BILL ANALYSIS Ó
SB 712
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Date of Hearing: July 6, 2011
ASSEMBLY COMMITTEE ON GOVERNMENTAL ORGANIZATION
Isadore Hall, Chair
SB 712 (Committee on Insurance) - As Amended: May 3, 2011
SENATE VOTE : 39-0
SUBJECT : Insurance
SUMMARY : Requires every admitted property and casualty insurer,
unless exempt, to annually submit a Statement of Actuarial
Opinion with supporting documents and an Actuarial Opinion
Summary, as specified, and exempts from public disclosure,
required under the California Public Records Act (CPRA), all
actuarial reports, work papers, or opinion summaries submitted
in support of the Statement of Actuarial Opinion, and such
records would not be subject to subpoena or discovery, or be
admissible in evidence in any private party civil action.
Specifically, this bill :
1)Authorizes the commissioner to adopt regulations related to
the terms and conditions required by the Property and Casualty
Annual Statement of Instructions of the National Association
of Insurance Commissioners (NAIC).
2)Requires every property and casualty insurer domiciled in this
state to annually submit an Actuarial Opinion Summary written
by the insurer's Appointed Actuary.
3)Requires an admitted insurer not domiciled in this state to
provide the Actuarial Opinion Summary upon request of the
Insurance Commissioner (IC).
4)Provides that if the admitted property and casualty insurer
fails to provide an acceptable Actuarial Report, the
commissioner is authorized to engage, at the expense of the
insurer, a qualified actuary to review the Actuarial Opinion
and prepare the supporting Actuarial Report.
5)Requires the Statement of Actuarial Opinion to be a public
record and open to inspections.
6)Exempts from disclosure required under the CPRA all admitted
property and casualty insurer Actuarial Reports, work papers,
SB 712
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or Actuarial Opinion Summaries submitted in support of the
Statement of Actuarial Opinion, and such records would be
confidential by law and privileged and would not be subject to
subpoena or discovery, or be admissible in evidence in any
private party civil action.
7)Requires that documents, materials, and other information in
the possession of the IC that are considered an Actuarial
Report, work papers, or Actuarial Opinion Summary provided in
support of the Statement of Actuarial Opinion shall be
confidential and privileged, and not be made public by the IC
or any other person. However, the IC is not restricted from
releasing these materials or information to the American
Academy of Actuaries' Actuarial Board for Counseling and
Discipline for the purpose of professional disciplinary
proceedings.
8)Makes a finding that in order to protect proprietary
information, it is necessary to enact legislation that the
actuarial supporting documents provided pursuant to this act
are kept confidential.
9)Makes various technical corrections to Insurance Code
statutes.
EXISTING LAW
1)Governs the disclosure of governmental records to the public,
upon request. Generally, under the CPRA, all public records
are open to the public upon request unless the record
requested is exempt from public disclosure.
2)Authorizes the IC to extend reciprocity to certain actions,
reports, and filings, if they have been approved by an
insurance regulator of another state whose department is
accredited by the Financial Regulation Standards and
Accreditation Program of the NAIC.
3)Recognizes the NAIC's Financial Regulation Standards and
Accreditation Program.
FISCAL EFFECT : Unknown
COMMENTS :
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Background: The California Department of Insurance (DOI)
participates in an insurance regulator accreditation program
developed by the NAIC. The NAIC is an organization of state
insurance regulators for 50 states, Washington D.C., and five
U.S. Territories. Its primary mission is to promote uniform
practices amongst states in regulating multi-state insurers. To
support this effort, the NAIC maintains an insurance
accreditation program and develops uniform standards known as
Model Laws. Periodically, NAIC develops uniform insurance
standards which are included in NAIC's model laws. States are
required to adopt the 18 laws or regulations deemed
indispensable to adequately monitor the financial solvency of
its domestic insurers. Each member of the accreditation program
must then adopt the model laws in order to maintain its
accreditation.
Effective January 1, 2010 the NAIC added a requirement for
states to adopt the NAIC Property and Casualty Opinion Model
Law. The accreditation standard for this Model Law requires
states to codify the following: Annual submission of an
actuarial opinion, annual submission of an actuarial opinion
summary, the actuarial opinion must be provided with the Annual
Statement and treated as a public document, and the various
documents related to the actuarial report or actuarial opinion
summary must be privileged and treated as confidential by law
because they contain significant proprietary information.
Last year, during an interim annual review of CDI, the NAIC
found that California had not codified the NAIC Property and
Casualty Opinion Model Law. In order for California to preserve
its NAIC accreditation status, the NAIC Property and Casualty
Opinion Model Law needs to be codified. SB 712 fulfills that
goal.
Purpose of this bill : The purpose of this bill is to adopt
NAIC's Model Law in order for DOI, California's Insurance
Regulator, to retain NAIC accreditation.
Arguments in support: According to the author it is imperative
that California adopt this Model Law to preserve its NAIC
accreditation status. The status of CDI as an accredited
insurance regulator allows our Reports of Examination to be
accepted by other states, and allows other states to rely on us
for other regulatory functions related to financial
surveillance.
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Similarly, DOI states," the loss of accreditation would
seriously impede CDI's ability to protect California's consumers
as well as negatively impact the state's domestic insurance
industry." Furthermore, DOI states that, "It should be noted
that SB 712 reflects CDI's current business practices;
therefore, it will result in no change in the methods and
processes of CDI's current regulatory activities and the current
business practices of the industry we regulate today."
REGISTERED SUPPORT / OPPOSITION :
Support
Department of Insurance
Opposition
None on file
Analysis Prepared by : Felipe Lopez / G. O. / (916) 319-2531