AB 1072,
as amended, Daly. Insurance:begin delete firefightersend deletebegin insert firefighters’end insert or police officers’ benefit and relief associations.
Existing law generally provides for the regulation of insurers by the Department of Insurance pursuant to laws set forth in the Insurance Code. Existing law authorizes the Insurance Commissioner to make certain examinations, investigations, and prosecutions and, upon making a determination of the existence of certain conduct, conditions, or grounds, to issue orders reasonably necessary to correct, eliminate, or remedy the conduct, conditions, or grounds.
Existing law exempts from the requirements set forth in the Insurance Code firemen’s, policemen’s, and peace officers’ benefit and relief associations that comply with specified criteria, including, among other things, a requirement that the membership consist solely of peace officers, members of police or fire departments, and emergency medical personnel employed by fire departments, as specified. Existing law prohibits an association from operating or doing business in the state without a certificate of authority.
This bill would require every association that holds a certificate of authority to submit to the commissioner the opinion, as specified, of a qualified actuary as to whether the reserves and related actuarial items that support the policies or contracts issued are based on assumptions that satisfy contractual provisions, are consistent with prior reported amounts, and are based on specified actuarial standards and procedures. The bill would also require an association seeking a certificate of authority to file an opinion that meets specified requirements and that establishes that it would have adequate resources to provide benefits, as specified, as required to satisfy its proposed contractual obligations. The bill would require the commissioner to notify the association of the deficiencies in the filing if the association fails to provide an opinion and supporting memoranda to the commissioner that meets the requirements of the bill, as specified. The bill would also require the commissioner, if he or she determines that the laws governing these associations are inadequate to protect the interests of the members of the associations, to develop and deliver recommendations to the Assembly Committee on Insurance and the Senate Committee on Insurance regarding changes in the law that would better protect the interests of members of the associations. The provisions of the bill would remain in effect only until December 31, 2018, and as of that date are repealed.
Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.
The people of the State of California do enact as follows:
Section 11401.5 is added to the Insurance Code,
2to read:
(a) (1) Each association that holds a certificate of
4authority pursuant to this chapter shall submit to the commissioner
5the opinion of a qualified actuary as to whether the reserves and
6related actuarial items that support the policies or contracts issued
7pursuant to this chapter, including policies and contracts issued
8by entities established by these associations that provide benefits
9described in this chapter, are based on assumptions that satisfy
10contractual provisions, are consistent with prior reported amounts,
11and are based on actuarial standards and procedures established
12by the American Academy of Actuaries and the Actuarial Standards
13Board. An association that holds a certificate of authority pursuant
P3 1to
this chapter shall file its initial opinion no later than July 1,begin delete2
2016, and each July 1 thereafter.end delete
3(2) An association seeking a certificate of authority pursuant to
4this chapter shall file an opinion, to the extent feasible, that
5establishes that it would have adequate resources to provide
6benefits described in this chapter as required to satisfy its proposed
7contractual obligations.
8(b) The opinion required by subdivision (a) shall include an
9opinion with supporting memoranda consistent with the same
10qualified actuary as to whether the reserves and related actuarial
11items held in support of the policies and contracts, when considered
12in light of the assets held by the association with respect to the
13reserves and related actuarial items,
including, but not limited to,
14the investment earnings on the assets and the considerations
15anticipated to be received and retained under the policies and
16contracts, and shall make adequate provision for the association’s
17obligations under the policies and contracts, including, but not
18limited to, the benefits under any expenses associated with the
19policies and contracts.
20(c) The opinion required by subdivision (b) shall be governed
21by the following provisions:
22(1) It shall include a memorandum, in form andbegin delete substance,end delete
23begin insert substanceend insert consistent with actuarial standards and procedures
24established by the American
Academy of Actuaries and the
25Actuarial Standards Board, in support of the opinion.
26(2) If the association fails to provide an opinion and supporting
27memoranda to the commissioner that meets the requirements of
28this section, the commissioner shall notify the association of the
29deficiencies in the filing, and shall make a specific request that
30identifies the issues that should be addressed in an amended filing.
31(d) If the commissioner determines, after a review of the filings
32from thebegin delete associationsend deletebegin insert associations,end insert that the laws governing these
33associations are inadequate to protect the interests of the members
34of the associations,
he or she shall develop and deliver
35recommendations to the Assembly Committee on Insurance and
36the Senate Committee on Insurance regarding changes in the law
37that would better protect the interests of members of the
38associations.
39(e) This section shall remain in effect only until December 31,
402018, and as of that date is repealed, unless a later enacted statute,
P4 1that is enacted before December 31, 2018, deletes or extends that
2date.
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