BILL ANALYSIS Ó AB 1131 Page 1 Date of Hearing: May 20, 2015 ASSEMBLY COMMITTEE ON APPROPRIATIONS Jimmy Gomez, Chair AB 1131 (Dababneh) - As Amended May 14, 2015 ----------------------------------------------------------------- |Policy |Insurance |Vote:|13 - 0 | |Committee: | | | | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | | | | | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | | | | | | | | | | | | | | | ----------------------------------------------------------------- Urgency: No State Mandated Local Program: NoReimbursable: No SUMMARY: This bill, until January 1, 2021, permits consumers to receive documents and conduct some transactions related to life insurance, disability insurance, and annuities electronically. It also specifies requirements licensees must comply with in AB 1131 Page 2 order to use electronic delivery. FISCAL EFFECT: Minor and absorbable costs to the California Department of Insurance (CDI) to review and evaluate electronic transmission processes and procedures, and to review documentation provided to those consumers who have opted in to receive documents electronically. COMMENTS: 1)Purpose. According to the author, current law needs to be updated to allow broader use of voluntary e-delivery and e-signature of life insurance documents. Current law requires many transactions to have a "wet signature." This has prevented the life insurers from implementing a completely electronic sales process, presenting challenges to customers and agents, and undermining the benefits to insurers and consumers of full electronic processing. This bill is co-sponsored by CDI and the Association of California Life and Health Insurance Companies. 2)Background. The California Uniform Electronic Transactions Act (UETA) provides the law should be construed to facilitate electronic transmissions and that any transaction not specifically exempted from UETA may be conducted electronically, subject to specific rules including opt-in and opt-out provisions. However, current law prohibits the use of electronic transactions for many insurance products. Electronic signature has many benefits, including efficiency, speed, and economy. This bill would allow electronic delivery for some, but not all, insurance products. 3)Prior Legislation. SB 251 (Calderon), Chapter 369, Statutes of AB 1131 Page 3 2013, allowed policy renewal notices for property/casualty insurance policies to be delivered electronically. This bill closely parallels the requirements of SB 251 as it relates to notices and disclosures related to life insurance. However, this bill allows for a broader range of electronic transactions. Analysis Prepared by:Lisa Murawski / APPR. / (916) 319-2081