BILL ANALYSIS Ó
AB 822
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB
822 (Cooley)
As Amended June 1, 2015
Majority vote
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|ASSEMBLY: |79-0 |(April 16, |SENATE: |37-0 |(June 22, 2015) |
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Original Committee Reference: INS.
SUMMARY: Provides that the right to file a judicial action
challenging a denial of a claim by the California Insurance
Guarantee Association (CIGA) is triggered by a written denial of
the claim by CIGA, and does not have to wait until the
liquidator of the insolvent insurer has finally wrapped up and
closed the insolvency.
The Senate amendments exclude workers' compensation claims from
the rule established by this bill.
EXISTING LAW:
1)Establishes CIGA to pay covered claims to those who are owed
an insurance payment from an insolvent property-casualty
insurer.
AB 822
Page 2
2)Establishes a system administered by the Insurance
Commissioner, or the similar official in other states with
respect to insurers admitted in California but domiciled in
other states, to handle the insolvency (bankruptcy) of
insurers.
FISCAL EFFECT: None
COMMENTS: The purpose of CIGA is to pay covered claims right
away to anyone entitled to payment from an insurer that has
become insolvent while insolvency proceedings go forward on a
separate track. The insolvency proceedings can go on for years,
even decades, depending on the complexity of the insurer's
business. A recent case implied that a claim against CIGA is
not "ripe" until the insolvency proceeding has concluded, which
would defeat the fundamental purpose of CIGA. This bill
clarifies that this is not the rule. Since workers'
compensation claims have not suffered from this potential
defect, those claims were excluded by Senate amendments to
ensure that current law affecting workers' compensation claims
is not inadvertently changed.
Analysis Prepared by:
Mark Rakich / INS. / (916) 319-2086 FN: 0001001