BILL ANALYSIS Ó
SENATE INSURANCE COMMITTEE
Senator Ronald Calderon, Chair
AB 1098 (Hagman) Hearing Date: June 22, 2011
As Amended: March 31, 2011
Fiscal: Yes
Urgency: No
SUMMARY Would require, under a law governing auto insurers and
direct repair program administration, that a request by the
California DOI seeking confirmation by an insurer of a fact
about a third party auto body repair shop be made to the insurer
in written form.
DIGEST
Existing law
1. Specifies certain rules governing the relationship between
an insurer and an auto body repair shop when participating in
the insurer's direct repair program.
2. Permits a registered auto body repair shop that is denied
participation in an insurer's direct repair program to report
a denial to the Department of Insurance (DOI).
3. The DOI is required to maintain a record of all those
denials for the purposes of gathering market conduct
information and requires an insurer, upon the request of the
DOI, to disclose the fact that a denial was made.
4. Authorizes an insurer to disclose personal or privileged
information about an individual to an insurance regulatory
authority, or to a law enforcement or other governmental
authority pursuant to law, or to make such other disclosures
otherwise permitted or required by law.
This bill
1. Specifies that a request by the DOI to confirm that an
insurer denied participation to a particular auto body repair
shop in its direct repair program be made in writing.
AB 1098 (Hagman), Page 2
COMMENTS
Purpose of the bill According to the Author, the relationship of
an insurer and an auto body repair shops in a direct repair
program involves a private business relationship as does the
denial to enter into that relationship. To protect the privacy
rights of auto body repair shops, the request from the DOI
concerning the denial should be in writing to ensure that the
person to whom the carriers release the information has made the
request on the basis of appropriate legal authority. The Author
states "A telephone call is not sufficiently protective because
there is no ability to verify the caller."
1. Background and Discussion:
While the California statute AB 1098 amends does require an
insurer to confirm the fact of a denial upon request of the DOI,
the general legal privacy framework California insurers are
subject to under the Insurance Code is such that the disclosure
of information concerning third parties by an insurance does
depend on the nature of a query as legally authorized, whether
this authorization is based on fact that it is an insurance
regulatory agency making the request or another entity asking
pursuant to law.
Since this class of request by the DOI is not one solely
concerned with the insurer's business but involves at a minimum
identification of a third party, good legal practice under
California's Insurance Information and Privacy Act (California
Insurance Code Section 791 et seq) supports requiring the
request to be in writing on letterhead or facsimile indicating
its origin as an official California Department of Insurance
inquiry.
The addition of the word "written" is sufficient to cover
letters, facsimile transmissions, and similar written
communications.
2. Summary of Arguments in Support:
a. The requirement of a writing permits validation of
the request as from a source that is authorized to make
such inquiries.
3. Summary of Arguments in Opposition:
AB 1098 (Hagman), Page 3
a. None received
4. Amendments:
a. None proposed
5. Prior and Related Legislation:
a. None
LIST OF REGISTERED SUPPORT/OPPOSITION
Support
Personal Insurance Federation of California (Sponsor)
Opposition
None Received
Consultant: Ken Cooley (916) 651-4110