BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 1098|
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CONSENT
Bill No: AB 1098
Author: Hagman (R)
Amended: 3/31/11 in Assembly
Vote: 21
SENATE INSURANCE COMMITTEE : 9-0, 6/22/11
AYES: Calderon, Gaines, Anderson, Corbett, Correa, Lieu,
Lowenthal, Price, Wyland
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
ASSEMBLY FLOOR : 75-0, 5/26/11 (Consent) - See last page
for vote
SUBJECT : Insurance: unlawful practices
SOURCE : Author
DIGEST : This bill requires, under a law governing auto
insurers and direct repair program administration, that a
request by the California Department of Insurance seeking
confirmation by an insurer of a fact about a third party
auto body repair shop be made to the insurer in written
form.
ANALYSIS :
Existing law:
1. Specifies certain rules governing the relationship
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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 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.
Background
While the California statute this bill 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
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official DOI inquiry.
The addition of the word "written" is sufficient to cover
letters, facsimile transmissions, and similar written
communications.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
SUPPORT : (Verified 7/12/11)
Personal Insurance Federation of California
ARGUMENTS IN SUPPORT : According to the author's office,
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."
ASSEMBLY FLOOR : 75-0, 5/26/11
AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Beall,
Bill Berryhill, Block, Blumenfield, Bonilla, Bradford,
Brownley, Buchanan, Butler, Charles Calderon, Carter,
Chesbro, Conway, Cook, Dickinson, Donnelly, Eng, Feuer,
Fletcher, Fong, Fuentes, Furutani, Beth Gaines, Galgiani,
Garrick, Gatto, Gordon, Grove, Hagman, Halderman, Hall,
Harkey, Hayashi, Roger Hernández, Hill, Huber, Hueso,
Huffman, Jeffries, Knight, Lara, Logue, Bonnie Lowenthal,
Ma, Mansoor, Mendoza, Miller, Mitchell, Monning, Morrell,
Nestande, Nielsen, Norby, Olsen, Pan, Perea, V. Manuel
Pérez, Portantino, Silva, Skinner, Smyth, Solorio,
Swanson, Torres, Valadao, Wagner, Wieckowski, Williams,
Yamada, John A. Pérez
NO VOTE RECORDED: Campos, Cedillo, Davis, Gorell, Jones
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JJA:kc 7/12/11 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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