BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 1391
                                                                  Page  1

          Date of Hearing:   April 10, 2013

                           ASSEMBLY COMMITTEE ON INSURANCE
                                Henry T. Perea, Chair
             AB 1391 (Committee on Insurance) - As Introduced:  April 3,  
                                        2013
           
          SUBJECT  :   Insurance: Department of Insurance Omnibus

           SUMMARY  :   Makes a number of technical and clarifying changes to  
          the Insurance Code.  Specifically,  this bill  :  

          1)Clarifies that cancellation notices for auto insurance  
            policies must be mailed at least 20 days prior to the  
            cancellation date, and requires mailing 10 days prior when a  
            policy is cancelled for non-payment of premium.

          2)Repeals an obsolete requirement relating to auto insurance  
            cancellation notices.

          3)Corrects a cross-reference related to risk based capital  
            requirements. 

          4)Corrects cross-references relating to insolvent insurers.

          5)Clarifies the definition of an "insurance solicitor."

          6)Extends the window for agents and brokers previously licensed  
            in another state for multiple lines of insurance to obtain  
            those licenses in California without an examination to 12  
            months if they obtain one such license within 90 days of  
            cancelling their license in another state.  

          7)Prohibits life insurance agents selling annuities from  
            repeating the continuing education (CE) course required before  
            they are allowed to sell annuities to satisfy ongoing CE  
            requirements.

          8)Requires life insurance agents selling variable contract  
            products to be registered to sell securities in California by  
            the Financial Industry Regulatory Authority (FINRA).

          9)Repeals an obsolete reporting requirement.

          10)Eliminates duplicative CE requirements for individuals  








                                                                  AB 1391
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            licensed both as a property-casualty agent/broker and as an  
            insurance adjuster.

           EXISTING LAW  :

          1)Requires that insurers provide notice to policy holders prior  
            to cancelling an auto insurance policy.

          2)Establishes regulatory requirements for the amount of capital  
            held by insurers.

          3)Establishes the Conservation and Liquidation Office within the  
            Department of Insurance to conserve and liquidate insolvent  
            insurers.

          4)Establishes a structure to license and regulate agents and  
            brokers.
          5)Establishes a structure to license and regulate insurance  
            adjusters.

           FISCAL EFFECT :   Unknown

           COMMENTS  :   

           1)Purpose  . This bill is sponsored by the Department of Insurance  
            as the 2013 omnibus bill which proposes technical changes to  
            the Insurance Code.

           2)FINRA Requirements  . Current law specifies that as a condition  
            for a life insurance agent to be granted variable contract  
            authority in California, he or she must be registered to sell  
            securities with both the Securities Exchange Commission and  
            FINRA.  However, the exam requirements for FINRA registration  
            differ from state to state and current law permits an FINRA  
            registration in any state to satisfy this requirement.  To be  
            registered by FINRA in California, an individual must pass  
            multiple exams in the securities series state while many other  
            states only require passage of one of the securities series  
            exams.  

           3)Producer Licensing  .  Nonresident licensees have 90 days after  
            they cancel their agent/broker license in another state to  
            apply for a California license without taking the license  
            exam.  Many agents have licenses for multiple lines of  
            authority (e.g. property, casualty, life and health).  It is  








                                                                  AB 1391
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            common for these agents/brokers to apply for the exam waiver  
            on only one line of authority within the 90 day window and  
            then must take the license exam to be licensed in other lines  
            of authority. The bill would create a 12 month window for an  
            exam waiver for lines of authority that they were previously  
            licensed as a non-resident if they obtained an exam waiver for  
            one line of authority within the 90 day window.  This language  
            is consistent with the provisions of the National Association  
            of Insurance Commissioner's Producer Licensing Model Act.

           4)Annuity Sales  .  Before selling annuities, life insurance  
            agents are required to complete 8 hours of CE.  Thereafter  
            they must complete 4 hours of CE in annuities prior to  
            renewing their license.  The 8-hour course is intended for  
            life insurance agents who have never sold annuities and the  
            4-hour courses are intended for agents with some knowledge in  
            annuities and provide more in-depth material in specific  
            areas.  However, some life agents continue to take the initial  
            8-hour course to meet the CE requirement for renewal and are  
            not benefitting from the more advanced curricula in the 4-hour  
            courses.  

           5)Suggested Technical Amendment  .  The author may want to amend  
            the bill to clarify that the Department of Insurance can  
            produce an "Adjusted RBC Report" for life and health insurers.

           REGISTERED SUPPORT / OPPOSITION  :   
           Support 
           
          Department of Insurance (Sponsor)

           Opposition 
           
          None available
           
          Analysis Prepared by  :    Paul Riches / INS. / (916) 319-2086