuant to
this article, or the direct supervisor of the vendor's
endorsees employees or authorized representatives
at each location or region shall be an endorsee and
shall be responsible for the supervision of each
additional endorsee employee or authorized
representative at that location or in that region. Each
licensee shall identify the endorsee who is
maintain a list of who the manager or supervisor is
at each location or region for the purposes of this article. The
list shall be maintained by the portable electronics vendor and
shall be made available to the commissioner for review and inspection
upon request.
(b) An endorsee employee or authorized
representative may act on behalf of and under the supervision
of the communications equipment portable el
ectronics insurance agent in matters relating to
transacting insurance under that agent's license. The conduct of an
endorsee of a communications equipment
employee or authorized representative of a portable electronics
insurance agent acting within the scope of employment or agency
shall be deemed the conduct of the communications equipment
portable electronics insurance agent for
purposes of this article.
SEC. 6. Section 1758.65 of the Insurance Code is amended to read:
1758.65. (a) If a licensee or endorsee
its employee or authorized representative violates any
provision of this article or any other provision of this code, the
commissioner may do any of the following:
(1) After notice and hearing, suspend or revoke the license of the
communications equipment portable
electronics insurance agent.
(2) After notice and hearing, impose fines on the
communications equipment portable electronics
insurance agent for its conduct or that of its endorsees
employees or authorized representatives .
(3) After notice and hearing, impose other penalties that the
commissioner deems necessary and convenient to carry out the purpose
of this code, including suspending the privilege of transacting
communications equipment portable electronics
insurance pursuant to this article at specific business
locations where violations have occurred, imposing fines on the
communications equipment portable electronics
insurance agent, and suspending or revoking the
endorsement of individual endorsees or manager endorsees
ability of individual employees or authorized representatives to
act under the vendor's license .
(b) If any person sells insurance in connection with, or
incidental to, the sale of communications equipment
portable electronics or the sale or provision of
service for communications equipment
accessories or services related thereto , or holds himself or
herself or an organization out as a communications equipment
portable electronics insurance agent without
obtaining the license required by this article , or as being
an endorsee when that person is not an endorsee , or as
being licensed pursuant to Chapter 5 Article
3 (commencing with Section 1631) without obtaining that
license, the commissioner may issue a cease and desist order pursuant
to Section 12921.8.
(c) Notwithstanding any other provision of law to the contrary,
the provisions of Section 1748.5 are applicable to both the
organization issued a license pursuant to this article and any
endorsee employee or authorized
representative selling or offering to sell portable electronics
insurance pursuant to that license.
SEC. 7. Section 1758.66 of the Insurance Code is amended to read:
1758.66. A communications equipment
portable electronics insurance agent shall not sell insurance
pursuant to this article by unsolicited telephone calls or otherwise
unless, at the time of sale, or reasonably thereafter with respect to
a sale or enrollment occurring by telephone, all of the following
conditions are satisfied:
(a) The communications equipment portable
electronics insurance agent provides brochures or other written
materials to the prospective purchaser that do all of the following:
(1) Summarize the material terms and conditions of coverage
offered, including the identity of the insurer.
(2) Describe the process for filing a claim, including a toll-free
telephone number to report a claim.
(3) Disclose any additional information on the price, benefits,
exclusions, conditions, or other limitations of those policies that
the commissioner may, by rule, prescribe.
(4) Provide the name, address, telephone number, and license
number of the licensee or the fire and casualty
property or casualty broker-agent appointed by the insurer
issuing communications equipment portable
electronics insurance coverage to the licensee, as well as the
department's toll-free consumer hotline.
(b) The communications equipment portable
electronics insurance agent or its endorsees
employee or authorized representative makes all of the
following disclosures, which shall be acknowledged in writing by the
purchaser, or displayed by clear and conspicuous signs that are
posted at every location where contracts are executed, such as the
counter where the purchaser signs the service agreement, or provided
in writing to the purchaser:
(1) That the purchase by the customer of the kinds of insurance
prescribed in this article is not required in order to purchase
communications equipment or service portable
electronics, accessories, or related services .
(2) That the insurance policies offered by the
communications equipment portable electronics
insurance agent may provide a duplication of coverage already
provided by other insurance policies covering the purchaser.
(3) That the endorsee employee or
authorized representative of the communications
equipment portable electronics insurance agent
is not qualified or authorized to evaluate the adequacy of the
purchaser's existing insurance coverages, unless that person is
licensed pursuant to Article 3 (commencing with Section 1631).
(4) That the customer may cancel the insurance at any time. If the
customer cancels any unearned premium will be refunded in accordance
with applicable law.
(c) The material terms and conditions of coverage are provided to
every person who elects to purchase that coverage.
(d) Costs for the insurance are separately itemized in any billing
statement for the insurance. However, if the charge for
coverage is included in the cost associated with the purchase or
lease of portable electronics or related services, the vendor shall
clearly and conspicuously disclose to the customer that the charge
for the portable electronics or related services includes the charge
for coverage.
(e) The insurance is provided under an individual policy issued to
the purchaser, or under a group or master policy issued to an
organization licensed as a communications equipment
portable electronics insurance agent by an
insurer authorized to transact the applicable kinds or types of
insurance in this state.
SEC. 8. Section 1758.661 of the Insurance Code is amended to read:
1758.661. Charges for portable electronics insurance may be
billed and collected by a portable electronics insurance agent
licensee. A licensee shall not be required to treat moneys
collected from consumers purchasing insurance pursuant to this
article as funds received in a fiduciary capacity if the insurer
represented by the licensee has provided in writing that the funds
need not be segregated from funds received by the
communications equipment vendor on account of the sale of
communications equipment and the charges for insurance coverage are
itemized and incorporated as part of the customer's bill.
portable electronics vendor on account of the sale or lease of
portable electronics or related services or accessories. Licensees
may receive compensation for billing and collection services.
SEC. 9. Section 1758.67 of the Insurance Code is amended to read:
1758.67. Under the authority of the communications
equipment portable electronics insurance agent
license, a communications equipment portable
electronics insurance agent shall not do any of the following:
(a) Offer to sell insurance except in conjunction with, and
incidental to, the sale of communications equipment
portable electronics, their accessories, or the
sale or provision of a related service for
communications equipment .
(b) Advertise, represent, or otherwise portray itself or its
employees or endorsees authorized
representatives as licensed insurers or fire and casualty
broker-agents.
(c) Pay any endorsee employee or
authorized representative any compensation, fee, or commission
dependent on the placement of insurance based
primarily on the number of customers electing coverage under
the portable electronics insurance agent's license.
Nothing in this code shall prohibit the payment of a
performance-related incentive. For purposes of this subdivision, a
"performance-related incentive" is money or other tangible or
intangible items of value paid or given to any endorsee of the
licensee which is not based solely on the offering or selling of the
insurance products listed in subdivision (d) of Section 1758.69.
However, nothing in this code shall prohibit the
payment of compensation to employees and authorized representatives
of a portable electronics insurance agent for activities under the
agent's license that is incidental to their overall compensation.
SEC. 10. Section 1758.68 of the Insurance Code is amended to read:
1758.68. Any insurer that provides insurance to be sold by an
organization licensed as a communications equipment
portable electronics insurance agent shall file
a copy of any individual policy issued to a purchaser, or any policy
or certificate issued under a group or master policy to an
organization licensed as a communications equipment
portable electronics insurance agent, with the
commissioner, who shall make that policy available to the public.
SEC. 11. Section 1758.69 of the Insurance Code is amended to read:
1758.69. As used in this article, the following definitions have
the following meanings:
(a) "Enrollment" means the process of soliciting or accepting
enrollments or applications from a consumer under a
communications equipment portable electronics
insurance policy, which includes informing the consumer of the
availability of coverage, preparing and delivery of the certificate
of insurance or notice of proposed insurance, or otherwise assisting
the consumer in making an informed decision whether or not to elect
to purchase communications equipment portable
electronics insurance.
(b) "Communications equipment" means handsets, pagers, personal
digital assistants, portable computers, cellular telephones,
batteries, and other devices or their accessories used to originate
or receive communications signals or service; however, the term does
not include telecommunications switching equipment, transmission
wires, cell site transceiver equipment, or other equipment and
systems used by telecommunications companies to provide
telecommunications service to consumers.
(c) "Communications equipment insurance agent license" means an
agent license issued to an individual or organization for the
enrollment and sale of communications equipment insurance.
(d) "Communications equipment insurance" means insurance issued to
cover the loss, theft, mechanical failure, or malfunction of or
damage to communications equipment.
(e) "Communications equipment vendor" means any person in the
business of selling, reselling, soliciting, or leasing communications
equipment or communications equipment service to customers.
(f) "Endorsee" means an unlicensed employee of a communications
equipment insurance agent who meets the requirements of this article.
(g)
(b) (1) "License period" means all of that two-year
period beginning as described in subparagraph (A) or (B) of paragraph
(2), as applicable, and ending the second succeeding year on the
last calendar day of the month in which the initial license was
issued.
(2) A license period shall be determined for each person as
follows:
(A) Upon initial licensing, the license period shall start on the
date the license is issued.
(B) Subsequently, the license period shall start on the first day
following the month in which the initial license was issued.
(3) A license shall be renewed on or before the expiration date of
the license period.
(c) "Portable electronics" means electronic devices that are
portable in nature, and their accessories and services related to the
use of the device.
(d) (1) "Portable electronics insurance" means insurance providing
coverage for the repair or replacement of portable electronics that
may cover portable electronics against any one or more of the
following causes of loss: loss, theft, mechanical failure,
malfunction, damage, or other applicable perils.
(2) "Portable electronics insurance" does not include any of the
following:
(A) A service contract governed by Article 4.5 (commencing with
Section 9855) of Chapter 20 of Division 3 of the Business and
Professions Code.
(B) A policy of insurance covering a seller's or manufacturer's
obligations under a warranty.
(C) A homeowner's, renter's, private passenger automobile,
commercial multiperil, or similar insurance policy.
(e) "Portable electronics insurance agent license" means an agent
license issued to an individual or organization for the enrollment
and sale of portable electronics insurance.
(f) "Portable electronics vendor" means any person in the
business, directly or indirectly, of selling, reselling, soliciting,
or leasing portable electronics to customers.
SEC. 12. Section 1758.691 of the Insurance Code is amended to
read:
1758.691. Nothing in this article regulating the sale of
communications equipment portable electronics
insurance shall be construed to impair or impede the application of
any other law regulating the sale of communications
equipment portable electronics insurance.
SEC. 13. Section 1758.692 of the Insurance Code is amended to
read:
1758.692. (a) Not less than 60 days before a permanent license
will expire, the commissioner may use an electronic delivery method,
including e-mail or other similar electronic method of delivery, to
deliver, or may mail, to the latest e-mail or mailing address
appearing on his or her records, an application to the licensee to
renew the license of a communications equipment
portable electronics insurance agent and any
endorsees for the appropriate succeeding license term. It
is the licensee's responsibility to renew, whether or not a renewal
notice is received.
(b) The commissioner may accept a late renewal without penalty,
provided that the licensee's failure to comply is due to a clerical
error or inadvertence.
(c) An application for renewal of a license may be filed on or
before the expiration date. An application for renewal of an expired
license may be filed after the expiration date and until that same
month and date of the next succeeding year.
(d) The commissioner shall impose a penalty fee equal to one-half
of the renewal fee for the communications equipment
portable electronics insurance agent license and
any endorsees for any renewal that is filed after the expiration
date of the license.
SEC. 14. Section 1758.693 of the Insurance Code is repealed.
1758.693. (a) This article shall become operative only upon a
determination by the commissioner that the personnel positions needed
to carry out the provisions of this article are in existence or have
been authorized in the Budget Act of 2002 or a subsequent budget
act.
(b) On and after January 1, 2003, the commissioner may accept
applications from communications equipment vendors seeking licensure
pursuant to this article. However, the commissioner shall not act
upon the applications. If, prior to April 30, 2003, the commissioner
receives 50 applications or less, the commissioner shall be deemed to
have sufficient personnel to carry out the provisions of this
article and this article shall immediately become operative.
SEC. 15. No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of the
Government Code, or changes the definition of a crime within the
meaning of Section 6 of Article XIII B of the California
Constitution.