Amended in Assembly May 4, 2015

California Legislature—2015–16 Regular Session

Assembly Bill No. 1131

Introduced by Assembly Member Dababneh

February 27, 2015

An act to amend begin insert and repeal end insert Section 1633.3 of the Civil Code, begin delete and to amend Sections 38.5, 38.8, 663, 678, and 678.1 of end delete begin insert and to add and repeal Section 38.6 of end insert the Insurance Code, relating to electronic records.

LEGISLATIVE COUNSEL’S DIGEST

AB 1131, as amended, Dababneh. Insurance: electronic transmission.

Existing law generally requires that any required notice related to insurance transactions be made by mail. Existing law authorizes an insurer, under specified conditions, to provide by electronic transmission the required offer of renewal for automobile insurance, the required offer of renewal or conditional renewal for property insurance, the required offer of coverage or renewal or any disclosure required regarding earthquake insurance, and the offer of renewal for a workers’ compensation policy.

Existing law also generally requires that, a record, signature, or contract may not be denied legal effect or enforceability because it is in electronic form. Existing law exempts from this requirement disability insurance and life insurance policies and certificates offered for sale to individuals 65 years of age or older, notice of an increase in premiums on an individual life insurance policy, individual life insurance policies with a face value of less than $10,000, a policy of individual life insurance that is initially delivered or issued for delivery in the state on and after January 1, 1990, applications for life insurance or annuity, and a policy replacement notice.

This bill begin delete would end delete begin insert would, for life insurance records, end insert authorize additional persons to send records by electronic transmission by providing that an insurer, agent, broker, or any other person licensed by the Department of Insurance may send electronic records. This bill would expand the scope of electronic notice provisions by allowing the above licensees to send any written record by electronic transmission if not specifically excluded and if the licensee meets specified requirements. begin insert The bill would also require the commissioner to submit a report, as specified. end insert

This bill would make conforming changes.

Vote: majority. Appropriation: no. Fiscal committee:  begin delete no end delete begin insert yes end insert . State-mandated local program: no.

The people of the State of California do enact as follows:

SECTION 1.  

Section 1633.3 of the Civil Code, as amended
by Section 3 of Chapter 913 of the Statutes of 2014, is amended
to read:

1633.3.  

(a) Except as otherwise provided in subdivisions (b)
and (c), this title applies to electronic records and electronic
signatures relating to a transaction.

(b) This title does not apply to transactions subject to the
following laws:

(1) A law governing the creation and execution of wills, codicils,
or testamentary trusts.

(2) Division 1 (commencing with Section 1101) of the Uniform
Commercial Code, except Sections 1206 and 1306.

(3) Divisions 3 (commencing with Section 3101), 4
(commencing with Section 4101), 5 (commencing with Section
5101), 8 (commencing with Section 8101), 9 (commencing with
Section 9101), and 11 (commencing with Section 11101) of the
Uniform Commercial Code.

(4) A law that requires that specifically identifiable text or
disclosures in a record or a portion of a record be separately signed,
including initialed, from the record. However, this paragraph does
not apply to Section 1677 or 1678 of this code or Section 1298 of
the Code of Civil Procedure.

(c) This title does not apply to any specific transaction described
in Section 17511.5 of the Business and Professions Code, Section
56.11, 56.17, 798.14, 1133, or 1134 of, Section 1689.6, 1689.7,
or 1689.13 of, Chapter 2.5 (commencing with Section 1695) of
Title 5 of Part 2 of Division 3 of, Section 1720, 1785.15, 1789.14,
1789.16, or 1793.23 of, Chapter 1 (commencing with Section
1801) of Title 2 of Part 4 of Division 3 of, Section 1861.24, 1862.5,
1917.712, 1917.713, 1950.6, 1983, 2924b, 2924c, 2924f, 2924i,
2924j, 2924.3, or 2937 of, Article 1.5 (commencing with Section
2945) of Chapter 2 of Title 14 of Part 4 of Division 3 of, Section
2954.5 or 2963 of, Chapter 2b (commencing with Section 2981)
or 2d (commencing with Section 2985.7) of Title 14 of Part 4 of
Division 3 of, Section 3071.5 of, Part 5 (commencing with Section
4000) of Division 4 of, or Part 5.3 (commencing with Section
6500) of Division 4 of this code, subdivision (b) of Section 18608
or Section 22328 of the Financial Code, Section 1358.15, 1365,
1368.01, 1368.1, 1371, or 18035.5 of the Health and Safety Code,
Section 662, paragraph (2) of subdivision (a) of Section 663, 664,
667.5, 673, 677, paragraph (2) of subdivision (a) of Section 678,
subdivisions (a) and (b) of Section 678.1, begin insert Section 786 as it applies
to individual and group disability policies, end insert Section 10192.18,
10199.44, 10199.46, 10235.16, 10235.40, 11624.09, or 11624.1
of the Insurance Code, Section 779.1, 10010.1, or 16482 of the
Public Utilities Code, or Section 9975 or 11738 of the Vehicle
Code. An electronic record may not be substituted for any notice
that is required to be sent pursuant to Section 1162 of the Code of
Civil Procedure. Nothing in this subdivision shall be construed to
prohibit the recordation of any document with a county recorder
by electronic means.

(d) This title applies to an electronic record or electronic
signature otherwise excluded from the application of this title under
subdivision (b) when used for a transaction subject to a law other
than those specified in subdivision (b).

(e) A transaction subject to this title is also subject to other
applicable substantive law.

(f) The exclusion of a transaction from the application of this
title under subdivision (b) or (c) shall be construed only to exclude
the transaction from the application of this title, but shall not be
construed to prohibit the transaction from being conducted by
electronic means if the transaction may be conducted by electronic
means under any other applicable law.

(g) This section shall remain in effect only until January 1, 2019,
and as of that date is repealed, unless a later enacted statute, that
is enacted before January 1, 2019, deletes or extends that date.

begin delete

SEC. 2.  

Section 38.5 of the Insurance Code, as amended by
Section 4 of Chapter 369 of the Statutes of 2013, is amended to
read:

38.5.  

(a) (1) Any written record required to be given or mailed
to any person by a licensee relating to any insurance on risks or
on operations in this state not excepted by subdivision (a), (c), (d),
(e), or (g) of Section 1851 from the coverage of Chapter 9
(commencing with Section 1850.4) of Part 2 of Division 1 of this
code may, if not excluded by subdivision (b) or (c) of Section
1633.3 of the Civil Code, be provided by electronic transmission
pursuant to Title 2.5 (commencing with Section 1633.1) of Part 2
of Division 3 of the Civil Code, if each party has agreed to conduct
the transaction by electronic means pursuant to Section 1633.5 of
the Civil Code, and if the licensee complies with the provisions
of this section. A valid electronic signature shall be sufficient for
any provision of law requiring a written signature.

(2) For purposes of this section, the definitions set forth in
Section 1633.2 of the Civil Code shall apply. The term “licensee”
means an insurer, agent, broker, or any other person who is required
to be licensed by the department.

(b) In order to transmit a record electronically, a licensee shall
comply with all of the following:

(1) A licensee, or licensee’s representative, acquires the consent
of the person to opt in to receive the record by electronic
transmission, and the person has not withdrawn that consent, prior
to providing the record by electronic transmission. A person’s
consent may be acquired verbally, in writing, or electronically. If
consent is acquired verbally, the licensee shall confirm consent in
writing or electronically. The licensee shall retain a record of the
person’s consent to receive the record by electronic transmission
with the policy information so that it is retrievable upon request
by the department while the policy is in force and for five years
thereafter.

(2)  A licensee discloses, in writing or electronically, to the
person all of the following:

(A) The opt in to receive the record by electronic transmission
is voluntary.

(B) That the person may opt out of receiving the record by
electronic transmission at any time, and the process or system for
the person to opt out.

(C)  A description of the record that the person will receive by
electronic transmission.

(D) The process or system to report a change or correction in
the person’s email address.

(E) The licensee’s contact information, which includes, but is
not limited to, a toll-free number or the licensee’s Internet Web
site address.

(3) The disclosure required by paragraph (2) and the opt-in
consent language may be set forth in the application or in a separate
document that is part of the policy and shall be bolded or otherwise
set forth in a conspicuous manner. The person’s signature shall be
set forth immediately below the person’s opt-in consent and shall
be obtained before the application is completed. The licensee shall
retain a copy of the confirmation and electronic signature, if either
is required, with the policy information so that each is retrievable
upon request by the Department of Insurance while the policy is
in force and for five years thereafter.

(4) If the transaction specifically involves the insured, the
licensee shall include the insured’s email address on the policy
declaration page.

(5) The licensee shall annually provide one free printed copy
of any record described in this subdivision upon request by the
person.

(6) If a provision of this code requires a licensee to transmit a
record by regular mail, or does not specify a method of delivery,
and if the licensee is not otherwise prohibited from transmitting
the record electronically under subdivision (b) of Section 1633.8
of the Civil Code, then the licensee shall maintain a process or
system that can demonstrate that the record provided by electronic
transmission was both sent and received consistent with Section
1633.15 of the Civil Code. If a different method of sending or
receiving is agreed upon by the licensee and the person pursuant
to Section 1633.15 of the Civil Code, a licensee shall comply with
the provisions of this subdivision. The licensee shall retain and
document information so that the documentation and information
is retrievable upon request by the department while the current
policy is in force and for five years thereafter related to its process
or system demonstrating that the record provided by electronic
transmission was sent to the person by the applicable statutory
regular mail delivery deadlines and received electronically. The
record provided by electronic transmission shall be treated as if
mailed so long as the licensee delivers it to the person in
compliance with the applicable statutory regular mail delivery
deadlines.

(A) Acceptable methods for a licensee to demonstrate that the
record was sent to the person include simple mail transfer protocol
server log files indicating transmission, or other methodologies
indicating sent transmission consistent with the standards set forth
in Section 1633.15 of the Civil Code.

(B) Acceptable methods for the licensee to demonstrate that the
record was received by the person include server log files indicating
that the email or application has been received, or log files showing
that the person logged into his or her secured account with the
licensee or other methodologies indicating received transmission
consistent with standards set forth in Section 1633.15 of the Civil
Code.

(7) Notwithstanding subdivision (b) of Section 1633.8 of the
Civil Code, if a provision of this code requires a licensee to
transmit a record by return receipt, registered mail, certified mail,
signed written receipt of delivery, or other method of delivery
evidencing actual receipt by the person, and if the licensee is not
otherwise prohibited from transmitting the record electronically
under Section 1633.3 of the Civil Code, then the licensee shall
maintain a process or system that demonstrates proof of delivery
and actual receipt of the record by the person consistent with this
paragraph. The licensee shall document and retain information
demonstrating delivery and actual receipt so that it is retrievable,
upon request, by the department at least five years after the policy
is no longer in force. The record provided by electronic
transmission shall be treated as if actually received if the licensee
delivers it to the person in compliance with applicable statutory
delivery deadlines. A licensee may demonstrate actual delivery
and receipt by any of the following:

(A) The person acknowledges receipt of the electronic
transmission of the record by returning an electronic receipt or by
executing an electronic signature.

(B) The record is made part of, or attached to, an email sent to
the email address designated by the person, a confirmation receipt,
or some other evidence that the person received the email in his
or her email account and opened the email.

(C) The record is posted on the licensee’s secure Internet Web
site, evidence demonstrating that the person logged onto the
licensee’s secure Internet Web site and downloaded, printed, or
otherwise acknowledged receipt of the record.

(8) Any record required to be transmitted by first-class mail and
not otherwise prohibited from being transmitted electronically may
be transmitted under the provisions of paragraph (6), except that
any notice of nonrenewal, lapse, cancellation, or termination of a
policy of life insurance that is not prohibited to be transmitted
electronically by subdivision (a), may be transmitted electronically,
only if the licensee demonstrates proof of electronic delivery and
receipt as set forth in paragraph (7). This paragraph applies to any
law that requires notice of nonrenewal, lapse, cancellation, or
termination of a policy of life insurance, including, but not limited
to, subdivision (b) of Section 10113.71 and subdivision (c) of
Section 10113.72.

(9) If the record is not delivered directly to the electronic address
designated by the person but placed at an electronic address
accessible to the person, a licensee shall notify the person in plain,
clear, and conspicuous language at the electronic address
designated by the person that describes the record, informs that
person that it is available at another location, and provides
instructions to the person as to how to obtain the record.

(10) (A) Upon a licensee receiving information indicating that
the record sent by electronic transmission was not received by the
person, the licensee shall, within two business days, either clause
(i) or (ii):

(i) Contact the person to confirm or update the person’s email
address and resend the record by electronic transmission. If the
licensee elects to resend the record by electronic transmission, the
licensee shall demonstrate the transmission was received by the
person, pursuant to paragraph (6), (7), or (8). If the licensee is
unable to confirm or update the person’s email address, the licensee
shall resend the record by regular mail to the licensee at the address
shown on the policy.

(ii) Resend the record initially provided by electronic
transmission by regular mail to the insured at the address shown
on the policy.

(B) If the licensee sends the first electronic record within the
time period required by law and the licensee complies with both
paragraph (5) and subparagraph (A) of this paragraph, the
electronic offer, notice, or disclosure sent pursuant to clause (i) or
(ii) of subparagraph (A) shall be treated as if mailed in compliance
with the applicable statutory regular mail delivery deadlines.

(11) The licensee shall not charge any person who declines to
opt in to receive a record through electronic transmission from
receiving a record electronically. The licensee shall not provide a
discount or an incentive to any person to induce or otherwise
encourage the person to opt in to receive electronic records.

(12) If a person has consented to receive records electronically
but a calendar year or more has elapsed since the last required
record for which consent was provided was electronically
transmitted by the licensee, the licensee shall verify, via paper
writing sent by regular mail, the accuracy of the person’s email
address.

(c) On or before January 1, 2018, the commissioner shall submit
a report to the Governor and to the committees of the Senate and
Assembly having jurisdiction over insurance and the judiciary,
regarding the impact and implementation of the authorization of
the electronic transmission of certain insurance renewal offers,
notices, or disclosures as authorized by this section. The report
shall include input from insurers, consumers, and consumer
organizations, and shall include an assessment of the department’s
experience pertaining to the authorization of the electronic
transmission of insurance renewals as authorized by this section.

(d) Notwithstanding paragraph (4) of subdivision (b) of Section
1633.3 of the Civil Code, for any policy of life insurance, any
statutory requirement for a separate acknowledgment, signature,
or initial, which is not expressly prohibited by subdivision (c) of
Section 1633.3 of the Civil Code, may be transacted using an
electronic signature, or by electronic transaction, subject to all
applicable provisions of this section.

(e) The department may suspend a licensee from providing
records by electronic transmission if there is a pattern or practices
that demonstrate the licensee has failed to comply with the
requirements of this section. A licensee may appeal the suspension
and resume its electronic transmission of records upon
communication from the department that the changes the licensee
made to its process or system to comply with the requirements of
this section are satisfactory.

(f) This section shall remain in effect only until January 1, 2019,
and as of that date is repealed, unless a later enacted statute, that
is enacted before January 1, 2019, deletes or extends that date.

SEC. 3.  

Section 38.8 of the Insurance Code is amended to read:

38.8.  

Licensees shall maintain a system for electronically
confirming a person’s decision to opt in to an agreement to conduct
transactions electronically and a system that will allow the person
to electronically opt out of the agreement to conduct business
electronically as specified in subdivision (c) of Section 1633.5.
The licensee shall maintain the electronic records for the same
amount of time the licensee would be required to maintain those
records if the records were in written form.

SEC. 4.  

Section 663 of the Insurance Code, as amended by
Section 6 of Chapter 369 of the Statutes of 2013, is amended to
read:

663.  

(a) Before policy expiration, an insurer shall deliver or
mail to the named insured, at the address shown on the policy, one
of the following:

(1) At least 20 days before expiration, a written or verbal offer
of renewal of the policy, contingent upon payment of premium as
stated in the offer.

(2) At least 30 days before expiration, a written notice of
nonrenewal of the policy, including the statement required by
Section 666.

(b) (1) An insurer that delivers a verbal offer to renew that is
declined by an insured shall, at least 20 days before expiration of
the policy, deliver to or mail to the named insured, at the address
shown on the policy, a written confirmation of the offer and
rejection.

(2) An insurer that attempts to satisfy subdivision (a) with a
verbal offer to renew, but is unable to contact the named insured
directly at least 20 days before policy expiration, shall, at least 20
days before policy expiration, deliver to or mail to the named
insured, at the address shown on the policy, a written offer to renew
the policy, contingent upon payment of premium as stated in the
offer.

(c) In the event that an insurer fails to give the named insured
either an offer of renewal or notice of nonrenewal as required by
this section, the existing policy, with no change in its terms and
conditions, shall remain in effect for 30 days from the date that
either the offer to renew or the notice of nonrenewal is delivered
or mailed to the named insured. A notice to this effect shall be
provided by the insurer to the named insured with the policy or
the notice of renewal or nonrenewal. Notwithstanding the failure
of an insurer to comply with this section, the policy shall terminate
on the effective date of any other replacement or succeeding
automobile insurance policy procured by the insured, or his or her
agent or broker, with respect to any automobile designated in both
policies.

(d) The insurer shall not be required to notify the named insured,
or any other insured, of nonrenewal of the policy if the insurer has
mailed or delivered a notice of expiration or cancellation, on or
prior to the 30th day preceding expiration of the policy period.

(e) This section shall remain in effect only until January 1, 2019,
and as of that date is repealed, unless a later enacted statute, that
is enacted before January 1, 2019, deletes or extends that date.

SEC. 5.  

Section 678 of the Insurance Code, as amended by
Section 8 of Chapter 369 of the Statutes of 2013, is amended to
read:

678.  

(a) At least 45 days prior to policy expiration, an insurer
shall deliver to the named insured or mail to the named insured at
the address shown in the policy, either of the following:

(1) An offer of renewal of the policy contingent upon payment
of premium as stated in the offer, stating each of the following:

(A) Any reduction of limits or elimination of coverage.

(B) The telephone number of the insurer’s representatives who
handle consumer inquiries or complaints. The telephone number
shall be displayed prominently in a font size consistent with the
other text of the renewal offer.

(2) A notice of nonrenewal of the policy. That notice shall
contain each of the following:

(A) The reason or reasons for the nonrenewal.

(B) The telephone number of the insurer’s representatives who
handle consumer inquiries or complaints. The telephone number
shall be displayed prominently in a font size consistent with the
other text of the notice of nonrenewal.

(C) A brief statement indicating that if the consumer has
contacted the insurer to discuss the nonrenewal and remains
unsatisfied, he or she may have the matter reviewed by the
department. The statement shall include the telephone number of
the unit within the department that responds to consumer inquiries
and complaints.

(b) In the event an insurer fails to give the named insured either
an offer of renewal or notice of nonrenewal as required by this
section, the existing policy, with no change in its terms and
conditions, shall remain in effect for 45 days from the date that
either the offer to renew or the notice of nonrenewal is delivered
or mailed to the named insured. A notice to this effect shall be
provided by the insurer to the named insured with the policy or
the notice of renewal or nonrenewal.

(c) Any policy written for a term of less than one year shall be
considered as if written for a term of one year. Any policy written
for a term longer than one year, or any policy with no fixed
expiration date, shall be considered as if written for successive
policy periods or terms of one year.

(d) This section applies only to policies of insurance specified
in Section 675.

(e) This section shall remain in effect only until January 1, 2019,
and as of that date is repealed, unless a later enacted statute, that
is enacted before January 1, 2019, deletes or extends that date.

SEC. 6.  

Section 678.1 of the Insurance Code, as amended by
Section 10 of Chapter 369 of the Statutes of 2013, is amended to
read:

678.1.  

(a) This section applies only to policies of insurance
of commercial insurance that are subject to Sections 675.5 and
676.6.

(b) A notice of nonrenewal shall be in writing and shall be
delivered or mailed to the producer of record and to the named
insured at the mailing address shown on the policy. Subdivision
(a) of Section 1013 of the Code of Civil Procedure shall be
applicable if the notice is mailed.

(c) An insurer, at least 60 days, but not more than 120 days, in
advance of the end of the policy period, shall give notice of
nonrenewal, and the reasons for the nonrenewal, if the insurer
intends not to renew the policy, or to condition renewal upon
reduction of limits, elimination of coverages, increase in
deductibles, or increase of more than 25 percent in the rate upon
which the premium is based.

(d) If an insurer fails to give timely notice required by
subdivision (c), the policy of insurance shall be continued, with
no change in its terms or conditions, for a period of 60 days after
the insurer gives the notice.

(e) With respect to policies defined in subdivision (b) of Section
676.6, in addition to the bases for conditional renewal set forth in
subdivision (c), an insurer may also condition renewal upon
requirements relating to the underlying policy or policies. If the
requirements are not satisfied as of (1) the expiration date of the
policy, or (2) 30 days after mailing or delivery of such notice,
whichever is later, the conditional renewal notice shall be treated
as an effective notice of nonrenewal, provided the insurer has sent
written confirmation to the first named insured and the producer
of record that the conditions were not met and that coverage ceased
at the expiration date shown in the expiring policy.

(f) A notice of nonrenewal shall not be required in any of the
following situations:

(1) The transfer of, or renewal of, a policy without a change in
its terms or conditions or the rate on which the premium is based
between insurers that are members of the same insurance group.

(2) The policy has been extended for 90 days or less, if the
notice required in subdivision (c) has been given prior to the
extension.

(3) The named insured has obtained replacement coverage or
has agreed, in writing, within 60 days of the termination of the
policy, to obtain that coverage.

(4) The policy is for a period of no more than 60 days and the
insured is notified at the time of issuance that it may not be
renewed.

(5) The named insured requests a change in the terms or
conditions or risks covered by the policy within 60 days prior to
the end of the policy period.

(6) The insurer has made a written offer to the insured, within
the time period specified in subdivision (c), to renew the policy
under changed terms or conditions or at a changed premium rate.
As used herein, “terms or conditions” includes, but is not limited
to, a reduction in limits, elimination of coverages, or an increase
in deductibles.

(g) This section shall remain in effect only until January 1, 2019,
and as of that date is repealed, unless a later enacted statute, that
is enacted before January 1, 2019, deletes or extends that date.

end delete

begin insert

begin insert SEC. 2. end insert   

end insert

begin insert Section 1633.3 of the end insert begin insert Civil Code end insert begin insert , as amended by
Section 4 of Chapter 913 of the Statutes of 2014, is amended to
read: end insert

1633.3.  

(a) Except as otherwise provided in subdivisions (b)
and (c), this title applies to electronic records and electronic
signatures relating to a transaction.

(b) This title does not apply to transactions subject to the
following laws:

(1) A law governing the creation and execution of wills, codicils,
or testamentary trusts.

(2) Division 1 (commencing with Section 1101) of the Uniform
Commercial Code, except Sections 1206 and 1306.

(3) Divisions 3 (commencing with Section 3101), 4
(commencing with Section 4101), 5 (commencing with Section
5101), 8 (commencing with Section 8101), 9 (commencing with
Section 9101), and 11 (commencing with Section 11101) of the
Uniform Commercial Code.

(4) A law that requires that specifically identifiable text or
disclosures in a record or a portion of a record be separately signed,
including initialed, from the record. However, this paragraph does
not apply to Section 1677 or 1678 of this code or Section 1298 of
the Code of Civil Procedure.

(c) This title does not apply to any specific transaction described
in Section 17511.5 of the Business and Professions Code, Section
56.11, 56.17, 798.14, 1133, or 1134 of, Section 1689.6, 1689.7,
or 1689.13 of, Chapter 2.5 (commencing with Section 1695) of
Title 5 of Part 2 of Division 3 of, Section 1720, 1785.15, 1789.14,
1789.16, or 1793.23 of, Chapter 1 (commencing with Section
1801) of Title 2 of Part 4 of Division 3 of, Section 1861.24, 1862.5,
1917.712, 1917.713, 1950.6, 1983, 2924b, 2924c, 2924f, 2924i,
2924j, 2924.3, or 2937 of, Article 1.5 (commencing with Section
2945) of Chapter 2 of Title 14 of Part 4 of Division 3 of, Section
2954.5 or 2963 of, Chapter 2b (commencing with Section 2981)
or 2d (commencing with Section 2985.7) of Title 14 of Part 4 of
Division 3 of, Section 3071.5 of Part 5 (commencing with Section
4000) of Division 4 of, or Part 5.3 (commencing with Section
6500) of Division 4 of this code, subdivision (b) of Section 18608
or Section 22328 of the Financial Code, Section 1358.15, 1365,
1368.01, 1368.1, 1371, or 18035.5 of the Health and Safety Code,
Section 662, 663, 664, 667.5, 673, 677, 678, 678.1, begin delete 786, 10086,
10113.7, 10127.7, 10127.9, 10127.10, end delete begin insert 786 as it applies to
individual and group disability policies, end insert 10192.18, 10199.44,
10199.46, 10235.16, 10235.40, begin delete 10509.4, 10509.7, end delete 11624.09, or
11624.1 of the Insurance Code, Section 779.1, 10010.1, or 16482
of the Public Utilities Code, or Section 9975 or 11738 of the
Vehicle Code. An electronic record may not be substituted for any
notice that is required to be sent pursuant to Section 1162 of the
Code of Civil Procedure. Nothing in this subdivision shall be
construed to prohibit the recordation of any document with a county
recorder by electronic means.

(d) This title applies to an electronic record or electronic
signature otherwise excluded from the application of this title under
subdivision (b) when used for a transaction subject to a law other
than those specified in subdivision (b).

(e) A transaction subject to this title is also subject to other
applicable substantive law.

(f) The exclusion of a transaction from the application of this
title under subdivision (b) or (c) shall be construed only to exclude
the transaction from the application of this title, but shall not be
construed to prohibit the transaction from being conducted by
electronic means if the transaction may be conducted by electronic
means under any other applicable law.

begin insert

(g) This section shall become operative on January 1, 2019.

end insert begin insert

(h) This section shall remain in effect only until January 1, 2021,
and as of that date is repealed, unless a later enacted statute, that
is enacted before January 1, 2021, deletes or extends that date.

end insert

begin insert

begin insert SEC. 3. end insert   

end insert

begin insert Section 1633.3 of the end insert begin insert Civil Code end insert begin insert , as amended by
Section 4 of Chapter 913 of the Statutes of 2014, is amended to
read: end insert

1633.3.  

(a) Except as otherwise provided in subdivisions (b)
and (c), this title applies to electronic records and electronic
signatures relating to a transaction.

(b) This title does not apply to transactions subject to the
following laws:

(1) A law governing the creation and execution of wills, codicils,
or testamentary trusts.

(2) Division 1 (commencing with Section 1101) of the Uniform
Commercial Code, except Sections 1206 and 1306.

(3) Divisions 3 (commencing with Section 3101), 4
(commencing with Section 4101), 5 (commencing with Section
5101), 8 (commencing with Section 8101), 9 (commencing with
Section 9101), and 11 (commencing with Section 11101) of the
Uniform Commercial Code.

(4) A law that requires that specifically identifiable text or
disclosures in a record or a portion of a record be separately signed,
including initialed, from the record. However, this paragraph does
not apply to Section 1677 or 1678 of this code or Section 1298 of
the Code of Civil Procedure.

(c) This title does not apply to any specific transaction described
in Section 17511.5 of the Business and Professions Code, Section
56.11, 56.17, 798.14, 1133, or 1134 of, Section 1689.6, 1689.7,
or 1689.13 of, Chapter 2.5 (commencing with Section 1695) of
Title 5 of Part 2 of Division 3 of, Section 1720, 1785.15, 1789.14,
1789.16, or 1793.23 of, Chapter 1 (commencing with Section
1801) of Title 2 of Part 4 of Division 3 of, Section 1861.24, 1862.5,
1917.712, 1917.713, 1950.6, 1983, 2924b, 2924c, 2924f, 2924i,
2924j, 2924.3, or 2937 of, Article 1.5 (commencing with Section
2945) of Chapter 2 of Title 14 of Part 4 of Division 3 of, Section
2954.5 or 2963 of, Chapter 2b (commencing with Section 2981)
or 2d (commencing with Section 2985.7) of Title 14 of Part 4 of
Division 3 of, Section 3071.5 of Part 5 (commencing with Section
4000) of Division 4 of, or Part 5.3 (commencing with Section
6500) of Division 4 of this code, subdivision (b) of Section 18608
or Section 22328 of the Financial Code, Section 1358.15, 1365,
1368.01, 1368.1, 1371, or 18035.5 of the Health and Safety Code,
Section 662, 663, 664, 667.5, 673, 677, 678, 678.1, 786, 10086,
10113.7, 10127.7, 10127.9, 10127.10, 10192.18, 10199.44,
10199.46, 10235.16, 10235.40, 10509.4, 10509.7, 11624.09, or
11624.1 of the Insurance Code, Section 779.1, 10010.1, or 16482
of the Public Utilities Code, or Section 9975 or 11738 of the
Vehicle Code. An electronic record may not be substituted for any
notice that is required to be sent pursuant to Section 1162 of the
Code of Civil Procedure. Nothing in this subdivision shall be
construed to prohibit the recordation of any document with a county
recorder by electronic means.

(d) This title applies to an electronic record or electronic
signature otherwise excluded from the application of this title under
subdivision (b) when used for a transaction subject to a law other
than those specified in subdivision (b).

(e) A transaction subject to this title is also subject to other
applicable substantive law.

(f) The exclusion of a transaction from the application of this
title under subdivision (b) or (c) shall be construed only to exclude
the transaction from the application of this title, but shall not be
construed to prohibit the transaction from being conducted by
electronic means if the transaction may be conducted by electronic
means under any other applicable law.

(g) This section shall become operative on January 1, begin delete 2019. end delete
begin insert 2021. end insert

begin insert

begin insert SEC. 4. end insert   

end insert

begin insert Section 38.6 is added to the end insert begin insert Insurance Code end insert begin insert , to read: end insert

begin insert

begin insert 38.6. end insert   

(a) (1) Any written record required to be given or mailed
to any person by a licensee relating to the business of life
insurance, as defined in Section 101 of this code may, if not
excluded by subdivision (b) or (c) of Section 1633.3 of the Civil
Code, be provided by electronic transmission pursuant to Title 2.5
(commencing with Section 1633.1) of Part 2 of Division 3 of the
Civil Code, if each party has agreed to conduct the transaction by
electronic means pursuant to Section 1633.5 of the Civil Code,
and if the licensee complies with the provisions of this section. A
valid electronic signature shall be sufficient for any provision of
law requiring a written signature.

(2) For purposes of this section, the definitions set forth in
Section 1633.2 of the Civil Code shall apply. The term “licensee”
means an insurer, agent, broker, or any other person who is
required to be licensed by the department.

(b) In order to transmit a life insurance record electronically,
a licensee shall comply with all of the following:

(1) A licensee, or licensee’s representative, acquires the consent
of the person to opt in to receive the record by electronic
transmission, and the person has not withdrawn that consent, prior
to providing the record by electronic transmission. A person’s
consent may be acquired verbally, in writing, or electronically. If
consent is acquired verbally, the licensee shall confirm consent in
writing or electronically. The licensee shall retain a record of the
person’s consent to receive the record by electronic transmission
with the policy information so that it is retrievable upon request
by the department while the policy is in force and for five years
thereafter.

(2) A licensee discloses, in writing or electronically, to the
person all of the following:

(A) The opt in to receive the record by electronic transmission
is voluntary.

(B) That the person may opt out of receiving the record by
electronic transmission at any time, and the process or system for
the person to opt out.

(C) A description of the record that the person will receive by
electronic transmission.

(D) The process or system to report a change or correction in
the person’s email address.

(E) The licensee’s contact information, which includes, but is
not limited to, a toll-free number or the licensee’s Internet Web
site address.

(3) The opt-in consent form required by paragraph (2) may be
set forth in the application or in a separate document that is part
of the policy approved by the commissioner and shall be bolded
or otherwise set forth in a conspicuous manner. The person’s
signature shall be set forth immediately below the person’s opt-in
consent. If the licensee seeks consent at any time prior to the
completion of the application, consent and signature shall be
obtained before the application is completed. If the person has not
opted in at the time the application is completed, the licensee may
receive the opt in consent at any time thereafter, pursuant to the
same opt in requirements that apply at the time of the application.
The licensee shall retain a copy of the confirmation and electronic
signature, if either is required, with the policy information so that
each is retrievable upon request by the department while the policy
is in force and for five years thereafter.

(4) The email address of the person who has consented to
electronic transmission shall be set forth on the consent form and
on the policy declaration page or annual statement if sent to the
person who has consented.

(5) The licensee shall annually provide one free printed copy
of any record described in this subdivision upon request by the
person.

(6) If a provision of this code requires a licensee to transmit a
record by regular mail, does not specify a method of delivery, or
is a record that is required to be provided pursuant to Article 6.6
(commencing with Section 791), and if the licensee is not otherwise
prohibited from transmitting the record electronically under
subdivision (b) of Section 1633.8 of the Civil Code, then the
licensee shall maintain a process or system that can demonstrate
that the record provided by electronic transmission was both sent
and received consistent with Section 1633.15 of the Civil Code. If
a different method of sending or receiving is agreed upon by the
licensee and the person pursuant to Section 1633.15 of the Civil
Code, a licensee shall comply with the provisions of this
subdivision. The licensee shall retain and document information
so that the documentation and information is retrievable upon
request by the department while the current policy is in force and
for five years thereafter related to its process or system
demonstrating that the record provided by electronic transmission
was sent to the person by the applicable statutory regular mail
delivery deadlines and received electronically. The record provided
by electronic transmission shall be treated as if mailed so long as
the licensee delivers the record to the person in compliance with
the applicable statutory regular mail delivery deadlines.

(A) Acceptable methods for a licensee to demonstrate that the
record was sent to the person include simple mail transfer protocol
server log files indicating transmission, or other methodologies
indicating sent transmission consistent with the standards set forth
in Section 1633.15 of the Civil Code.

(B) Acceptable methods for the licensee to demonstrate that the
record was received by the person include server log files
indicating that the email or application has been received, or log
files showing that the person logged into his or her secured account
with the licensee or other methodologies indicating received
transmission consistent with the standards set forth in Section
1633.15 of the Civil Code.

(7) Notwithstanding subdivision (b) of Section 1633.8 of the
Civil Code, if a provision of this code requires a licensee to
transmit a record by return receipt, registered mail, certified mail,
signed written receipt of delivery, or other method of delivery
evidencing actual receipt by the person, and if the licensee is not
otherwise prohibited from transmitting the record electronically
under Section 1633.3 of the Civil Code and the provisions of this
section, then the licensee shall maintain a process or system that
demonstrates proof of delivery and actual receipt of the record by
the person consistent with this paragraph. The licensee shall
document and retain information demonstrating delivery and actual
receipt so that it is retrievable, upon request, by the department
at least five years after the policy is no longer in force. The record
provided by electronic transmission shall be treated as if actually
received if the licensee delivers the record to the person in
compliance with applicable statutory delivery deadlines. A licensee
may demonstrate actual delivery and receipt by any of the
following:

(A) The person acknowledges receipt of the electronic
transmission of the record by returning an electronic receipt or
by executing an electronic signature.

(B) The record is made part of, or attached to, an email sent to
the email address designated by the person, and there is a
confirmation receipt, or some other evidence that the person
received the email in his or her email account and opened the
email.

(C) The record is posted on the licensee’s secure Internet Web
site, and there is evidence demonstrating that the person logged
onto the licensee’s secure Internet Web site and downloaded,
printed, or otherwise acknowledged receipt of the record.

(D) If a licensee is unable to demonstrate actual delivery and
receipt pursuant to this paragraph, the licensee shall resend the
record by regular mail to the person in the manner originally
specified by the underlying provision of this code.

(8) Any record required to be transmitted by first-class mail
and not otherwise prohibited from being transmitted electronically
may be transmitted under the provisions of paragraph (6), except
that any notice of nonrenewal, lapse, cancellation, or termination
of a policy of life insurance, as defined in Section 101, that is not
prohibited to be transmitted electronically by subdivision (a), may
be transmitted electronically, only if the licensee demonstrates
proof of electronic delivery and receipt as set forth in paragraph
(7). This paragraph applies to any law that requires notice of
nonrenewal, lapse, cancellation, or termination of a policy of life
insurance, including, but not limited to, subdivision (b) of Section
10113.71 and subdivision (c) of Section 10113.72.

(9) If the record is not delivered directly to the electronic
address designated by the person but placed at an electronic
address accessible to the person, a licensee shall notify the person
in plain, clear, and conspicuous language at the electronic address
designated by the person that describes the record, informs that
person that it is available at another location, and provides
instructions to the person as to how to obtain the record.

(10) (A) Upon a licensee receiving information indicating that
the record sent by electronic transmission was not received by the
person, the licensee shall, within five business days, comply with
either clause (i) or (ii):

(i) Contact the person to confirm or update the person’s email
address and resend the record by electronic transmission. If the
licensee elects to resend the record by electronic transmission, the
licensee shall demonstrate the transmission was received by the
person, pursuant to paragraph (6), (7), or (8). If the licensee is
unable to confirm or update the person’s email address, the
licensee shall resend the record by regular mail to the licensee at
the address shown on the policy, or if the underlying statute
requires delivery in a specified manner, send the record in that
specified manner.

(ii) Resend the record initially provided by electronic
transmission by regular mail to the insured at the address shown
on the policy, or if the underlying statute requires delivery in a
specified manner, send the record in that specified manner.

(B) If the licensee sends the first electronic record within the
time period required by law and the licensee complies with both
paragraph (5) and subparagraph (A) of this paragraph, the record
sent pursuant to clause (i) or (ii) of subparagraph (A) shall be
treated as if mailed in compliance with the applicable statutory
regular mail delivery deadlines.

(11) The licensee shall not charge any person who declines to
opt in to receive a record through electronic transmission from
receiving a record electronically. The licensee shall not provide
a discount or an incentive to any person to opt in to receive
electronic records.

(12) The licensee shall verify a person’s email address via paper
writing sent by regular mail when more than 12 months have
elapsed since the license’s last electronic communication.

(c) On or before January 1, 2020, the commissioner shall submit
a report to the Governor and to the committees of the Senate and
Assembly having jurisdiction over insurance and the judiciary,
regarding the impact and implementation of the authorization of
the electronic transmission of certain insurance renewal offers,
notices, or disclosures as authorized by this section. The report
shall include input from insurers, consumers, and consumer
organizations, and shall include an assessment of the department’s
experience pertaining to the authorization of the electronic
transmission of insurance renewals as authorized by this section.

(d) Notwithstanding paragraph (4) of subdivision (b) of Section
1633.3 of the Civil Code, for any policy of life insurance, as defined
in Section 101, any statutory requirement for a separate
acknowledgment, signature, or initial, which is not expressly
prohibited by subdivision (c) of Section 1633.3 of the Civil Code,
may be transacted using an electronic signature, or by electronic
transaction, subject to all applicable provisions of this section.

(e) The department may suspend a licensee from providing
records by electronic transmission if there is a pattern or practices
that demonstrate the licensee has failed to comply with the
requirements of this section. A licensee may appeal the suspension
and resume its electronic transmission of records upon
communication from the department that the changes the licensee
made to its process or system to comply with the requirements of
this section are satisfactory.

(f) This section shall remain in effect only until January 1, 2021,
and as of that date is repealed, unless a later enacted statute, that
is enacted before January 1, 2021, deletes or extends that date.

end insert