BILL ANALYSIS Ó
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