BILL ANALYSIS Ó AB 1512 Page 1 Date of Hearing: April 8, 2015 ASSEMBLY COMMITTEE ON INSURANCE Tom Daly, Chair AB 1512 (Committee on Insurance) - As Amendeded April 6, 2015 SUBJECT: Insurance: notice of lapse SUMMARY: Clarifies the application of rules authorizing the designation of third party recipients to receive lapse notices in connection with employer-provided disability income insurance. Specifically, this bill: 1)Deletes a requirement that the payroll deduction method be disclosed on an insurance application form. 2)Exempts disability income insurance policies from application of the lapse notice requirement if the premiums for the policy are entirely paid by the employer. EXISTING LAW: 1)Establishes, commencing January 1, 2016, that people who have homeowners insurance, automobile insurance, and individual disability income insurance have the right to designate a third party who will receive a copy of any notice that the policy is about to lapse. AB 1512 Page 2 2)Establishes the procedures that insurers must comply with in order to satisfy their obligations under this new law. 3)Includes, within the scope of disability income insurance, policies that are employer provided and paid. FISCAL EFFECT: Undetermined. COMMENTS: AB 1512 was introduced by the Committee on Insurance to correct a minor error in the application of AB 1804 (Perea) - Statutes 2014, Chapter 380 - which created the right to designate a third party recipient of lapse notices. Late in the Session last year, at a date when amending measures was difficult, life and disability insurers pointed out language that would apply these new lapse rules in a context - employer provided and paid coverage - where the third party lapse notice did not fit, and might cause unwarranted problems. Since AB 1804 had a delayed implementation date, an agreement was reached to address the issue this year, before the law takes effect. AB 1512 accomplishes that goal. REGISTERED SUPPORT / OPPOSITION: Support Association of California Life and Health Insurance Companies AB 1512 Page 3 Opposition None received. Analysis Prepared by:Mark Rakich / INS. / (916) 319-2086