BILL NUMBER: SB 712 INTRODUCED
BILL TEXT
INTRODUCED BY Committee on Insurance (Senators Calderon (Chair),
Anderson, Corbett, Correa, Gaines, Lowenthal, Price, and Wyland)
FEBRUARY 18, 2011
An act to amend Sections 790.03, 10234.86, 11093, 11788, 11790,
11874, and 12352 of the Insurance Code, relating to insurance.
LEGISLATIVE COUNSEL'S DIGEST
SB 712, as introduced, Committee on Insurance. Insurance.
Existing law creates the State Compensation Insurance Fund to be
administered by its board of directors for the purpose of transacting
workers' compensation insurance, and insurance against the expense
of defending any suit for serious and willful misconduct, against an
employer or his or her agent, and insurance to employees and other
persons of the compensation fixed by the workers' compensation laws
for employees and their dependents.
Existing law gives the Insurance Commissioner certain powers and
duties regarding domestic fraternal benefit societies.
Existing law requires every title insurer to deposit $100,000 with
the Insurance Commissioner or other designated official of its home
state, as provided.
Existing law requires long-term care insurers to maintain records
for each agent of that agent's amount of replacement sales as a
percent of the agent's total annual sales and the amount of lapses of
long-term care insurance policies sold by the agent as a percent of
the agent's total annual sales.
Existing law defines unfair methods of competition and unfair and
deceptive acts or practices in the business of insurance.
This bill would make technical, nonsubstantive changes to those
provisions.
Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 790.03 of the Insurance Code is amended to
read:
790.03. The following are hereby defined as unfair methods of
competition and unfair and deceptive acts or practices in the
business of insurance.
(a) Making, issuing, circulating, or causing to be made, issued or
circulated, any estimate, illustration, circular , or
statement misrepresenting the terms of any policy issued or to be
issued or the benefits or advantages promised thereby or the
dividends or share of the surplus to be received thereon, or making
any false or misleading statement as to the dividends or share of
surplus previously paid on similar policies, or making any misleading
representation or any misrepresentation as to the financial
condition of any insurer, or as to the legal reserve system upon
which any life insurer operates, or using any name or title of any
policy or class of policies misrepresenting the true nature thereof,
or making any misrepresentation to any policyholder insured in any
company for the purpose of inducing or tending to induce the
policyholder to lapse, forfeit, or surrender his or her insurance.
(b) Making or disseminating or causing to be made or disseminated
before the public in this state, in any newspaper or other
publication, or any advertising device, or by public outcry or
proclamation, or in any other manner or means whatsoever, any
statement containing any assertion, representation , or
statement with respect to the business of insurance or with respect
to any person in the conduct of his or her insurance business, which
is untrue, deceptive, or misleading, and which is known, or which by
the exercise of reasonable care should be known, to be untrue,
deceptive, or misleading.
(c) Entering into any agreement to commit, or by any concerted
action committing, any act of boycott, coercion , or
intimidation resulting in or tending to result in unreasonable
restraint of, or monopoly in, the business of insurance.
(d) Filing with any supervisory or other public official, or
making, publishing, disseminating, circulating, or delivering to any
person, or placing before the public, or causing directly or
indirectly, to be made, published, disseminated, circulated,
delivered to any person, or placed before the public any false
statement of financial condition of an insurer with intent to
deceive.
(e) Making any false entry in any book, report, or statement of
any insurer with intent to deceive any agent or examiner lawfully
appointed to examine into its condition or into any of its affairs,
or any public official to whom the insurer is required by law to
report, or who has authority by law to examine into its condition or
into any of its affairs, or, with like intent, willfully omitting to
make a true entry of any material fact pertaining to the business of
the insurer in any book, report, or statement of the insurer.
(f) (1) Making or permitting any unfair
discrimination between individuals of the same class and equal
expectation of life in the rates charged for any contract of life
insurance or of life annuity or in the dividends or other benefits
payable thereon, or in any other of the terms and conditions of the
contract.
This
(2) This subdivision shall be
interpreted, for any contract of ordinary life insurance or
individual life annuity applied for and issued on or after January 1,
1981, to require differentials based upon the sex of the individual
insured or annuitant in the rates or dividends or benefits, or any
combination thereof. This requirement is satisfied if those
differentials are substantially supported by valid pertinent data
segregated by sex, including, but not necessarily
limited to, mortality data segregated by sex.
However,
(3) However, for any contract of
ordinary life insurance or individual life annuity applied for and
issued on or after January 1, 1981, but before the compliance date,
in lieu of those differentials based on data segregated by sex,
rates, or dividends or benefits, or any combination thereof, for
ordinary life insurance or individual life annuity on a female life
may be calculated as follows: (a) (A)
according to an age not less than three years nor more than six years
younger than the actual age of the female insured or female
annuitant, in the case of a contract of ordinary life insurance with
a face value greater than five thousand dollars ($5,000) or a
contract of individual life annuity; and (b)
(B) according to an age not more than six years younger than
the actual age of the female insured, in the case of a contract of
ordinary life insurance with a face value of five thousand dollars
($5,000) or less. "Compliance date" as used in this paragraph shall
mean the date or dates established as the operative date or dates by
future amendments to this code directing and authorizing life
insurers to use a mortality table containing mortality data
segregated by sex for the calculation of adjusted premiums and
present values for nonforfeiture benefits and valuation reserves as
specified in Sections 10163.5 10163.1
and 10489.2 or successor sections.
Notwithstanding
(4) Notwithstanding the
provisions of this subdivision, sex-based differentials in rates or
dividends or benefits, or any combination thereof, shall not be
required for (1) (A) any contract of
life insurance or life annuity issued pursuant to arrangements which
may be considered terms, conditions, or privileges of employment as
these terms are used in Title VII of the Civil Rights Act of 1964
(Public Law 88-352), as amended, and (2) (B)
tax sheltered annuities for employees of public schools or of
tax exempt organizations described in Section 501(c)(3) of the
Internal Revenue Code.
(g) Making or disseminating, or causing to be made or
disseminated, before the public in this state, in any newspaper or
other publication, or any other advertising device, or by public
outcry or proclamation, or in any other manner or means whatever,
whether directly or by implication, any statement that a named
insurer, or named insurers, are members of the California Insurance
Guarantee Association, or insured against insolvency as defined in
Section 119.5. This subdivision shall not be interpreted to prohibit
any activity of the California Insurance Guarantee Association or the
commissioner authorized, directly or by implication, by Article 14.2
(commencing with Section 1063).
(h) Knowingly committing or performing with such frequency as to
indicate a general business practice any of the following unfair
claims settlement practices:
(1) Misrepresenting to claimants pertinent facts or insurance
policy provisions relating to any coverages at issue.
(2) Failing to acknowledge and act reasonably promptly upon
communications with respect to claims arising under insurance
policies.
(3) Failing to adopt and implement reasonable standards for the
prompt investigation and processing of claims arising under insurance
policies.
(4) Failing to affirm or deny coverage of claims within a
reasonable time after proof of loss requirements have been completed
and submitted by the insured.
(5) Not attempting in good faith to effectuate prompt, fair, and
equitable settlements of claims in which liability has become
reasonably clear.
(6) Compelling insureds to institute litigation to recover amounts
due under an insurance policy by offering substantially less than
the amounts ultimately recovered in actions brought by the insureds,
when the insureds have made claims for amounts reasonably similar to
the amounts ultimately recovered.
(7) Attempting to settle a claim by an insured for less than the
amount to which a reasonable person would have believed he or she was
entitled by reference to written or printed advertising material
accompanying or made part of an application.
(8) Attempting to settle claims on the basis of an application
which was altered without notice to, or knowledge or consent of, the
insured, his or her representative, agent, or broker.
(9) Failing, after payment of a claim, to inform insureds or
beneficiaries, upon request by them, of the coverage under which
payment has been made.
(10) Making known to insureds or claimants a practice of the
insurer of appealing from arbitration awards in favor of insureds or
claimants for the purpose of compelling them to accept settlements or
compromises less than the amount awarded in arbitration.
(11) Delaying the investigation or payment of claims by requiring
an insured, claimant, or the physician of either, to submit a
preliminary claim report, and then requiring the subsequent
submission of formal proof of loss forms, both of which submissions
contain substantially the same information.
(12) Failing to settle claims promptly, where liability has become
apparent, under one portion of the insurance policy coverage in
order to influence settlements under other portions of the insurance
policy coverage.
(13) Failing to provide promptly a reasonable explanation of the
basis relied on in the insurance policy, in relation to the facts or
applicable law, for the denial of a claim or for the offer of a
compromise settlement.
(14) Directly advising a claimant not to obtain the services of an
attorney.
(15) Misleading a claimant as to the applicable statute of
limitations.
(16) Delaying the payment or provision of hospital, medical, or
surgical benefits for services provided with respect to acquired
immune deficiency syndrome or AIDS-related complex for more than 60
days after the insurer has received a claim for those benefits, where
the delay in claim payment is for the purpose of investigating
whether the condition preexisted the coverage. However, this 60-day
period shall not include any time during which the insurer is
awaiting a response for relevant medical information from a health
care provider.
(i) Canceling or refusing to renew a policy in violation of
Section 676.10.
SEC. 2. Section 10234.86 of the Insurance Code is amended to read:
10234.86. (a) Every insurer shall maintain records for each agent
of that agent's amount of replacement sales as a percent of the
agent's total annual sales and the amount of lapses of long-term care
insurance policies sold by the agent as a percent of the agent's
total annual sales.
(b) Every insurer shall report annually by June 30, the 10 percent
of its agents in the state with the greatest percentage of lapses
and replacements as measured by subdivision (a).
(c) Every insurer shall report annually by June 30, the number of
lapsed policies as a percent of its total annual sales in the state,
as a percent of its total number of policies in force in the state,
and as a total number of each policy form in the state, as of the end
of the preceding calendar year.
(d) Every insurer shall report annually by June 30, the number of
replacement policies sold as a percent of its total annual sales in
the state and as a percent of its total number of policies in force
in the state as of the end of the preceding calendar year.
(e) Reported replacement and lapse rates do not alone constitute a
violation of insurance laws or necessarily imply
wrongdoing. The reports are for the purpose of reviewing more closely
agent activities regarding the sale of long-term care insurance.
SEC. 3. Section 11093 of the Insurance Code is amended to read:
11093. (a) If the commissioner finds that
any of the conditions set forth in Section 11092 exist in respect to
a domestic society, he or she shall, in an order to show
cause, notify the society of his or her findings and
wherein such those conditions exist and
shall set a date after a reasonable period of time on which it shall
show cause why it should not be enjoined from carrying on any
business until the overt act or violation complained of shall have
been corrected, or why an action in quo warranto should not be
commenced against the society.
If
(b) If on such date the society
does not present good and sufficient reason why it should not be so
enjoined or why such action should not be commenced, the commissioner
may present the facts relating thereto to the Attorney General who
shall, if he or she deems the circumstances warrant,
commence an action to enjoin the society from transacting business or
in quo warranto.
The
(c) The court shall thereupon
notify the society of a hearing. If after a full hearing it appears
that the society should be so enjoined or liquidated or a receiver
appointed, the court shall enter the necessary order.
SEC. 4. Section 11788 of the Insurance Code is amended to read:
11788. The State Treasurer shall be custodian of all securities
belonging to the State Compensation Insurance Fund, except as
otherwise provided in this chapter. He He or
she shall be liable on his or her official bond for
the safe keeping thereof.
SEC. 5. Section 11790 of the Insurance Code is amended to read:
11790. All securities belonging to the fund shall be delivered to
the State Treasurer and held by him or her until
otherwise disposed of as provided in this chapter. Upon delivery of
such those securities into the custody
of the State Treasurer, such the
securities shall be credited by the State Treasurer to the fund.
SEC. 6. Section 11874 of the Insurance Code is amended to read:
11874. On the effective date of this act the Controller shall
draw his or her warrant in favor of the State Compensation
Insurance Fund for the total amount of the funds in the custody of
the Treasurer belonging to the State Compensation Insurance Fund
, and the Treasurer shall pay such
that warrant.
SEC. 7. Section 12352 of the Insurance Code is amended to read:
12352. If the deposit is made in this State
state , it shall first be approved by the commissioner,
who shall forthwith make a special deposit thereof in the State
treasury, for the purpose specified in section 12350. The Treasurer
shall give his or her receipt therefor, to the
commissioner.