BILL ANALYSIS Ó
SB 251
Page 1
Date of Hearing: August 21, 2013
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mike Gatto, Chair
SB 251 (Calderon) - As Amended: June 17, 2013
Policy Committee: InsuranceVote:7 -
0
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill adds renewal notices for automobile, property,
commercial, and certain types of liability insurance to the
types of notices that insurers are allowed to provide
electronically. Specifically, this bill:
1)Permits consumers, who choose to avail themselves of the
option, to receive electronic renewal notices for the
following types of insurance policies:
a) Automobile
b) Property
c) Liability
d) Commercial liability
e) Workers' Compensation
2)Requires the insurer to obtain consent from the insured before
sending electronic renewal notices.
3)Requires the insurer to provide the consumer, upon request, a
printed copy of the electronic documents to the insured.
4)Requires the insurer to retain information demonstrating the
sending and receipt of these electronic documents for at least
five years after the policy is no longer in force.
5)Permits the California Department of Insurance (CDI) to
suspend an insurer's authorization to send electronic
documents if the insurer has a pattern or practice that
demonstrate a failure to comply with the bill's requirements.
SB 251
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FISCAL EFFECT
This legislation could result in an increase in consumer
complaints to CDI related to renewals and coverage issues due to
electronic renewal notices not being received. CDI believes that
if there are approximately 2,500 inquiries and complaints per
year the workload costs for investigating those problems and
complaints could reach several hundred thousand dollars per year
(Insurance Fund).
COMMENTS
1)Purpose . According to the author and the sponsor, the
Association of California Insurance Companies, policyholders
are demanding that insurers move toward paperless
transactions, and frequently react negatively when the insurer
responds that it is not authorized by law to provide certain
documents or notices in an electronic format. According to
proponents, the documents authorized for electronic
transmission by this bill are less sensitive than many
documents already eligible for delivery electronically, such
as billing statements, notices of discounts, and privacy
notices.
2)Support . In support of the bill, the Personal Insurance
Federation of California notes that almost every state has
adopted similar laws to the one proposed in this bill in order
to facilitate electronic renewal of insurance documents. They
further point out that this bill requires that a consumer
and/or business agree to the electronic transactions; they
cannot be compelled to do so by an insurance company.
3)Opposition . The California Department of Insurance notes that
SB 251 fails to provide appropriate safeguards to help ensure
that consumers receive the electronic renewal information,
including conditional renewals, insurers are sending.
Conditional renewals, which are provided in the case of
commercial insurance, involve reduced policy coverage limits,
coverage elimination, increased deductibles and significant
increases in rates.
4)Related Legislation . In 2012, a similar bill, SB 1212
(Calderon), passed out of this committee but was subsequently
SB 251
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re-referred to the Assembly Judiciary Committee where it was
never heard.
Analysis Prepared by : Julie Salley-Gray / APPR. / (916)
319-2081