BILL ANALYSIS Ó AB 822 Page 1 CONCURRENCE IN SENATE AMENDMENTS AB 822 (Cooley) As Amended June 1, 2015 Majority vote -------------------------------------------------------------------- |ASSEMBLY: |79-0 |(April 16, |SENATE: |37-0 |(June 22, 2015) | | | |2015) | | | | | | | | | | | | | | | | | | -------------------------------------------------------------------- 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