BILL ANALYSIS Ó
AB 2056
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CONCURRENCE IN SENATE AMENDMENTS
AB 2056 (Dababneh)
As Amended August 6, 2014
Majority vote
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|ASSEMBLY: |78-0 |(May 15, 2014) |SENATE: |36-0 |(August 11, |
| | | | | |2014) |
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Original Committee Reference: INS.
SUMMARY : Increases disclosure of exclusions and payment
provisions in pet insurance policies and establishes uniform
definitions for exclusions commonly used in pet insurance
policies.
The Senate amendments :
1)Expand the definition of "pre-existing condition" to include
conditions that arise during a waiting period.
2)Provide pet insurers with the ability to use the standard
definitions in whole or in part.
3)Make technical and clarifying changes.
EXISTING LAW :
1)Classifies pet insurance as property/casualty insurance.
2)Requires those selling pet insurance to be licensed as a
property/casualty broker-agent.
3)Requires property/casualty insurance policy rates to be
reviewed and approved by the commissioner.
4)Prohibits property/casualty insurance rates from being
excessive, inadequate, or unfairly discriminatory.
AS PASSED BY THE ASSEMBLY , this bill:
1)Required pet insurance policies to use standard definitions
for a number of terms including the following:
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a) "Veterinary expenses" are the costs associated with
medical advice, diagnosis, care or treatment by a licensed
veterinarian.
b) "Pre-existing condition" is a condition for which a
veterinarian has provided advice or treatment or a
condition for which the pet exhibited signs or symptoms
before the effective date of the insurance policy.
c) "Waiting period" is the period of time from when the
policy is effective and when some or all of the coverage
begins.
d) "Hereditary disorder" is a genetically transmitted
abnormality that causes illness or disease.
e) "Congenital disorder" is a condition present from birth
which causes or contributes to an illness or disease.
f) "Chronic condition" is one that can be treated or
managed but not cured.
2)Required pet insurers to disclose whether the policy excludes
coverage for any of the following:
a) Pre-existing condition.
b) Hereditary disorder.
c) Congenital disorder.
d) Chronic condition.
e) Waiting period.
3)Required pet insurers to disclose if any other exclusions are
included in the policy and direct the consumer to the policy
for details regarding those exclusions.
4)Required pet insurers to provide consumers with a summary
description of the method used to determine claim payments.
5)Required pet insurers to allow anyone who purchases pet
insurance to return the policy within 30 days with a full
refund of any premium paid unless the insurer has paid a claim
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under the policy. If a claim has been paid, the option to
return the policy is not available, and the cancellation
provisions in the policy will apply.
6)Permitted the Insurance Commissioner (commissioner) to impost
civil penalties of up to $5,000 for each violation and up to
$10,000 for each willful violation.
7)Required the commissioner to hold a hearing regarding any
violations and that the hearing is subject to the provisions
of the Administrative Procedures Act.
8)Provided the commissioner with the authority to adopt
regulations necessary to administer the provisions of this
bill.
9)Deferred implementation of the bill until July 1, 2015.
FISCAL EFFECT : Unknown
COMMENTS :
1)Purpose. According to the sponsor, pet insurance policies are
often difficult for consumers to navigate and understand.
Typically there are several types of policies that itemize
covered treatments, deductibles, and lifetime/per illness
maximums. Additionally, the costs of different policies can
vary based on the amount of coverage, the type of coverage, as
well as the species, age, and breed of the pet. This bill
would require pet insurers to disclose this information
regarding their policies so that consumers can more easily
determine the most appropriate policy to fit their needs. By
allowing consumers to better ascertain the constrictions and
limitations of pet insurance policies, they will limit their
financial risk, be more likely to purchase a product that fits
their needs, and be less likely to complain when utilizing
their pet insurance coverage.
2)Cost of veterinary care. According to the American Pet
Products Association, the total United States pet industry
expenditures in 2012 were an estimated $53.33 billion, $27.4
billion of which was spent on veterinary care and over the
counter medicine. In 2011, total pet insurance expenditures
accounted for $450 million and it is expected to grow rapidly
to an estimated $750 million by 2015.
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3)Previous legislation. AB 2411 (Jones) of 2010, passed the
Legislature but was vetoed by the Governor. This bill is more
expansive than AB 2411 in terms of the definitions, disclosure
requirements, and enforcement mechanisms relating to pet
insurance.
Analysis Prepared by : Paul Riches / INS. / (916) 319-2086
FN: 0004600