BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 1184|
|Office of Senate Floor Analyses | |
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THIRD READING
Bill No: SB 1184
Author: Corbett (D), et al.
Amended: 4/17/12/12
Vote: 21
SENATE INSURANCE COMMITTEE : 8-0, 4/11/12
AYES: Calderon, Gaines, Anderson, Corbett, Correa, Lieu,
Lowenthal, Wyland
NO VOTE RECORDED: Price
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
SUBJECT : Senior insurance: veterans benefits
SOURCE : California Advocates for Nursing Home Reform
DIGEST : This bill prohibits an insurance agent from
providing assistance to a senior in obtaining veterans
benefits through government programs, unless the agent
maintains procedural safeguards designed to ensure that the
agent or broker transacting insurance has no direct
financial incentive to refer the policyholder or purchaser
to any government benefits program.
ANALYSIS : Existing law requires all insurers, brokers,
agents, and others engaged in the transaction of insurance
to owe to a prospective insured who is 65 years of age or
older, a duty of honesty, good faith, and fair dealing.
This bill prohibits an insurance broker or agent from
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participating in, being associated with, or employing any
party that participates in, or is associated with, the
obtaining of veterans benefits for a senior, unless the
insurance agent or broker maintains procedural safeguards
designed to ensure that the agent or broker transacting
insurance has no direct financial incentive to refer the
policyholder or prospective policyholder to any government
benefits program.
Background
Existing federal law prohibits any individual from charging
a fee for helping a veteran file an initial application for
benefits with the U.S. Department of Veterans Affairs
(limited fees may be charged for prosecuting an appeal
before the Board of Veterans Appeals).
According to the California Advocates for Nursing Reform
(CANHR), some aggressive marketers selling insurance
products target senior veterans and charge fees to
"educate" veterans or help them prepare claims.
In particular, the CANHR points to the Veterans Aid and
Attendance program designed to provide low-wealth veterans
with financial support to pay for care and allow the
veteran to remain independent. Eligibility is based, in
part, on the applicant's income and net worth. An agent
may advise a senior to "hide" assets in an annuity or trust
in order to qualify for these benefits with intent to sell
that product.
By requiring that agents and brokers "maintain procedural
safeguards" designed to avoid a conflict of interest, this
bill adopts a similar approach and language applied to
questionable practices related to reverse mortgages as
addressed in AB 793 (Eng), Chapter 223, Statutes of 2011,
and AB 329 (Feuer), Chapter 236, Statutes of 2009.
Prior and Related Legislation
AB 329 (Feuer), Chapter 236, Statutes of 2009, enacted the
Reverse Mortgage Elder Protection Act of 2009.
SB 180 (Corbett), Chapter 79, Statutes of 2011, prohibits a
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person from charging or receiving an unreasonable fee to
prepare; aid; or advise certain persons in procuring;
maintaining; or securing public social services, including
activities and functions administered or supervised by the
United States Department of Veterans Affairs or the
California Department of Veterans Affairs, including
pension benefits.
AB 793 (Eng), Chapter 223, Statutes of 2011, prohibits an
insurance broker or agent from participating in the
origination of a reverse mortgage, unless the insurance
agent or broker maintains procedural safeguards designed to
ensure that the agent or broker transacting insurance has
no direct financial incentive to refer the policyholder or
prospective policyholder to a reverse mortgage lender.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
SUPPORT : (Verified 4/30/12)
California Advocates for Nursing Home Reform (source)
Insurance Commissioner Dave Jones
American Association of Retired Persons
American Federation of State, County and Municipal
Employees
American Legion, Department of California
AMVETS, Department of California
California Association of County Veterans Officers
Consumer Attorneys of California
Vietnam Veterans, California State Council
ARGUMENTS IN SUPPORT : CANHR supports this bill because
it separates licensed California insurance agents from
profiteers who are charging aged and disabled veterans to
qualify for the free veterans' benefits. This bill makes
sure insurers do not deceptively peddle their products if
they are working with other groups or individuals who are
assisting veterans with benefits.
JJA:nl 4/30/12 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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