BILL NUMBER: SB 621	AMENDED
	BILL TEXT

	AMENDED IN ASSEMBLY  JUNE 28, 2011
	AMENDED IN ASSEMBLY  JUNE 16, 2011
	AMENDED IN SENATE  MARCH 31, 2011

INTRODUCED BY   Senator Calderon

                        FEBRUARY 18, 2011

   An act to add Section 10110.6 to the Insurance Code, relating to
insurance.



	LEGISLATIVE COUNSEL'S DIGEST


   SB 621, as amended, Calderon. Insurance: life: disability:
discretionary clauses.
   Existing law generally regulates life and disability insurance
policies.
   This bill would provide that if a policy, contract, certificate,
or agreement offered, issued, delivered, or renewed, whether or not
in California, that provides or funds life insurance or disability
insurance coverage for any California resident contains a provision
that reserves discretionary authority to the insurer, or an agent of
the insurer, to determine eligibility for benefits or coverage, to
interpret the terms of the policy, contract, certificate, or
agreement, or to provide standards of interpretation or review that
are inconsistent with the laws of this state, that provision would be
void and unenforceable. The bill would define the term
"discretionary authority" for these purposes. The bill would
authorize the  commissioner   Insurance
Commissioner  to adopt regulations  reasonably necessary
 to implement these provisions.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 10110.6 is added to the Insurance Code, to
read:
   10110.6.  (a) If a policy, contract, certificate, or agreement
offered, issued, delivered, or renewed, whether or not in California,
that provides or funds life insurance or disability insurance
coverage for any California resident contains a provision that
reserves discretionary authority to the insurer, or an agent of the
insurer, to determine eligibility for benefits or coverage, to
interpret the terms of the policy, contract, certificate, or
agreement, or to provide standards of interpretation or review that
are inconsistent with the laws of this state, that provision is void
and unenforceable.
   (b) For purposes of this section, "renewed" means continued in
force on or after the policy's anniversary date.
   (c) For purposes of this section, the term "discretionary
authority" means a policy provision that has the effect of conferring
discretion on an insurer or other claim administrator to determine
entitlement to benefits or interpret policy language that, in turn,
could lead to a deferential standard of review by any reviewing
court.
   (d) Nothing in this section prohibits an insurer from including a
provision in a contract that informs an insured that as part of its
routine operations the insurer applies the terms of its contracts for
making decisions, including making determinations regarding
eligibility, receipt of benefits and claims, or explaining policies,
procedures, and processes, so long as the provision could not give
rise to a deferential standard of review by any reviewing court.
   (e) This section applies to both group and individual products.
   (f) The commissioner may adopt regulations  to implement
  reasonably necessary to implement the provisions of
 this section.
   (g) This section is self-executing. If a life insurance or
disability insurance policy, contract, certificate, or agreement
contains a provision rendered void and unenforceable by this section,
the parties to the policy, contract, certificate, or agreement and
the courts shall treat that provision as void and unenforceable.