BILL ANALYSIS Ó
AB 2303
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ASSEMBLY THIRD READING
AB 2303 (Insurance Committee)
As Amended March 15, 2012
Majority vote
INSURANCE 9-0 APPROPRIATIONS 12-0
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|Ayes:|Solorio, Hagman, |Ayes:|Fuentes, Blumenfield, |
| |Bradford, Carter, Feuer, | |Bradford, Charles |
| |Hayashi, Skinner, Torres, | |Calderon, Campos, Davis, |
| |Wieckowski | |Gatto, Hall, Hill, Lara, |
| | | |Mitchell, Solorio |
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SUMMARY : Contains clarifying and clean up provisions for the
Insurance Code, establishes licenses for non-resident variable
contract agents and crop insurance adjusters, conforms California
law to federal law as it relates to the conservation and liquidation
of systemically important insurers, increasing the classroom
education requirements for bail agents, and expands the duties of
the Insurance Commissioner's (Commissioner) curriculum board to
include bail agents and insurance adjusters. Specifically, this
bill :
1)Repeals obsolete statutes relating to mortgage insurance.
2)Requires liquidation notices to include a reference to a Web site
that provides ongoing information for creditors of the company
being liquidated.
3)Repeals an obsolete requirement relating to auto insurance
cancellation notices.
4)Repeals a requirement for the Department of Insurance (Department)
to include information regarding tort claims against insurers in
its annual report to the Legislature and Governor.
5)Eliminates an existing requirement for insurers to annually report
specified data related to child care liability policies.
6)Requires insurers to provide data related to child care liability
policies to the Commissioner upon request.
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7)Clarifies existing law that requires a non-resident variable
contract agent to be licensed as both a life insurance and
variable contract agent in his or her resident state before
receiving a non-resident license in California.
8)Establishes a $64 fee for the issuance of a non-resident variable
contract authority license.
9)Repeals obsolete statutes relating to the issuance of certificates
of convenience.
10)Requires the Commissioner's curriculum board to propose mandatory
pre-licensing and continuing education curriculum for bail agents
and insurance adjusters.
11)Clarifies existing law requiring that an applicant for a
non-resident surplus lines broker license may demonstrate
competency by providing evidence of a property and casualty broker
license in his or her resident state.
12)Increases from 12 to 20 the number of pre-licensing classroom
hours required for bail agents.
13)Eliminates the requirement for the Conservation and Liquidation
Office to publish liquidation notices in newspapers in Alameda,
Los Angeles, Sacramento, San Diego, San Francisco, and Santa Clara
Counties for all liquidations and instead requires that notices be
published in newspapers located in geographic areas pertinent to
the insurer being liquidated.
14)Establishes a limited lines license for crop insurance adjusters
with the following requirements:
a) Licensure as an insurance adjuster;
b) Complete training required by the Federal Crop Insurance
Corporation Standard Reinsurance Agreement; and,
c) Pass the test required by the Federal Crop Insurance
Corporation Standard Reinsurance Agreement.
15)Prohibits acting as a crop insurance adjuster without a license.
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16)Prohibits contracting with or employing someone to adjust crop
insurance claims unless that person is licensed.
17)Permits the Commissioner to adopt regulations to implement the
crop insurance adjuster license including additional competency
requirements and establishing standards of practice for crop
insurance adjusters.
18)Conforms statutes related to the conservation and liquidation
process with changes made in the Dodd-Frank Wall Street Reform and
Consumer Protection Act (Dodd-Frank).
19)Corrects a number of erroneous statutory references.
EXISTING LAW :
1)Establishes a regulatory scheme for the sale of mortgage guaranty
insurance, which has superseded "mortgage insurance."
2)Establishes the Conservation and Liquidation Office within the
Department of Insurance to conserve and liquidate insolvent
insurers.
3)Requires that insurers provide notice to policyholders prior to
cancelling an auto insurance policy.
4)Requires the Department to provide an annual report to the
Governor and Legislature regarding the Department's activities.
5)Permits the Commissioner to make data calls from insurers.
6)Requires non-residents engaging in business activity requiring a
producer's license (agent, broker, etc.) to be licensed by the
Department.
7)Establishes "certificates of convenience" processes for some
license categories to provide a temporary license to practice in
certain circumstances.
8)Establishes a curriculum board appointed by the Commissioner to
recommend pre-license and continuing education curriculum for
agents, brokers and other licensees of the Department.
9)Establishes the requirements for a non-resident surplus lines
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broker license.
10)Requires applicants for a bail agent license to complete 12 hours
of classroom training.
11)Provides for a crop insurance program administered under federal
law.
FISCAL EFFECT : According to the Assembly Appropriations Committee,
costs associated with this legislation should be minor and
absorbable within existing resources
COMMENTS :
Purpose. This bill is sponsored by the Department of Insurance as
the 2012 omnibus bill which proposes a range of cleanup, federal
conformity, and non-controversial licensing changes.
Mortgage insurance repeal. This bill repeals existing law
establishing "mortgage insurance." These statutes are obsolete
because these policies are now issued under separate statutory
authority for "mortgage guaranty insurance."
Crop insurance adjusters. This provision establishes a limited
lines crop insurance adjuster license. Federal crop insurance
requirements were recently changed requiring crop insurance
adjusters to have specific knowledge of the crops at issue in a
claim. If a state does not offer a license based on a crop specific
test, then adjusters certified by the National Crop Insurance
Services (NCIS) may adjust claims in the state without a license.
This bill establishes state licensure based on the NCIS
certification process to comply with the federal requirements.
Dodd-Frank compliance. In 2010 Congress passed Dodd-Frank which,
among other things, creates a process for the conservation and/or
liquidation of "systemically important" financial companies by the
Federal Deposit Insurance Corporation. Dodd-Frank contains a
provision that requires systemically important insurance companies
(or their affiliates) to be conserved or liquidated under state law.
In California law, this conservation/liquidation process is
performed by the Insurance Commissioner through the Conservation and
Liquidation Office. This bill conforms the authority of the
Commissioner to initiate the conservation and liquidation process to
the requirements of Dodd-Frank.
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Analysis Prepared by : Paul Riches / INS. / (916) 319-2086
FN: 0003333