BILL ANALYSIS Ó
AB 565
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Date of Hearing: May 6, 2015
ASSEMBLY COMMITTEE ON INSURANCE
Tom Daly, Chair
AB 565
(Cooley) - As Amended April 28, 2015
SUBJECT: Group Disability Insurance
SUMMARY: Permits an insurer to send a certificate of insurance
directly to an individual insured who is insured by a group
disability policy.
EXISTING LAW:
Specifies that group disability insurance contracts contain a
provision requiring insurers issuing an insurance certificate
for an individual insured in a group disability policy to
provide the certificate to the policyholder, who will then
forward it to the individual insured.
FISCAL EFFECT: Undetermined
COMMENTS:
1)Purpose . This bill will provide insurers with greater
flexibility when serving customers who are covered under a
AB 565
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group disability insurance policy. Current law requires
insurers offering group disability policies to route the
certificate of insurance for an individual member of the group
through the policyholder (generally the employer) who then is
responsible for delivering it to the individual insured. This
bill will give employers and insurers the option to allow the
insurer to deliver the certificate of insurance directly to
the insured and reduce the administrative burden on employers
who choose to offer group disability insurance to their
employees.
2)Disability Income Insurance . Disability income (DI) insurance
is an insurance product that provides individuals with a cash
benefit if they become disabled and are unable to work. DI
insurance can be purchased to cover either short or long term
disability. Many employers offer a "group" DI policy as an
optional employee benefit. DI insurance is a niche product as
there are a number of public DI programs available to
California workers, including workers compensation temporary
disability benefits, the State Disability Insurance program
administered by the Employment Development Department, and the
permanent disability benefits offered through Social Security.
REGISTERED SUPPORT / OPPOSITION:
Support
Association of California Life and Health Insurance Companies
AB 565
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Opposition
None received
Analysis Prepared by:Paul Riches / INS. / (916) 319-2086