BILL ANALYSIS Ó
SB 1170
Page 1
Date of Hearing: August 8, 2012
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
SB 1170 (Leno) - As Amended: May 1, 2012
Policy Committee: InsuranceVote:13
- 0
Judiciary 10 - 0
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill expands consumer protections governing the sale of
insurance to any person 65 years of age or older, and adds
specific protections for senior veterans. Specifically, this
bill:
1)Makes it an unfair sales practice to fail to disclose to a
veteran, in connection with advertising for events, seminars,
workshops and related activities concerning veteran's
benefits, that the promoters are not authorized to represent
veterans in the application for, or appeal of, the denial of
veteran's benefits.
2)Makes it an unfair sales practice for any advertising for a
veteran's event, seminar, workshop and related activities that
is not sponsored by the California Department of Veterans
Affairs or the United States Department of Veterans Affairs
(VA), or other congressionally designated veteran's
organization, to fail to contain a specific statement that the
event is not sponsored by these governmental agencies.
3)Prohibits an insurance agent who is not an attorney from
delivering to any person 65 years of age or older a living
trust or other legal document if the purpose is to sell the
senior an insurance product.
4)Prohibits an insurance agent who is an attorney from
delivering a living trust or other legal document to a person
65 years of age or older, if the purpose is to sell the senior
an insurance product, unless a detailed disclosure that is
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currently required of attorneys is provided by the insurance
agent.
5)Prohibits use of terminology in written materials that could
lead the prospective senior purchaser to believe the policy is
offered by a veteran's organization.
6)Prohibits advertising for products intended to be sold to
seniors to imply the sale is endorsed or associated with the
Social Security Administration or Department of Veterans
Affairs.
FISCAL EFFECT
Costs associated with this legislation are minor and would be
absorbable within existing California Department of Insurance
(CDI) resources.
COMMENTS
1)Rationale . This bill, sponsored by California Advocates for
Nursing Home Reform (CANHR), seeks to establish consumer
protections for seniors who reportedly are being targeted by
companies aggressively marketing insurance and other financial
products under the guise of veterans' benefits.
Specifically, the bill expands protections for senior citizens
against deceptive or misleading insurance advertisements
regarding veteran's benefits assistance. The author notes
that this bill is necessary to address reported scams by
so-called trust mills that target senior veterans who may be
eligible for benefits under the Veterans Aid and Attendance
(VAA) program. The VAA program is administered by the United
States Department of Veterans Affairs and provides
supplemental income to veterans or their surviving spouses if
their combined income is less than $15,493 per year and they
own assets less than $80,000, excluding a residence.
Proponents of this bill report that self-described veterans
advocates are targeting senior veterans to sell them financial
services and products (e.g. deferred annuities) for the
purpose of hiding the veteran's assets to qualify for
veteran's benefits. The veteran's advocate is incentivized
because he may receive a commission on the sale of financial
products to the veteran. To bring greater transparency to
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such transactions, this bill would first extend existing
advertisement disclosure requirements for the sale of
insurance products to seniors to include advertisements
relating to veteran's benefits. In addition, this bill would
expand the Consumer Legal Remedies Act (CLRA) to specifically
prohibit misleading advertising regarding veteran's benefits
sent to persons age 65 or older.
2)Related Legislation . SB 1184 (Corbett) would prohibit an
insurance agent from having a financial interest in an entity
to which he or she refers a client in connection with
veteran's benefits. The bill is currently pending in this
committee.
Analysis Prepared by : Julie Salley-Gray / APPR. / (916)
319-2081