AB 1072, as amended, Daly. Insurance: firefighters’ 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 and that issues long-term disability or long-term care policies or contracts, as specified, 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 recognize that information
submitted by a company pursuant to those provisions and in the possession or control of the department as confidential and privileged, exempt from disclosurebegin insert by the commissionerend insert pursuant to the California Public Records Act, and not subject to subpoena or discoverybegin insert from the commissionerend insert or admissiblebegin delete inend deletebegin insert intoend insert evidence in a private civilbegin delete action.end deletebegin insert action if obtained from the commissioner.end insert 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 require an association that self-funds all or part of the benefits to include specified disclosure language in all contracts that are not regulated by the department and in certificates evidencing coverage under those contracts. 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 would be repealed.
Existing constitutional provisions require that a statute that limits the right of access to the meetings of public bodies or the writings of public officials and agencies be adopted with findings demonstrating the interest protected by the limitation and the need for protecting that interest.
This bill would make legislative findings to that effect.
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 and that issues long-term
5disability or long-term care policies or contracts shall submit to
6the commissioner the opinion of a qualified actuary as to whether
7the reserves and related actuarial items that support the policies
8or contracts issued pursuant to this chapter, including policies and
9contracts issued by entities established by these associations that
10provide benefits described in this chapter, are based on assumptions
11that satisfy contractual provisions, are consistent with prior reported
12amounts, and are based on actuarial standards and procedures
13established by the American Academy of Actuaries and the
14Actuarial
Standards Board. An association that holds a certificate
15of authority pursuant to this chapter shall file its opinion no later
16than July 1, 2016. The opinion shall have been completed no earlier
17than December 31, 2013.
18(2) An association is considered to have issued a long-term care
19or disability policy or contract if it self-funds all or part of the
20resulting obligation. An association that markets long-term policies
21or contracts issued by an insurer that is admitted by the department
22to offer insurance products in the state is exempt from this reporting
23requirement.
24(3) An association seeking a certificate of authority pursuant to
25this chapter shall file an opinion, to the extent feasible, that
26establishes that it would have adequate resources to provide
27benefits described in
this chapter as required to satisfy its proposed
28contractual obligations.
29(b) The opinion required by subdivision (a) shall include an
30opinion with supporting memoranda consistent with the same
31qualified actuary as to whether the reserves and related actuarial
32items held in support of the policies and contracts, when considered
P4 1in light of the assets held by the association with respect to the
2reserves and related actuarial items, including, but not limited to,
3the investment earnings on the assets and the considerations
4anticipated to be received and retained under the policies and
5contracts, and shall make adequate provision for the association’s
6obligations under the policies and contracts, including, but not
7limited to, the benefits under any expenses associated with the
8policies and contracts.
9(c) The opinion required by subdivision (b) shall be governed
10by the following provisions:
11(1) It shall include a memorandum, in form and substance
12consistent with actuarial standards and procedures acceptable to
13the American Academy of Actuaries and the Actuarial Standards
14Board, in support of the opinion.
15(2) If the association fails to provide an opinion and supporting
16memoranda to the commissioner that meets the requirements of
17this section, the commissioner shall notify the association of the
18deficiencies in the filing, and shall make a specific request that
19identifies the issues that should be addressed in an amended filing.
20(d) If the commissioner determines,
after a review of the filings
21from the associations, that the laws governing these associations
22are inadequate to protect the interests of the members of the
23associations, he or she shall, on or before July 1, 2017, develop
24and deliver recommendations to the Assembly Committee on
25Insurance and the Senate Committee on Insurance regarding
26changes in the law that would better protect the interests of
27members of the associations.
28(e) Documents, materials, or other information, including the
29opinion with supporting memoranda, submitted pursuant to this
30section that are in the possession or control of the Department of
31Insurance and that are obtained by, created by, or disclosed to the
32commissioner or any other person pursuant to this section, are
33recognized by this state as being proprietary and to contain trade
34secrets. Those documents,
materials, or other information shall be
35confidential by law and privileged, shall not be subject to disclosure
36begin insert by the commissionerend insert pursuant to the California Public Records
37Act (Chapter 3.5 (commencing with Section 6250) of Division 7
38of Title 1 of the Government Code), and shall not be subject to
39subpoena orbegin delete discovery,end deletebegin insert discovery from the commissionerend insert or
40admissiblebegin delete inend deletebegin insert intoend insert evidence, in a private civilbegin delete action.end deletebegin insert
action if
P5 1obtained from the commissioner.end insert The commissioner shall not
2otherwise make those documents, materials, or other information
3public without the prior written consent of the association.
4(f) This section shall remain in effect only until December 31,
52018, and as of that date is repealed, unless a later enacted statute,
6that is enacted before December 31, 2018, deletes or extends that
7date.
Section 11401.6 is added to the Insurance Code, to
9read:
(a) An association that self-funds all or part of the
11benefits provided under this chapter shall include the following
12language, or other language approved by the commissioner, in all
13contracts that are not regulated by the department, and in
14certificates evidencing coverage under those contracts, in capital
15letters and in abegin delete miniumend deletebegin insert minimumend insert of 12-point type:
17“ALL OR A PORTION OF THE BENEFITS PROVIDED BY
18THIS CONTRACT ARE NOT SUBJECT TO REGULATION
19BY THE CALIFORNIA DEPARTMENT
OF INSURANCE, AND
20THE CONTRACT IS NOT GUARANTEED BY THE
21CALIFORNIA LIFE AND HEALTH INSURANCE
22GUARANTEE ASSOCIATION.”
24(b) This section shall remain in effect only until December 31,
252018, and as of that date is repealed, unless a later enacted statute,
26that is enacted before December 31, 2018, deletes or extends that
27date.
The Legislature finds and declares that Section 1 of
29this act, which adds Section 11401.5 of the Insurance Code,
30imposes a limitation on the public’s right of access to the meetings
31of public bodies or the writings of public officials and agencies
32within the meaning of Section 3 of Article I of the California
33Constitution. Pursuant to that constitutional provision, the
34Legislature makes the following findings to demonstrate the interest
35protected by this limitation and the need for protecting that interest:
36In order to protect proprietary information, it is necessary to
37enact legislation that limits the public’s right of access to insurance
P6 1holding
company information that is provided pursuant to Section
211401.5 of the Insurance Code.
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