BILL ANALYSIS                                                                                                                                                                                                    Ó






                             SENATE INSURANCE COMMITTEE
                           Senator Ronald Calderon, Chair


          AB 2084 (Solorio)        Hearing Date:  June 27, 2012  

          As Amended: June 21, 2012
          Fiscal:             Yes
          Urgency:       No

          VOTES:              Asm. Floor(05/30/12)77-0/Pass
                         Asm. Appr.          (05/25/12)17-0/Pass
                         Asm. Ins. (04/18/12)13-0/Pass


          SUMMARY: Would expand the types of blanket insurance that may be 
          offered by California admitted insurers.
          
           
           DIGEST
           
          Existing law


              1.   Provides that blanket insurance is that form of 
               insurance providing coverage for specified circumstances 
               and insuring by describing all persons within a class of 
               persons defined in a policy issued to a master 
               policyholder, and not by specifically naming the persons 
               covered; 


             2.   Provides that the permitted types of blanket insurance 
               are those where the blanket policy is issued to specified 
               entities, including, but not limited to, a volunteer fire 
               company providing benefits to members only in the event of 
               accident incurred while performing actions incident to such 
               membership and a proprietor or sponsor of an organized 
               camping institution providing benefits to campers or 
               persons responsible for their support for death or 
               dismemberment resulting from accident, or for hospital, 
               medical, surgical, or nursing expenses resulting from 
               accident or sickness related to the camper's specified 
               connection with the camping institution;






                                              AB 2084 (Solorio), Page 2




             3.   Prohibits a person from transacting any class of 
               insurance business in this state without first being an 
               admitted insurer. Under existing law, admission is secured 
               by procuring a certificate of authority from the Insurance 
               Commissioner; 


             4.   Authorizes the above-described blanket policies, among 
               others, to provide that the cost of the insurance coverage 
               is required to be paid by either the policyholder, or the 
               individuals insured or their parents or guardians, payable 
               through the policyholder; 


             5.   Prohibits a blanket policy from being issued until 
               approved as to substance and form by the commissioner.

           
          This bill


              1.   Would revise and recast provision related to a volunteer 
               fire company and an organized camping institution to 
               instead include:


                a.      A volunteer or governmental fire department, 
                  emergency medical services company, or similar volunteer 
                  or governmental organization providing benefits to 
                  members or participants only in the event of accident 
                  incurred while performing actions incident to an 
                  activity or operation sponsored or supervised by the 
                  department, company, or organization and 


                b.      A sports team or camp, as specified, providing 
                  benefits to participants, campers, and other specified 
                  persons responsible for their support for death or 
                  dismemberment resulting from accident, or for hospital, 
                  medical, surgical, or nursing expenses resulting from 
                  specified accident or sickness related to the 
                  participants, campers, or other specified person's 
                  connection with the sports team or camp, as specified;


             2.   Would additionally specify other permitted types of 




                                              AB 2084 (Solorio), Page 3




               blanket insurance, providing specified benefits, issued to 
               specified entities that include, but are not limited to, 


                a.      An employer providing accident benefits to any 
                  group of workers, dependents, or guests, limited by 
                  reference to specified hazards incident to activities or 
                  operations of the employer, 


                b.      Any common carrier or any operator, owner, or 
                  lessor of a means of transportation providing accident 
                  benefits to any specified group of persons who may 
                  become lessees or passengers limited by reference to 
                  travel status, and 


                c.      An entertainment production company providing 
                  accident benefits to any group of participants, 
                  volunteers, audience members, contestants, or workers 
                  while engaged in any activity or operation of the 
                  entertainment production company; 


             1.   Would extend existing provision to the newly established 
               permitted types of blanket insurance described above; 


             2.   Would require an insurer who intends to issue a policy 
               according to these revised provisions to submit, prior to 
               issuance, any new language in that policy to the 
               commissioner for approval; 


             3.   Would authorize the person insured, when the premium is 
               paid for these types of blanket insurance, to request a 
               copy of the policy from the insurer; 


             4.   Would also authorize the commissioner to add to the list 
               of entities that may be eligible to purchase blanket 
               insurance for any risk or class of risks, relating to 
               accident benefits, as defined, which may be properly 
               eligible for blanket insurance; 






                                              AB 2084 (Solorio), Page 4




             5.   Would require the commissioner to issue and post on the 
               commission's Internet Web site a letter order, as 
               specified, each time the commissioner exercises his or her 
               discretion to add an entity to the list of entities 
               eligible to purchase blanket insurance;


             6.   Would make additional conforming, nonsubstantive 
               changes.
          

          COMMENTS


              1.   Purpose of the bill.   To update the group blanket 
               insurance statute to better reflect current needs for this 
               type of insurance in the marketplace. It would do so by 
               adding to the types of groups that can be covered, and by 
               giving the Insurance Commissioner authority to add 
               additional risks in his/her discretion.


              2.   Background.   In California, blanket insurance is a form 
               of group disability insurance that is provided by an 
               authorized policy holder to cover persons as a described 
               class (not necessarily by name) and only while engaged in 
               specified activities covered under the policy.  

               For example, under this bill, an entertainment organization 
               could provide accident insurance for participants, audience 
               members, contestants or volunteers while they are 
               participating, watching, or assisting in the production of 
               activities organized by the entertainment organization.  
               These individuals all run the risk of being injured while 
               participating, watching or assisting the production. The 
               blanket insurance policy (either standing alone, or as a 
               companion to a general liability policy) would keep 
               production costs down and would provide coverage regardless 
               of the liability of the organization producing the show. 

               a.     Distinguished form General Liability.  Unlike 
                 general liability, which covers the policy holder, 
                 blanket insurance covers the insured, but only for a 
                 specific period defined in the policy.  Group blanket 
                 coverage will pay for a covered accident regardless of 
                 liability insurance coverage and in addition to any 




                                              AB 2084 (Solorio), Page 5




                 coverage under workers' compensation.  It is not 
                 exclusive, but in addition to, those policies.  Also, 
                 under some blanket insurance policies, the cost of the 
                 policy may be passed to the insured; in those cases, the 
                 insured may request a copy of the policy.


               b.     AB 2084 Expands the Number of Eligible Classes.  
                 This proposal updates the statute to expand the types of 
                 legitimate businesses that could obtain a group blanket 
                 insurance policy.  


                  i.        The bill would update and expand the scope of 
                    first responder organizations to include governmental 
                    fire departments and emergency service companies (the 
                    statute is currently limited to only volunteer fire 
                    companies) while performing actions incident to an 
                    activity or operation sponsored or supervised by the 
                    policyholder. 


                  ii.       It would also broaden the available coverage 
                    for any religious, charitable, recreational, 
                    educational, athletic or civic organization, or branch 
                    thereof to include any activity or activities or 
                    operations on the premises of the policyholder (rather 
                    than just activities supervised or sponsored by the 
                    policyholder).


                 This bill would add the following classes of blanket 
                 insurance defined by eligible policyholders and 
                 beneficiary classes covering costs related to death or 
                 dismemberment, or for hospital, medical, surgical, or 
                 nursing expenses ("specified costs") when engaged in 
                 defined activities:


                  i.        Sports team operators providing benefits to 
                    sports team participants and employees for specified 
                    costs resulting from an accident;


                  ii.       An employer providing benefits to any group of 
                    workers, dependents, or guests for specified costs 




                                              AB 2084 (Solorio), Page 6




                    resulting from accidents related to specified hazards 
                    incident to activities or operations of the employer; 


                  iii.      Common carriers (planes, trains, buses, etc.) 
                    providing benefits to lessees or passengers for 
                    specified costs resulting from an accident based on 
                    their travel status (for example, a policy issue to a 
                    cab company to cover passengers); and


                  iv.       Entertainment production companies providing 
                    benefits to participants, volunteers, contestants, 
                    audience members, or workers resulting from an 
                    accident while engaged in any activity or operation of 
                    the policy holder.  


               Grants the Insurance Commissioner Discretion to Add 
               Classes.  Additionally, the bill provides the Commissioner 
               the authority to add additional types of blanket insurance 
               (but may not change the substance of what is authorized).  
               The bill would also allow the Commissioner to add other 
               entities eligible to purchase blanket insurance by issuing 
               and posting a letter order on the CDI website.  



           3.  Summary of Arguments in Support   

              According to AIG:


                a.      The statute has not been amended since 1973. Since 
                  that time, the marketplace has evolved, and additional 
                  businesses not specified in the statute have a need for 
                  this type of insurance.  For example, Reality TV shows 
                  are a class of California business that would not have 
                  been envisioned when the statue was last amended.  


                b.      The additional classes of risks added in this bill 
                  are found in statues in other states, although states 
                  can vary as to which classes they allow.






                                              AB 2084 (Solorio), Page 7




                c.      California has one of the more restrictive blanket 
                  eligibility statutes in the country, not just because of 
                  the limited types of groups that are allowed, but also 
                  because California does not have a discretionary 
                  authority provision for its Insurance Commissioner.  
                  Most states have already granted the respective 
                  insurance commissioner the authority to add more 
                  classes.



           4.  Summary of Arguments in Opposition   

              None received.
          

          POSITIONS
           
          Support
           
          American International Group (AIG)/Sponsor
           

          Opposition
           
          None received.


          Consultant:   Hugh Slayden, (916) 651-4773