BILL NUMBER: AB 1131 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY MAY 4, 2015
INTRODUCED BY Assembly Member Dababneh
FEBRUARY 27, 2015
An act to amend and repeal Section 1633.3 of the Civil
Code, and to amend Sections 38.5, 38.8, 663, 678, and 678.1
of and to add and repeal Section 38.6 of 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 would would, for life insurance
records, 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. The bill would
also require the commissioner to submit a report, as specified.
This bill would make conforming changes.
Vote: majority. Appropriation: no. Fiscal committee: no
yes . 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, Section 786 as it applies to individual and group
disability policies, 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.
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.
SEC. 2. Section 1633.3 of the Civil
Code , as amended by Section 4 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, 663, 664, 667.5, 673, 677, 678,
678.1, 786, 10086, 10113.7, 10127.7, 10127.9, 10127.10,
786 as it applies to individual and group disability
policies, 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, 2019.
(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.
SEC. 3. Section 1633.3 of the Civil
Code , as amended by Section 4 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, 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,
2019. 2021.
SEC. 4. Section 38.6 is added to the
Insurance Code , to read:
38.6. (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.