BILL ANALYSIS Ó
AB 2303
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CONCURRENCE IN SENATE AMENDMENTS
AB 2303 (Insurance Committee)
As Amended August 13, 2012
Majority vote
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|ASSEMBLY: |63-0 |(April 23, |SENATE: |39-0 |(August 20, |
| | |2012) | | |2012) |
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Original Committee Reference: INS.
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.
The Senate amendments :
1)Repeal obsolete reporting requirements.
2)Permit title insurers and underwritten title companies to
provide escrow accounts in residential real estate
transactions.
3)Repeal the process for the commissioner to establish a list of
eligible non-admitted insurers for use by surplus lines
brokers.
4)Eliminate an obsolete advisory committee on automobile
insurance fraud and automobile theft.
5)Resolve chaptering out conflicts.
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guaranty insurance, which has superseded "mortgage insurance."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
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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
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.
AS PASSED BY THE ASSEMBLY , this bill:
1)Repealed obsolete statutes relating to mortgage insurance.
2)Required liquidation notices to include a reference to a Web
site that provides ongoing information for creditors of the
company being liquidated.
3)Repealed an obsolete requirement relating to auto insurance
cancellation notices.
4)Repealed a requirement for the Department of Insurance
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(Department) to include information regarding tort claims
against insurers in its annual report to the Legislature and
Governor.
5)Eliminated an existing requirement for insurers to annually
report specified data related to child care liability
policies.
6)Required insurers to provide data related to child care
liability policies to the Commissioner upon request.
7)Clarified 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)Established a $64 fee for the issuance of a non-resident
variable contract authority license.
9)Repealed obsolete statutes relating to the issuance of
certificates of convenience.
10)Required the Commissioner's curriculum board to propose
mandatory pre-licensing and continuing education curriculum
for bail agents and insurance adjusters.
11)Clarified 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)Increased from 12 to 20 the number of pre-licensing classroom
hours required for bail agents.
13)Eliminated 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)Established a limited lines license for crop insurance
adjusters with the following requirements:
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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)Prohibited acting as a crop insurance adjuster without a
license.
16)Prohibited contracting with or employing someone to adjust
crop insurance claims unless that person is licensed.
17)Permitted 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)Conformed 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)Repealed obsolete reporting requirements.
20)Corrected a number of erroneous statutory references.
FISCAL EFFECT : According to the Senate Appropriations
Committee, pursuant to Senate Rule 28.8, negligible state costs.
COMMENTS : 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.
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." This also bill 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
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requirements.
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.
Analysis Prepared by : Paul Riches / INS. / (916) 319-2086
FN: 0004826