BILL ANALYSIS Ó
AB 2354
Page 1
Date of Hearing: May 9, 2012
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 2354 (Solorio) - As Amended: April 11, 2012
Policy Committee: InsuranceVote:13
- 0
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill updates the laws governing the sale of insurance in
connection with travel insurance. Specifically, this bill:
1)Repeals existing laws regulating limited lines travel
insurance agents and replaces it with a new system of
regulation consistent with standards adopted by the National
Association of Insurance Commissioners (NAIC).
2)Defines travel insurance as insurance coverage for personal
risks associated with travel including, but not limited to:
a) Interruption or cancellation of travel.
b) Loss of baggage or personal effects.
c) Damages to accommodations or rental vehicles.
d) Sickness, accident, disability or death occurring during
travel.
1)Specifies that major medical policies providing comprehensive
medical protection on trips lasting more than six months are
not travel insurance.
2)Defines a "travel retailer" as a business organization engaged
in transacting travel insurance on behalf of a travel
insurance agent.
3)Permits a travel insurance agent to compensate the travel
retailer and its employees if the compensation is not
primarily based on the number of policies sold.
4)Authorizes the Insurance Commissioner to adopt regulations
AB 2354
Page 2
needed to implement the bill.
FISCAL EFFECT
1)Under this legislation, the 2,000 travel agent insurance
licenses will be reduced to 50 for a loss of approximately
$62,000 in licensing revenue. Currently, those agents pay $22
a year for their licenses. The Commissioner has the authority
to set licensing fees. In order to offset this loss, the new
fee for the 50 licensed insurers would be approximately $3,100
for a two-year license.
2)Costs associated with this legislation should be minor and
absorbable within the California Department of Insurance's
(CDI) existing resources.
COMMENTS
1)Purpose . According to the author, this bill revises California
law relating to the sale of travel insurance to comply with
the licensing standards adopted by NAIC. These standards were
developed to establish nationally consistent licensing
requirements for travel insurance agents while ensuring
consumer protection. Implementing an approach consistent with
the NAIC model will reduce the burden of regulation on travel
retailers while focusing regulatory scrutiny on those most
responsible for the insurance product.
2)NAIC Model . This bill is modeled on uniform licensing
standards for travel insurance agents adopted by the National
Association of Insurance Commissioners in 2010. These
standards shift the licensing requirements from individual
travel agents and employees of common carriers (airlines,
railroads, bus lines, etc.) to an intermediary (such as a
managing general agent) who is responsible for training and
overseeing the sale of travel insurance by travel retailers.
The intermediary (limited lines travel insurance agent) would
be appointed by an insurance company and licensed by the
department.
Analysis Prepared by : Julie Salley-Gray / APPR. / (916)
319-2081
AB 2354
Page 3