BILL ANALYSIS Ó
SENATE INSURANCE COMMITTEE
Senator Ronald Calderon, Chair
AB 2301 (Committee on Insurance) Hearing Date: June 13, 2012
As Amended: April 9, 2012
Fiscal: No
Urgency: No
VOTES: Asm. Floor(05/10/12)73-0/Pass
Asm. Ins. (05/02/12)13-0/Pass
SUMMARY Creditors of an insolvent insurer must submit claims
to a liquidator in order to obtain compensation for obligations
owed by the insurer. In part, existing law defines "covered
claims" as those submitted to the liquidator in California (the
Insurance Commissioner). This bill provides that those claims
be submitted to the liquidator in the state of domicile of the
insolvent insurer.
DIGEST
Existing law
1. Establishes the California Insurance Guarantee Association to
provide coverage against losses arising from the failure of an
insolvent property, casualty, or workers' compensation insurer
to discharge its obligations under its insurance policies;
2. Defines "covered claims" for purposes of these provisions to
mean the obligations of an insolvent insurer that satisfy
specified requirements, including that the claim be presented as
a claim to the liquidator in this state or to the association on
or before the last date fixed for the filing of claims in the
domiciliary liquidating proceedings.
This bill
1. Would revise the definition of "covered claims" with
respect to the requirement that the claim be presented as a
claim to the liquidator in this state to instead require
that the claim be presented as a claim to the liquidator in
AB
2301 (Committee on Insurance), Page 2
the state of domicile of the insolvent insurer or to the
association as described above.
COMMENTS
1. Purpose of this bill To clean up the statutes for handling
insurer insolvencies when the insurer is domiciled out of
state.
2. Background
a. CIGA and Covered Claims. The California Insurance
Guarantee Association (CIGA) provides a mechanism for the
payment of "covered claims" against insolvent member
insurers. (Ins. Code §§ 1063-1063.77.) CIGA is triggered
when a member insurer admitted to transact business in
California is found by a court of competent jurisdiction
to be insolvent and ordered into liquidation.
The current definition of "covered claims" includes those
claims presented to a liquidator in California (in
practice, the California Insurance Commissioner) or CIGA,
even if the claim should initially be filed with a
liquidator outside of California (when the insolvent
insurer is domiciled in another state).
This bill corrects that definition by including claims
presented to the liquidator in the state of domicile
rather than California specifically.
b. Technical Cleanup. This bill also resolves several
technical issues that were addressed during the 2009-10
Legislative Session in the 2009 code maintenance bill, AB
1164 (Tran), Chapter 140, Statutes of 2009, but
subsequently chaptered out by AB 2781 (Assembly Committee
on Insurance), Chapter 140, Statutes of 2010.
3. Summary of Arguments in Support
The California Department of Insurance (CDI) states AB 2301
eliminates unnecessary bureaucratic steps for California
policyholders filing a claim against an insolvent
non-California domiciled insurer when they are already
AB
2301 (Committee on Insurance), Page 3
dealing with a stressful situation and provides CIGA with
the statutory clarity to process these policyholder claims
as timely as possible.
4. Summary of Arguments in Opposition
None received.
POSITIONS
Support
Department of Insurance
California Insurance Guarantee Association (CIGA)
Opposition
None Received.
Consultant: Hugh Slayden, (916) 651-4773