AB 1391, as introduced, Committee on Insurance. Insurance: omnibus.
(1) Existing law provides that no cancellation of a motor vehicle insurance policy, not subject to certain cancellation protections because it has been in effect less than 60 days, is effective unless a notice of cancellation, subject to certain notice provisions, is mailed or delivered by the insurer to the named insured not later than the 59th day following the effective date and at least 10 days prior to the effective date of cancellation. Existing law also provides no notice of cancellation of a motor vehicle insurance policy, where the cancellation is based on, among other things, nonpayment of premium, is effective unless mailed or delivered by the insurer to the named insured, lienholder, or additional interest at least 20 days prior to the effective date of cancellation, except as specified.
This bill would delete the requirements for cancellation of a motor vehicle insurance policy less than 60 days old, and would apply the requirements regarding notice of cancellation for nonpayment of premiums, and other specified reasons, to all cancellation circumstances.
(2) Existing law requires every life agent who sells annuities to satisfactorily complete 8 hours of training prior to soliciting individual consumers, and requires every life agent who sells annuities to satisfactorily complete 4 hours of training prior to each license renewal.
This bill would clarify the completion of an 8-hour training requirement to initially procure a license to sell annuities does not satisfy the requirement to complete a 4-hour training course in order to renew the annuity license.
(3) Existing law prohibits the Insurance Commissioner from granting authority to transact variable contracts unless the life agent or applicant furnishes proof that he or she is registered to sell securities in accordance with the rules of the United States Securities and Exchange Commission or the Financial Industry Regulatory Authority.
This bill would make clear that the life agent or applicant is required furnish proof that he or she is registered to sell securities in California in accordance with the rules of the United States Securities and Exchange Commission or the Financial Industry Regulatory Authority.
(4) Existing law requires an individual holding an insurance adjuster license, not otherwise exempt, to complete a minimum of 24 hours of continuing education courses, as specified.
This bill would authorize an exemption from the continuing education requirements for an individual licensed as an insurance adjuster and as a property or casualty broker-agent who has met other specified continuing education requirements.
(5) Existing law defines an insurance solicitor as a natural person employed to aid an insurance agent or insurance broker in transacting insurance other than life.
This bill would add disability and health insurances to that definition.
(6) Existing law provides that a nonresident licensee who applies for a property broker-agent, casualty broker-agent, personal lines broker-agent, or life agent resident license in this state, and who is currently licensed for the same lines of authority in the state of his or her current resident license, is not required to complete an examination. The application for examination is required to be received within 90 days of the cancellation of the applicant’s resident license and the producer database records, maintained by the National Association of Insurance Commissioners, are required to indicate that the producer is licensed in good standing for the line of authority requested.
This bill would provide that upon issuance of the California resident license, the examination waiver also applies to adding additional lines of authority to the California resident license provided that the individual was previously licensed in good standing for the requested additional lines of authority, and the application is received within 12 months of the cancellation of the applicant’s previous resident license in another state.
(7) This bill would make technical, conforming, and clarifying changes, and delete obsolete provisions.
Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.
The people of the State of California do enact as follows:
Section 662 of the Insurance Code is amended
begin deleteNo end deletenotice of cancellation of a policy begin delete to which shall be effective unless mailed or delivered
4Section 661 appliesend delete
5by the insurer to the named insured, lienholder, or additional
6interest at least 20 days prior to the effective date of cancellation;
7provided, however, that where cancellation is for nonpayment of
8premium, at least 10 days’ notice of cancellation accompanied by
begin delete thereforend delete shall be given. Unless the
10reason accompanies or is included in the notice of cancellation,
11the notice of cancellation shall state or be accompanied by a
12statement that upon written request of the named insured, mailed
13or delivered to the insurer not less than 15 days prior to the
14effective date of cancellation, the insurer will specify the reason
begin delete suchend delete cancellation.
16(b) This section shall not apply to nonrenewal.
17(c) Notices made to lienholders pursuant to this section may be
18done electronically with the consent of the lienholder.
Section 668.5 of the Insurance Code is repealed.
No cancellation of a policy or coverage of insurance
21subject to this chapter but not subject to Section 661 or 662
22(because it has been in effect less than 60 days) shall be effective
23unless a notice of cancellation subject to Sections 664 and 665,
24when applicable, but not to any other provision of this chapter, be
25mailed or delivered by the insurer to the named insured not later
26than the 59th day following its effective date and at least 10 days
27prior to the effective date of cancellation.
Section 739.3 of the Insurance Code is amended to
(a) “Company Action Level Event” means any of the
3(1) The filing of an RBC Report by an insurer that indicates any
4of the following:
5(A) The insurer’s Total Adjusted Capital is greater than or equal
6to its Regulatory Action Level RBC but less than its Company
7Action Level RBC.
8(B) If a life or health insurer, the insurer has Total Adjusted
9Capital that is greater than or equal to its Company Action Level
10RBC but less than the product of its Authorized Control Level
11RBC and 2.5, and has a negative trend.
12(C) If a
property and casualty insurer, the insurer has Total
13Adjusted Capital that is greater than or equal to its Company Action
14Level RBC but less than the product of its Authorized Control
15Level RBC and 3.0, and triggers the trend test determined in
16accordance with the trend test calculation included in the Property
17and Casualty RBC instructions.
18(2) The notification by the commissioner to the insurer of an
19Adjusted RBC Report that indicates the event in
begin delete subparagraph (A) paragraph (1), provided that the insurer does not challenge
20or (B) ofend delete
21the Adjusted RBC Report under Section 739.7.
22(3) If the insurer challenges an Adjusted
23RBC Report that indicates the event in
begin delete subparagraph (A) or (B) , the
24of paragraph (1) under Section 739.7end delete
25notification by the commissioner to the insurer that the
26commissioner has, after a hearing, rejected the insurer’s challenge.
27(b) In the event of a Company Action Level Event, the insurer
28shall prepare and submit to the commissioner a comprehensive
begin delete, whichend delete shall do all of the following:
30(1) Identify the conditions in the insurer that contribute to the
31Company Action Level Event.
32(2) Contain proposals of corrective actions that the insurer
33intends to take and would be expected to result in the elimination
34of the Company Action Level Event.
35(3) Provide projections of the insurer’s financial results in the
36current year and at least the four succeeding years, both in the
37absence of proposed corrective actions and giving effect to the
38proposed corrective actions, including projections of statutory
39operating income, net income, capital, or surplus, or a combination.
40The projections for both new and renewal business may include
P5 1separate projections for each major line of business and separately
2identify each significant income, expense, and benefit component.
3(4) Identify the key assumptions impacting the insurer’s
4projections and the sensitivity of the projections to the assumptions.
5(5) Identify the quality of, and problems associated with, the
6insurer’s business, including, but not limited to, its assets,
7anticipated business growth and associated surplus strain,
8extraordinary exposure to risk, mix of business, and use of
9reinsurance in each case, if any.
10(c) The RBC Plan shall be submitted as follows:
11(1) Within 45 days of the Company Action Level Event.
12(2) If the insurer challenges an Adjusted RBC Report pursuant
13to Section 739.7, within 45 days after notification to the insurer
14that the commissioner has, after a hearing, rejected the insurer’s
16(d) Within 60 days after the submission by an insurer of an RBC
17Plan to the commissioner, the commissioner shall notify the insurer
18whether the RBC Plan shall be implemented or is, in the judgment
19of the commissioner, unsatisfactory. If the commissioner
20determines that the RBC Plan is unsatisfactory, the notification to
21the insurer shall set forth the reasons for the determination, and
22may set forth proposed revisions that will render the RBC Plan
23satisfactory, in the judgment of the commissioner. Upon
24notification from the commissioner, the insurer shall prepare a
25Revised RBC Plan, which may incorporate by reference revisions
26proposed by the commissioner, and shall submit the Revised RBC
27Plan to the commissioner as follows:
28(1) Within 45 days after the notification from the commissioner.
29(2) If the insurer challenges the notification from the
30commissioner under Section 739.7, within 45 days after a
31notification to the insurer that the commissioner has, after a
32hearing, rejected the insurer’s challenge.
33(e) In the event of a notification by the commissioner to an
34insurer that the insurer’s RBC Plan or Revised RBC Plan is
35unsatisfactory, the commissioner may, at his or her discretion,
36subject to the insurer’s right to a hearing under Section 739.7,
37specify in the notification that the notification constitutes a
38Regulatory Action Level Event.
39(f) Every domestic insurer that files an RBC Plan or Revised
40RBC Plan with the commissioner shall file a copy of the RBC Plan
P6 1or Revised RBC Plan with the insurance commissioner in any state
2in which the insurer is authorized to do business if both of the
4(1) That state has an RBC provision substantially similar to
5subdivision (a) of Section 739.8.
6(2) The insurance commissioner of that state has notified the
7insurer of its request for the filing in writing, in which case the
8insurer shall file a copy of the RBC Plan or Revised RBC Plan in
9that state no later than the later of:
10(A) Fifteen days after the receipt of notice to file a copy of its
11RBC Plan or Revised RBC Plan with the state.
12(B) The date on which the RBC Plan or Revised RBC Plan is
13filed under subdivision (c) of Section 739.7.
Section 985 of the Insurance Code is amended to read:
(a) On or after January 1, 1970, as used in this article and
begin delete paragraph (9) of subdivision (a)end delete of Section 1011,
17“insolvency” means either of the following:
18(1) Any impairment of minimum “paid-in capital” or “capital
19paid in,” as defined in Section 36, required in the aggregate of an
20insurer by the provisions of this code for the class, or classes, of
21insurance that it transacts anywhere.
22(2) An inability of the insurer to meet its financial obligations
23when they are due.
24(b) On or after January 1, 1970, an insurer cannot escape the
25condition of insolvency by being able to provide for all its liabilities
26and for reinsurance of all outstanding risks. An insurer must also
27be possessed of additional assets equivalent to the aggregate
28“paid-in capital” or “capital paid in” required by this code after
29making provision for all those liabilities and for that reinsurance.
30(c) On or after October 1, 1967, as used in this code provision
31for reinsurance of all outstanding risks and “gross premiums
32without any deduction, received and receivable upon all unexpired
33risks” means the greater of: (1) the aggregate amount of actual
34unearned premiums, or (2) the amount reasonably estimated as
35being required to reinsure in a solvent admitted insurer the
36unexpired terms of the risks represented by all outstanding policies.
37(d) On or after October 1, 1967, an insurer shall make provision
38for reinsurance of the outstanding risk on policies that provide
39premiums that are fully earned at inception and on policies that
P7 1for any other reason do not provide for a return premium to the
2insured on cancellation prior to expiration.
3(e) On or after October 1, 1967, the commissioner shall prescribe
4standards for reasonably estimating the amount required to reinsure
5that will provide adequate safeguards for the policyholders,
6creditors, and the public.
7(f) On or after October 1, 1967, this section shall not be
8applicable to life, title, mortgage, or mortgage guaranty insurers.
9(g) In the application of this section to disability insurance, as
10defined in Section 106, reserves for unearned premiums and
11amounts reasonably estimated as required to reinsure outstanding
12risks shall be determined in accordance with the provisions of
Section 1011 of the Insurance Code is amended to
begin delete(a)end delete begin delete end deleteThe superior court of the county in which the
17principal office of a person described in Section 1010 is located,
18upon the filing by the commissioner of the verified application
19showing any of the conditions in this subdivision exist, or a filing
20by the Federal Deposit Insurance Corporation of the verified
21application showing that the conditions enumerated in subdivision
begin delete (b)end delete exist and the conditions set forth in Section 5383(e)(3) of
23Title 12 of the United States Code having been satisfied, shall issue
24its order vesting title to all of the assets of that person, wheresoever
25situated, in the commissioner or his or her successor in office, in
26his or her official capacity, and direct the commissioner forthwith
27to take possession of all of its books, records, property, real and
28personal, and assets, and to conduct, as conservator, the business
29of the person, or so much thereof as to the commissioner may seem
30appropriate, and enjoining the person and its officers, directors,
31agents, servants, and employees from the transaction of its business
32or disposition of its property until any of the following further
33order of the court:
35 That the person has
refused to submit its books, papers,
36accounts, or affairs to the reasonable inspection of the
37commissioner or his or her deputy or examiner.
39 That the person has neglected or refused to observe an order
40of the commissioner to make good within the time prescribed by
P8 1law any deficiency in its capital if it is a stock corporation, or in
2its reserve if it is a mutual insurer.
4 That the person, without first obtaining the consent in writing
5of the commissioner, has transferred, or attempted to transfer,
6substantially its entire property or business or, without consent,
7has entered into any transaction the effect of which is to merge,
8consolidate, or reinsure substantially its entire property or business
9in or with the property or business of any other person.
11 That the person is found, after an examination, to be in
begin delete suchend delete
12 condition that its further transaction of business will be
13hazardous to its policyholders, or creditors, or to the public.
15 That the person has violated its charter or any law of the
18 That any officer of the person
refuses to be examined under
19oath, touching its affairs.
21 That any officer or attorney in fact of the person has
22embezzled, sequestered, or wrongfully diverted any of the assets
23of the person.
25 That a domestic insurer does not comply with the
26requirements for the issuance to it of a certificate of authority, or
27that its certificate of authority has been revoked.
29 That the last report of examination of any person to whom
30the provisions of this article apply shows the person to be insolvent
31within the meaning of Article 13 (commencing with Section 980)
32of Chapter 1 of Part 2 of Division 1; or if a reciprocal or
33interinsurance exchange, within the applicable provisions of
34Section 1370.2, 1370.4, 1371, or 1372; or if a life insurer, within
35the applicable provisions of Sections 10510 and 10511.
37 Notification is given by the United States Secretary of the
38Treasury that a determination has been made by the secretary, in
39accordance with and satisfying the provisions of Section 5383(b)
40of Title 12 of the United States Code, as to a person described in
P9 1Section 1010 that is an insurance company as defined in Section
25381(a)(13) of Title 12 of the United States Code, and one of the
4(1) The board of directors, or body performing similar functions,
5of the person acquiesces or consents to the appointment of a
6receiver as provided for in Section 5832(a)(1)(A)(i) of Title 12 of
7the United States Code, with that consent to be considered to be
8consent to issuance of an order under this section.
United States District Court for the District of Columbia
10issued an order for the appointment of a receiver of the person as
11provided for in Section 5382(a)(1)(A)(iv)(I) of Title 12 of the
12United States Code, without regard to whether an appeal of the
13order is pending.
14(3) A petition by the United States Secretary of the Treasury
15for appointment of a receiver was made to the United States District
16Court for the District of Columbia and was granted by operation
17of the law as provided for in Section 5382(a)(1)(A)(v) of Title 12
18of the United States Code, without regard to whether an appeal of
19the order is pending.
Section 1011.1 of the Insurance Code is amended to
If a verified application is filed pursuant to Section
231011 that shows that the conditions set forth in subdivision
begin delete (b)end delete
24 of Section 1011 exist and upon a showing that notice was provided
25to the person that is the subject of the verification application, all
26of the following apply:
27(a) A superior court hearing shall be held in which the person
28may oppose the verified application solely on the grounds that the
29conditions set forth in subdivision
begin delete (b)end delete of Section 1101 do not
30exist. The hearing shall be completed within 24 hours after the
31verified application is filed with the court.
32(b) The superior court shall issue an order as provided for in
33Section 1011 within 24-hours after the verified application was
34filed with the court.
35(c) If the superior court does not issue an order within 24 hours
36as provided for in subdivision (b), then an order described in
begin delete subdivision (a) ofend delete Section 1011 shall be deemed granted by
38operation of law upon expiration of the 24-hour period, without
P10 1(d) An order entered by the superior court pursuant to
2subdivision (b) or entered by operation of law pursuant to
3subdivision (c) shall not be subject to any stay or injunction
Section 1012 of the Insurance Code is amended to
Except in the case of an order issued based on a verified
8application showing the conditions in subdivision
begin delete (b)end delete of Section
91011 to exist, the order shall continue in force and effect until, on
10the application either of the commissioner or of that person, it
11shall, after a full hearing, appear to the court that the ground for
12the order directing the commissioner to take title and possession
13does not exist or has been removed and that the person can properly
14resume title and possession of its property and the conduct of its
Section 1016 of the Insurance Code is amended to
(a) If at any time after the issuance of an order under
19Section 1011, or if at the time of instituting any proceeding under
20this article, including under Section 1011, it shall appear to the
21commissioner that it would be futile to proceed as conservator
22with the conduct of the business of that person, he or she may
23apply to the court for an order to liquidate and wind up the business
24of the person. Upon a full hearing of that application, the court
25may make an order directing the winding up and liquidation of the
26business of that person by the commissioner, as liquidator, for the
27purpose of carrying out the order to liquidate and wind up the
28business of that person.
29(b) Notwithstanding subdivision (a), the court may issue an
30order to liquidate and wind up the business of a person as to whom
31a verified application is filed pursuant to subdivision
begin delete (b)end delete of
32Section 1011 based solely on the verified application and hearing
33as provided for in subdivision (a) of Section 1011.1, without further
34hearing, or may issue an order to liquidate and wind up the business
35of the person upon application by the commissioner after the
36issuance of an order under Section 1011. The court’s order may
37direct the winding up and liquidation of the business of the person
38by the commissioner, as liquidator, for the purpose of carrying out
39the order to liquidate and wind up the business of the person.
Section 1070.6 of the Insurance Code is amended to
The withdrawal procedure and fees prescribed by this
4article shall not be required of a nonsurviving admitted constituent
5to a merger or consolidation into another admitted insurer in
6accordance with the applicable statutes and the commissioner’s
7prior written consent given pursuant to
begin delete paragraph (3) of subdivision of Section 1011, provided the commissioner is
9satisfied by documents, authenticated so as to be admissible in
10evidence over objection, filed with him, that:
11(a) The constituent has discharged all of its liabilities to residents
12of this state in the manner provided by Section 1071.5;
13(b) There will be an admitted insurer directly available to the
14constituent’s policyholders: (1) to obtain policy changes and
15endorsements, (2) to receive payment of premiums and refund
16unearned premiums, (3) to serve notice of claim, proof of loss,
17summons, process, and other papers, and (4) for purposes of suit;
18(c) The constituent shall timely file with the commissioner
19appropriate financial statements reporting its insurance business
20done in this state during the calendar year of the merger or
21consolidation and all appropriate tax returns required by law for
22the period, and shall timely pay all taxes found to be due on account
23of the business; and
24(d) The constituent has
surrendered its current California
25certificate of authority to the commissioner for cancellation as of
26the effective date of the merger.
27The withdrawal procedure and fees prescribed by this article
28shall not be required of an insurer that has been liquidated by a
29final order of a court of record of this or any sister state provided
30a certified copy of the order reciting the fact of liquidation and
31discharge of all obligations has been filed with the commissioner.
Section 1624 of the Insurance Code is amended to
An insurance solicitor is a natural person employed to
35aid an insurance agent or insurance broker in transacting insurance
36other than life.
Section 1675 of the Insurance Code is amended to
begin deleteExcept as provided in Section 1680, the end deletefollowing
2applicants who have theretofore been licensed under this code are
3exempt from the requirements of this article:
4(a) An applicant for a license to act as a property broker-agent
5or a casualty broker-agent who has been licensed as a property
6broker-agent, casualty broker-agent, or surplus line broker during
7any part of the license year in which the application is filed or the
8immediately preceding license year.
9(b) An applicant for a license to act as a life-only agent who has
10been licensed as a life-only agent during any part of the license
11year in which the application is filed or the immediately preceding
13(c) An applicant for a license to act as an accident and health
14agent who has been licensed as an accident and health agent during
15any part of the license year in which the application is filed or the
16immediately preceding license year.
17(d) An applicant for a license to act as a travel insurance agent.
18(e) An applicant specifically exempted from the particular
19qualifying examination requirement by other provisions of this
21(f) A nonresident licensee who applies for a property
22broker-agent, casualty broker-agent, personal lines broker-agent,
23or life agent resident license in this state, and who is currently
24licensed for the same lines of authority in the state of his or her
25current resident license, shall not be required to complete an
26examination. The application shall be received within 90 days of
27the cancellation of the applicant’s resident license and the producer
28database records, maintained by the National Association of
29Insurance Commissioners, shall indicate that the producer is
30licensed in good standing for the line of authority requested.
Section 1749.8 of the Insurance Code is amended to
(a) Every life agent who sells annuities shall
2satisfactorily complete eight hours of training prior to soliciting
3individual consumers in order to sell annuities.
4(b) Every life agent who sells annuities shall satisfactorily
5complete four hours of training prior to each license renewal.
8 For resident licensees, this
9requirement shall count toward the licensee’s continuing education
10requirement, but may still result in completing more than the
11minimum number of continuing education hours set forth in this
13(c) The training required by this section shall be approved by
14the commissioner and shall consist of topics related to annuities,
15and California law, regulations, and requirements related to
16annuities, prohibited sales practices, the recognition of indicators
17that a prospective insured may lack the short-term memory or
18judgment to knowingly purchase an insurance product, and
19fraudulent and unfair trade practices. Subject matter determined
20by the commissioner to be primarily intended to promote the sale
21or marketing of annuities shall not qualify for credit towards the
22training requirement. Any course or seminar that is disapproved
23under the provisions of this section shall be presumed invalid for
24credit towards the training requirement of this section unless it is
25approved in writing by the commissioner.
26(d) The training requirements set forth in this section shall not
27apply to nonresident agents representing an insurer that is a direct
29For the purposes of this section, “direct response provider” means
30an insurer that meets each of the following criteria:
31(1) The insurer does not initiate telephone contact with
32or prospective insureds.
33(2) Agents of the insurer speak with insureds and prospective
34insureds only by telephone, and at the request of the insureds or
36(3) Agents of the insurer are assigned to speak with insureds or
37prospective insureds on a random basis, when contacted.
38(4) Agents of the insurer are salaried and do not receive
39commissions for sales or referrals.
Section 1758.3 of the Insurance Code is amended to
The commissioner shall not grant authority to transact
4variable contracts unless the life agent or applicant furnishes proof
5that he or she is registered to sell securities in
6accordance with the rules of the United States Securities and
7Exchange Commission or the Financial Industry Regulatory
8Authority. Any authority granted to a life agent to transact variable
9contracts shall immediately terminate upon the life agent no longer
10being registered to sell securities in accordance with the rules of
11the United States Securities and Exchange Commission or the
12Financial Industry Regulatory Authority.
Section 1872.87 of the Insurance Code is amended
(a) Each insurer required to pay special purpose
16assessments pursuant to Sections 1872.8, 1872.81, 1872.85, 1874.8,
17or subdivision (a) of Section 1872.86 may, over a reasonable length
18of time, but in no event later than the calendar year in which the
19assessment is paid, recoup the special purpose assessments by way
20of a surcharge on premiums charged for the insurance policies to
21which those sections apply or by including the assessments within
22the insurer’s rates. Amounts recouped shall not be considered
23premiums for any purpose, including the computation of gross
24premium tax or agents’ commission.
25(b) The amount of the surcharge shall be separately stated on
26either a billing or policy declaration sent to an insured.
27(c) The commissioner, in consultation with the Director of Motor
28Vehicles, shall report to the Governor and to the chair and vice
29chair of the Joint Legislative Budget Committee prior to October
301, 2008, on the feasibility and fiscal impact of transferring
31collection of the assessments specified in Sections 1872.8, 1872.81,
32and 1874.8 to the Department of Motor Vehicles to be performed
33in conjunction with the registration of motor vehicles.
Section 14090.1 of the Insurance Code is amended
(a) An individual who holds an insurance adjuster
37license and who is not exempt under subdivision (b)
begin delete of this sectionend delete
38 shall satisfactorily complete a minimum of 24 hours, of which
39three hours are to be in ethics, of continuing education courses
40pertinent to the duties and responsibilities of an insurance adjuster
P15 1license reported to the insurance commissioner on a biennial basis
2in conjunction with his or her license renewal cycle.
3(b) This section does not apply to
begin delete eitherend delete of the
4(1) A licensee not licensed for one full year prior to the end of
5the applicable continuing education biennium.
6(2) A licensee holding a nonresident insurance adjuster license
7who has met the continuing education requirements of his or her
8designated resident state.