BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 1512|
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THIRD READING
Bill No: AB 1512
Author: Committee on Insurance
Amended: 6/1/15 in Senate
Vote: 21
SENATE INSURANCE COMMITTEE: 9-0, 6/10/15
AYES: Roth, Gaines, Berryhill, Glazer, Hall, Hernandez, Liu,
Mitchell, Wieckowski
ASSEMBLY FLOOR: 79-0, 4/16/15 (Consent) - See last page for
vote
SUBJECT: Insurance: notice of lapse
SOURCE: Association of California Life and Health Insurance
Companies
DIGEST: This bill clarifies the rules related to an insurer's
obligation to provide a policyholder with the opportunity to
designate a third-party recipient to receive an additional lapse
notice in connection with employer-provided individual
disability income insurance.
ANALYSIS:
Existing law:
1)Requires an insurer, commencing January 1, 2016, to maintain a
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process that allows policyholders of individual disability
income insurance policies to designate one additional person
to receive a notice of pending termination of the policy for
nonpayment of premium ("designation process").
2)Requires an insurer to notify policyholders of the designation
process within 30 days of the inception date of a policy and
at least every two years thereafter.
3)Suspends the designation process requirement when the premium
is paid through a payroll or pension deduction plan until 60
days after the policyholder is no longer on the deduction
plan.
4)Requires the application form for an insurance policy to
clearly indicate the deduction plan selected by the applicant.
This bill:
1)Clarifies that policies of individual disability income
insurance are not subject to the designation process
requirement when payments are made entirely by an employer.
2)Eliminates the requirement that the application form clearly
indicate the deduction plan selected by the applicant.
Background
This bill is a cleanup measure to AB 1804 (Perea, Chapter 380,
Statutes 2014), that requires, beginning January 1, 2016,
carriers of individual disability income insurance, and others,
to provide policyholders with the opportunity to designate a
third party to receive an additional notice when the policy will
terminate due to nonpayment. The extra notice is intended to
provide a failsafe against unintentional lapse. However, some
individual disability income policies are paid by or through the
insured's employer, so the designation would serve little, if
any, purpose.
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FISCAL EFFECT: Appropriation: No Fiscal
Com.:NoLocal: No
SUPPORT: (Verified6/16/15)
Association of California Life and Health Insurance Companies
(source)
American Council of Life Insurers
OPPOSITION: (Verified6/16/15)
None received
ARGUMENTS IN SUPPORT: Proponents explain that this bill
represents a minor clarification needed to ensure that
additional lapse notifications are not required in a group
context where the premiums are entirely paid by the employer.
ASSEMBLY FLOOR: 79-0, 4/16/15
AYES: Achadjian, Alejo, Travis Allen, Baker, Bigelow, Bloom,
Bonilla, Bonta, Brough, Brown, Burke, Calderon, Campos, Chang,
Chau, Chávez, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle,
Daly, Dodd, Eggman, Frazier, Beth Gaines, Gallagher, Cristina
Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez,
Gordon, Gray, Grove, Hadley, Harper, Roger Hernández, Holden,
Irwin, Jones, Jones-Sawyer, Kim, Lackey, Levine, Linder,
Lopez, Low, Maienschein, Mathis, Mayes, McCarty, Medina,
Melendez, Mullin, Nazarian, Obernolte, O'Donnell, Olsen,
Patterson, Perea, Rendon, Ridley-Thomas, Rodriguez, Salas,
Santiago, Steinorth, Mark Stone, Thurmond, Ting, Wagner,
Waldron, Weber, Wilk, Williams, Wood, Atkins
NO VOTE RECORDED: Quirk
Prepared by:Hugh Slayden / INS. / (916) 651-4110
6/17/15 13:58:25
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