Amended in Senate August 31, 2015

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 of, to add Section 10191.1 to, and to add and repeal Section 10191.5 of, the Insurance Code, relating to insurance.

LEGISLATIVE COUNSEL’S DIGEST

AB 387, as amended, McCarty. Insurance: life and disability policies.

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.

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.

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.

This bill would require the commissioner to begin delete commission end delete begin insert advise and present recommendations to a multistate regulatory support organization, which is authorized to commission and pay for end insert 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 begin delete the commissioner receives end delete solicited, nonpublic funds begin insert are received end insert for that purpose. The bill would require the commissioner to submit the begin delete report end delete begin insert study end insert to the Legislature, as specified, no later than January 1, 2017. The bill would repeal those provisions on January 1, 2021.

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 begin delete passes end delete begin insert pass end insert 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: yes. State-mandated local program: no.

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

SECTION 1.  

Section 10191.1 is added to the Insurance Code,
to read:

10191.1.  

(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.

SEC. 2.  

Section 10191.5 is added to the Insurance Code, to
read:

10191.5.  

(a) (1) The commissioner shall begin insert advise and present
recommendations to a multistate regulatory support organization,
which is authorized to end insert 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.

begin insert

(2) Notwithstanding any other provision of law, the independent
study described in paragraph (1) is not a personal services contract
as described in Section 19130 of the Government Code.

end insert begin delete

(2)

end delete

begin insert (3) end insert  The begin delete report end delete begin insert independent study end insert described in paragraph (1)
shall, to the extent feasible, begin delete also end delete 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)  begin delete The end delete begin insert Subject to paragraph (2), the end insert commissioner shall
submit the begin delete report end delete begin insert independent study end insert 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 begin delete report end delete
begin insert study end insert shall be begin delete made end delete begin insert submitted end insert in compliance with Section 9795
of the Government Code.

(2) The commissioner begin delete shall have the right to end delete begin insert may end insert review and
approve the final begin delete report end delete begin insert study end insert prior to its submission to the
Legislature.

(c)  begin insert The independent study described in paragraph (1) of
subdivision (a) shall be commissioned and paid for by a multistate
regulatory support organization, subject to the advice and
recommendations of the commissioner. end insert 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.

SEC. 3.  

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.