Amended in Assembly March 19, 2013

California Legislature—2013–14 Regular Session

Assembly Bill No. 546

Introduced by Assembly Member Stone

February 20, 2013

An act to amend Section begin delete 10110.1 of the Insurance Code, relating to insurance end delete begin insert 24304.2 of the Government Code, relating to local government end insert .

LEGISLATIVE COUNSEL’S DIGEST

AB 546, as amended, Stone. begin delete Insurance: life and disability insurance: insurable interest. end delete begin insert Local government: consolidation of offices. end insert

begin insert

Existing law authorizes the board of supervisors in Mendocino County, Sonoma County, Trinity County, and Tulare County to consolidate the duties of the offices of Auditor-Controller and Treasurer-Tax Collector into the elected office of Auditor-Controller-Treasurer-Tax Collector.

end insert begin insert

This bill would additionally authorize the board of supervisors in Santa Cruz County to consolidate the duties of the offices of Auditor-Controller and Treasurer-Tax Collector into the elected office of Auditor-Controller-Treasurer-Tax Collector.

end insert begin delete

Existing law provides, among other things, that an insurable interest, with reference to life and disability insurance, is an interest based upon a reasonable expectation of pecuniary advantage through the continued life, health, or bodily safety of another person and consequent loss by reason of that person’s death or disability or a substantial interest engendered by love and affection in the case of individuals closely related by blood or law.

end delete begin delete

This bill would make technical, nonsubstantive changes to those provisions.

end delete

Vote: majority. Appropriation: no. Fiscal committee: no. State-mandated local program: no.

The people of the State of California do enact as follows:

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begin insert SECTION 1. end insert   

end insert

begin insert Section 24304.2 of the end insert begin insert Government Code end insert begin insert is
amended to read: end insert

24304.2.  

Notwithstanding Section 24300, in Mendocino
County, begin insert Santa Cruz County, end insert Sonoma County, Trinity County, and
Tulare County, the board of supervisors, by ordinance, may
consolidate the duties of the offices of Auditor-Controller and
Treasurer-Tax Collector into the elected office of
Auditor-Controller-Treasurer-Tax Collector.

begin delete

SECTION 1.  

Section 10110.1 of the Insurance Code is
amended to read:

10110.1.  

(a) An insurable interest, with reference to life and
disability insurance, is an interest based upon a reasonable
expectation of pecuniary advantage through the continued life,
health, or bodily safety of another person and consequent loss of
that person by reason of death or disability or a substantial interest
engendered by love and affection in the case of individuals closely
related by blood or law.

(b) An individual has an unlimited insurable interest in his or
her own life, health, and bodily safety and may lawfully take out
a policy of insurance on his or her own life, health, or bodily safety
and have the policy made payable to whomsoever he or she pleases,
regardless of whether the beneficiary designated has an insurable
interest.

(c) Except as provided in Section 10110.4, an employer has an
insurable interest, as referred to in subdivision (a), in the life or
physical or mental ability of any of its directors, officers, or
employees or the directors, officers, or employees of any of its
subsidiaries or any other person whose death or physical or mental
disability might cause financial loss to the employer; or, pursuant
to a contractual arrangement with a shareholder concerning the
reacquisition of shares owned by the shareholder at the time of his
or her death or disability, on the life or physical or mental ability
of that shareholder for the purpose of carrying out the contractual
arrangement; or, pursuant to a contract obligating the employer as
part of compensation arrangements or pursuant to a contract
obligating the employer as guarantor or surety, on the life of the
principal obligor. The trustee of an employer or trustee of a
pension, welfare benefit plan, or trust established by an employer
providing life, health, disability, retirement, or similar benefits to
employees and retired employees of the employer or its affiliates
and acting in a fiduciary capacity with respect to those employees,
retired employees, or their dependents or beneficiaries has an
insurable interest in the lives of employees and retired employees
for whom those benefits are to be provided. The employer shall
obtain the written consent of the individual being insured.

(d) Trusts and special purpose entities that are used to apply for
and initiate the issuance of policies of insurance for investors,
where one or more beneficiaries of those trusts or special purpose
entities do not have an insurable interest in the life of the insured,
violate the insurable interest laws and the prohibition against
wagering on life.

(e) A device, scheme, or artifice designed to give the appearance
of an insurable interest where there is no legitimate insurable
interest violates the insurable interest laws.

(f) An insurable interest shall be required to exist at the time
the contract of life or disability insurance becomes effective, but
need not exist at the time the loss occurs.

(g) A contract of life or disability insurance procured or caused
to be procured upon another individual is void unless the person
applying for the insurance has an insurable interest in the individual
insured at the time of the application.

(h) Notwithstanding subdivisions (a), (f), and (g), a charitable
organization that meets the requirements of Section 214 or 23701d
of the Revenue and Taxation Code may effectuate life or disability
insurance on an insured who consents to the issuance of that
insurance.

(i) This section shall not be interpreted to define all instances
in which an insurable interest exists.

end delete