Amended in Senate June 29, 2015

Amended in Assembly April 30, 2015

California Legislature—2015–16 Regular Session

Assembly Bill No. 387

Introduced by Assembly Member McCarty

February 18, 2015

An act to amend Section 10290 begin delete of end delete begin insert of, to add Section 10191.1 to, and to add and repeal Section 10191.5 of, end insert the Insurance Code, relating to insurance.

LEGISLATIVE COUNSEL’S DIGEST

AB 387, as amended, McCarty. Insurance: begin delete disability policy: commissioner approval. end delete begin insert life and disability policies. end insert

begin insert

Existing law authorizes the Insurance Commissioner to promulgate, from time to time as conditions warrant, after notice and hearing, reasonable rules and regulations, and amendments and additions to those rules and regulations, as are necessary or advisable in order to establish and maintain a procedure for the filing and approval of specified documents prior to their issuance, delivery, or use in this state.

end insert begin insert

This bill would authorize the commissioner to develop and publish procedural requirements, guidelines, and standard insurance contract language for the purpose of streamlining and expediting the Department of Insurance’s file review process for life and disability insurance forms. The bill would require an expanded cover letter to be used to clearly document and demonstrate compliance with those published standards, as specified, in order to expedite review. The bill would require the department to make those published standards available on the department’s Internet Web site, as specified.

end insert begin insert

Existing law provides various protections for consumers of annuity, life, disability income, and long-term care insurance products, such as the requirement that the recommendation of an insurer or an entity marketing an annuity or long-term care insurance product regarding the purchase of those products be based on suitability standards that are designed to ensure that the individual consumer’s needs are met.

end insert begin insert

This bill would require the commissioner to commission an independent study to examine and report on the extent to which consumer protections for annuity, life, disability income, and long-term care insurance products differ from uniform standards developed by the Interstate Insurance Product Regulation Commission, to the extent the commissioner receives solicited, nonpublic funds for that purpose. The bill would require the commissioner to submit the report to the Legislature, as specified, no later than January 1, 2017. The bill would repeal those provisions on January 1, 2021.

end insert

Existing law provides for the licensing and regulation of disability insurers by the Department of Insurance. Existing law prohibits a disability policy from being issued until certain requirements are met. One of these conditions is if either (1) 30 days passes without notice from the Insurance Commissioner after a copy of the policy is filed with the commissioner; or (2) the commissioner gives written approval prior to the expiration of the 30 days.

This bill would increase that time period to 120 calendar days.

Vote: majority. Appropriation: no. Fiscal committee:  begin delete no end delete begin insert yes end insert . State-mandated local program: no.

The people of the State of California do enact as follows:

begin insert

begin insert SECTION 1. end insert   

end insert

begin insert Section 10191.1 is added to the end insert begin insert Insurance Code end insert begin insert ,
to read: end insert

begin insert

begin insert 10191.1. end insert   

(a) In order to streamline the department’s file review
process for life and disability insurance forms, the commissioner
may develop and publish all of the following:

(1) Procedural requirements for file submission.

(2) Guidelines and checklists that list and interpret applicable
required and optional insurance statutes and regulations.

(3) Standard insurance contract language previously approved
by the department.

(b) Documented use of the published standards described in
paragraphs (1) to (3), inclusive, of subdivision (a) will enable the
department to expedite its review process. In order to expedite file
review, an expanded cover letter, in a format published by the
department, shall be used to clearly document and demonstrate
compliance with those standards.

(c) A publication developed pursuant to this section shall be
made available on a dedicated page of the department’s Internet
Web site.

end insert

begin insert

begin insert SEC. 2. end insert   

end insert

begin insert Section 10191.5 is added to the end insert begin insert Insurance Code end insert begin insert , to
read: end insert

begin insert

begin insert 10191.5. end insert   

(a) (1) The commissioner shall commission an
independent study to examine and report on the extent to which
the uniform standards set forth in the Interstate Insurance Product
Regulation Compact developed by the Interstate Insurance Product
Regulation Commission provide consumer protections that are
equivalent to those established under state law for annuity, life,
disability income, and long-term care insurance products.

(2) The report described in paragraph (1) shall, to the extent
feasible, also highlight the substantive differences between the
uniform standards set forth in the Interstate Insurance Product
Regulation Compact and the statutory requirements under state
law for annuity, life, disability income, and long-term care
insurance products.

(b) (1) The commissioner shall submit the report described in
paragraph (1) of subdivision (a) to the Chairpersons of the
Assembly and Senate committees on insurance no later than
January 1, 2017. The report shall be made in compliance with
Section 9795 of the Government Code.

(2) The commissioner shall have the right to review and approve
the final report prior to its submission to the Legislature.

(c) This section shall be implemented only to the extent that
solicited, nonpublic funds are received and made available for the
commission of the independent study. No moneys from the General
Fund or the Insurance Fund may be used to implement this section.

(d) This section shall remain in effect only until January 1, 2021,
and as of that date is repealed, unless a later enacted statute, that
is enacted before January 1, 2021, deletes or extends that date.

end insert

begin delete SECTION 1. end delete
begin insert SEC. 3. end insert   

Section 10290 of the Insurance Code is amended to
read:

10290.  

A disability policy shall not be issued or delivered to
any person in this state until both of the following conditions are
met:

(a) A copy of the form thereof and, if more than one class of
risks is written, of the classification of risks, and the premium rates
pertaining thereto are filed with the commissioner.

(b) Either of the following occurs:

(1) One hundred twenty calendar days expire without notice
from the commissioner after the copy is filed.

(2) The commissioner gives his or her written approval prior to
that time.