BILL ANALYSIS                                                                                                                                                                                                    



                                                                AB 1391
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        CONCURRENCE IN SENATE AMENDMENTS
        AB 1391 (Insurance Committee)
        As Amended  August 19, 2013
        Majority vote
         
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        |ASSEMBLY:  |75-0 |(May 9, 2013)   |SENATE: |36-0 |(August 22,    |
        |           |     |                |        |     |2013)          |
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         Original Committee Reference:    INS.  

         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.








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        10)Eliminates duplicative CE requirements for individuals licensed  
          both as a property-casualty agent/broker and as an insurance  
          adjuster.

         The Senate amendments  :  

         1)Require risk retention groups to comply with new governance  
          requirements adopted by the National Association of Insurance  
          Commissioners (NAIC).  

         2)Eliminate an existing exemption from statutes governing risk  
          retention groups for risk retention groups controlled by brokers  
          or agents.   
               
         3)Conform statutes governing ethics training for agents and brokers  
          to the ethics training standards adopted by the NAIC.  
               
         4)Establish standards for the distribution of termination notices  
          for portable electronic device insurance policies.
              
         5)Create a process that allows underwritten title companies to  
          withdraw from California.

        6)Create a streamlined process for the Insurance Commissioner to  
          make non-controversial changes to the plan of operation governing  
          the California Automobile Assigned Risk Plan and the California  
          Low Cost Automobile Insurance Program.  

        7)Provide for resolution of possible chaptering conflicts with  
          Assembly Bill 1180 (Pan) of the current legislative session.
         
        FISCAL EFFECT  :  Minor and absorbable costs to the Department of  
        Insurance.  According to the Senate Appropriations Committee,  
        pursuant to Senate Rule 28.8, negligible state costs. 

         COMMENTS  :   

         1)Purpose  . This bill is sponsored by the Department of Insurance as  
          the 2013 omnibus bill which proposes technical and  
          non-controversial 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  








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          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 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 eight hours of CE.  Thereafter they must  
          complete four hours of CE in annuities prior to renewing their  
          license.  The eight-hour course is intended for life insurance  
          agents who have never sold annuities and the four-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 eight-hour course to meet the  
          CE requirement for renewal and are not benefitting from the more  
          advanced curricula in the four-hour courses.  


         Analysis Prepared by  :    Paul Riches / INS. / (916) 319-2086 FN:  
        0001794