BILL ANALYSIS Ó
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