Amended in Senate June 30, 2014

Amended in Assembly April 18, 2013

Amended in Assembly March 21, 2013

California Legislature—2013–14 Regular Session

Assembly Bill No. 1130

Introduced by Assembly Member Wilk

February 22, 2013

An act to amend begin delete Section 12744 end delete begin insert Sections 12744 and 12752 end insert of the Insurance Code, relating to insurance.

LEGISLATIVE COUNSEL’S DIGEST

AB 1130, as amended, Wilk. Insurance: home protection contracts.

Existing law governs home protection contracts for the repair or replacement of a component, system, or appliance of a home. Existing law prohibits a person from issuing or offering to issue home protection contracts in this state unless the person holds a home protection company license issued by the Department of Insurance, except as specified.

This bill would provide that certain requirements for a home protection company license do not apply to a foreign applicant, including filing a financial statement certified by the applicant’s home state regulatory official as a true and correct copy of the statement filed with that official, and holding a certificate of authority as an insurance company, only if the applicant stipulates that the applicant will provide financial reports in the same manner required of domestic home protection companies.

begin insert

Existing law also requires each home protection company to file statements exhibiting its conditions and affairs, as specified. Existing law authorizes the commissioner, prior to licensure and at other times as appears necessary, to examine the business and affairs of any home protection company, as specified.

end insert begin insert

This bill would instead require each home protection company to file a single annual statement exhibiting its conditions and affairs. The bill would also prohibit the commissioner from conducting more than one financial examination of a company in any 5-year period, unless the commissioner makes a specified finding.

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

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

SECTION 1.  

Section 12744 of the Insurance Code is amended
to read:

12744.  

(a) No person shall issue or offer to issue home
protection contracts in this state unless the person holds a home
protection company license issued by the department, except as
provided in subdivision (b) of this section.

(b) An insurer admitted for the class of insurance defined in
Section 120 is authorized, in addition to the underwriting powers
granted by the class, to issue home protection contracts, but the
provisions of this part shall not be otherwise applicable to those
insurers or their contracts.

(c) No license shall be granted to a foreign applicant that has
not fulfilled the requirements of Sections 716 and 717. For
purposes of this part, the term “class of insurance” as used in said
sections shall mean the business of a home protection company.
This section shall not prohibit the admission of a foreign home
protection company begin delete which end delete begin insert that end insert has actively transacted home
protection business in its state of domicile for three years or more.

(d) The commissioner shall by regulation prescribe forms for
applications for home protection company licenses consistent with
the provisions of this part. Any reference to certificate of authority
in Article 3 (commencing with Section 699) of Chapter 1 of Part
2 of Division 1, shall mean home protection company license.

(e) (1) Subject to paragraph (2) and, notwithstanding
subdivision (c) or any regulation to the contrary, the following
requirements shall not apply to any foreign applicant:

(A) Filing a financial statement certified by the applicant’s home
state regulatory official as a true and correct copy of the statement
filed with that official. This exemption applies only if the official
does not require a home protection company or the applicant to
file a financial statement.

(B) Filing an examination report certified by the applicant’s
home state regulatory official as a true and correct copy. This
exemption applies only if the official does not prepare examination
reports of home protection companies or has not prepared an
examination report of the applicant.

(C) Holding a certificate of authority as an insurance company.

(2) The exemptions described in paragraph (1) apply only if the
applicant’s chief executive officer stipulates that the company will
provide financial reports in the same manner required of domestic
home protection companies.

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begin insert SEC. end insert begin insert 2. end insert   

end insert

begin insert Section 12752 of the end insert begin insert Insurance Code end insert begin insert is amended to
read: end insert

12752.  

(a) Each home protection company shall file begin delete statements end delete
begin insert an annual statement end insert exhibiting its conditions and affairs in
accordance with Sections 900, 900.5, begin delete 900.7, end delete 900.8, 900.9, 902,
903, 903.5, 904, 922.1 to 922.8, inclusive, 923, 923.5, and 924.
However, the required contents of the begin delete statements end delete begin insert annual statement end insert
may be varied from the requirements thereof, pursuant to regulation
adopted by the commissioner in accordance with Chapter 3.5
(commencing with Section 11340) of Part 1 of Division 3 of Title
2 of the Government Code, so as to adapt the requirements to the
home protection business. begin insert Nothing in this subdivision shall be
construed to limit the authority of the commissioner to request
financial statements from licensees at any time. end insert

(b) The commissioner shall, prior to licensure and at other times
as appears necessary, examine the business and affairs of any home
protection company subject to this part. Every home protection
company so examined shall open its books and records for
inspection by the commissioner and shall otherwise facilitate and
cooperate in the examination. In making the examination, the
commissioner shall have the rights specified in Section 733, and
the examinee shall be subject to the obligations of Section 736.
begin insert The commissioner shall not conduct more than one financial
examination of a company in any five-year period, unless the
commissioner finds that the financial condition of the company
has deteriorated, thereby warranting an interim examination. end insert