BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                    AB 1512


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          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.








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          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











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          Opposition


          None received.




          Analysis Prepared by:Mark Rakich / INS. / (916) 319-2086