California Legislature—2015–16 Regular Session

Assembly BillNo. 1515


Introduced by Committee on Insurance (Daly (Chair), Calderon, Cooley, Cooper, Dababneh, Frazier, Gatto, Gonzalez, Mayes, and Rodriguez)

March 5, 2015


An act to amend Sections 481, 510, 739.3, 742.34, 790.034, 1725.5, 1729.2, 1764.1, 1861.02, 1861.025, 10111.2, 10127.13, 10169, 10192.18, 10232.3, 10233.5, 10235.35, 12418.4, 12820, and 12921 of, and to repeal Section 10233.9 of, the Insurance Code, and to amend Section 1299.04 of the Penal Code, relating to insurance.

LEGISLATIVE COUNSEL’S DIGEST

AB 1515, as introduced, Committee on Insurance. Insurance.

(1) Existing law requires any insurance policy that includes a provision to refund premium other than on a pro rata basis, including the assessment of cancellation fees, to disclose that fact in writing, including the actual or maximum fees or penalties to be applied, which may be stated in the form of percentages of the premium. The disclosure is required to be provided prior to, or concurrent with, the application and prior to each renewal to which the policy provision applies.

This bill would require the disclosure to be on the first page of a policy and in a specified font size.

(2) Existing law requires certain insurance disclosures in various circumstances, including, but not limited to, when a life or disability insurance policy or certificate of coverage is first issued or delivered to a new insured or policyholder, when an employer obtains coverage from a multiple employer welfare arrangement, and when a claim is up for settlement.

This bill would require those disclosures to also include the Department of Insurance’s Internet Web site.

(3) Existing law defines the term “Adjusted RBC Report” as a Risk-Based Capital (RBC) report that has been adjusted by the Insurance Commissioner in accordance with specified provisions governing the determination of a property and casualty insurer’s RBC. Existing law requires the filing of an RBC report by a life or health insurer if the insurer has a Total Adjusted Capital that is greater than or equal to its Company Action Level RBC but the Total Adjusted Capital is less than the product of its Authorized Control Level RBC and 2.5.

This bill would require the RBC report if the Total Adjusted Capital is less than the product of its Authorized Control Level RBC and 3.0.

(4) Existing law provides requirements for various written insurance-related documents, including, among other things, the requirement on a licensee to include certain information on a business card, the requirement on all individual life insurance policies and individual annuity contracts to be in certain font, and an outline of coverage for long-term care insurance policies.

This bill would modify the requirements with respect to those written documents, as specified.

(5) Existing law requires an applicant or licensee to update his or her application if background information that was provided in the application for a license changes.

This bill would expand the definition of a license to include, among others, title insurance.

(6) This bill would make technical, nonsubstantive changes to correct obsolete cross-references and would delete obsolete provisions.

(7) Existing law, governing life and disability insurance, provides, among other things, that the only measure of insurer liability and damage is the sum payable to the insured in the manner and at the times as provided in the policy. Existing law requires, in addition, if any insurer fails to pay any benefits under a policy of disability income insurance, as defined, within 30 calendar days after the insurer has received all information needed to determine liability and has determined that liability exists, any delayed payment to bear interest, as specified.

This bill would specify that the above requirement to pay interest does not apply to health insurance, as defined.

(8) Existing law requires an outline of coverage to be delivered to a prospective applicant for long-term care insurance at the time of initial solicitation. Existing law specifies the form for the outline of coverage and requires the form to state that the policy provides coverage for insureds diagnosed with Alzheimer’s disease, organic disorders, or related degenerative and dementing illnesses.

This bill would require the form to state that the policy provides coverage for insureds for all mental illnesses.

(9) Existing law provides that any insurer offering long-term care insurance shall provide to the Department of Insurance a copy of the specimen individual policy form or group master policy and certificate forms, corresponding outline of coverage, and representative advertising materials to be used in the state.

This bill would eliminate that requirement.

(10) Existing law provides various procedural rights for, and requirements of, a title insurance representative applicant.

This bill would add the requirement to immediately notify the commissioner, using an approved method, of any change in email, other personal information, or other background information.

(11) Existing law requires the Insurance Commissioner to perform all duties imposed upon him or her by the Insurance Code and other laws regulating the business of insurance in this state and to enforce the execution of those provisions and laws. In an administrative action to enforce the Insurance Code and other laws regulating the business of insurance in this state, any settlement is subject to various requirements, including that the commissioner may delegate the power to negotiate the terms and conditions of a settlement, but shall not delegate the power to approve the settlement.

This bill would authorize the commissioner to delegate the power to approve settlements that do not involve an insurer, a managing general agent or production agent that manages the business of an insurer, a title company, a home protection company, an insurance adjuster whose claims practices are at issue, and an insurance agent or broker, or an insurance agent or broker applicant, who has allegedly engaged in theft, fraud, or the misappropriation of premium or other funds in an amount that exceeds $50,000.

(12) Existing law requires a licensed bail agent, bail permittee, or bail solicitor who engages, in the arrest of a defendant to satisfy specified requirements, including, among other things, the completion of 20 hours of classroom education pertinent to the duties and responsibilities of a bail licensee.

This bill would require a bail fugitive recovery person licensed after December 31, 2012, to have at least 20 hours of classroom prelicensing education, and a bail fugitive recovery person licensed between January 1, 1994, and December 31, 2012, to have at least 12 hours of classroom prelicensing education. The bill would provide that a person licensed prior to January 1, 1994, has no prelicensing education requirement.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

P4    1

SECTION 1.  

Section 481 of the Insurance Code is amended
2to read:

3

481.  

(a) Unless the insurance contract otherwise provides, a
4person insured is entitled to a return of his or her premium if the
5policy is canceled, rejected, surrendered, or rescinded, as follows:

6(1) To the whole premium, if the insurer has not been exposed
7to any risk of loss.

8(2) begin deleteWhere end deletebegin insertWhen end insertthe insurance is made for a definite period of
9time and the insured surrenders his or her policy, tobegin delete suchend deletebegin insert thatend insert
10 proportion of the premium as corresponds with the unexpired time,
11after deducting from the whole premium any claim for loss or
12damage under the policybegin delete whichend deletebegin insert thatend insert has previously accrued. The
13provisions of Section 482 apply only to the expired time.

14(b) No contract for individual motor vehicle liability or
15homeowners’ multiple-peril insurance may contain a provision
16begin delete whichend deletebegin insert thatend insert mandates that the premium for the policy shall be fully
17earned upon the happening of any contingency except the
18expiration of the policy itself. This subdivision shall not apply to
19policy fees or membership fees.

20(c) (1) Any insurance policy that includes a provision to refund
21premium other than on a pro rata basis, including the assessment
22of cancellation fees, shall disclose that fact in writing, including
23the actual or maximum fees or penalties to be applied, which may
24be stated in the form of percentages of the premium. The disclosure
25shall be provided prior to, or concurrent with, the application and
26prior to each renewal to which the policy provision applies.begin insert The
27disclosure shall be in at least 11-point font. For personal lines
28new business, the disclosure shall be included on the first page of
29the application. For commercial lines new business, the disclosure
30shall be included on the first page of the application or as a
31separate stand-alone page in the application. For renewals, the
P5    1disclosure shall be included in the actual notice and displayed on
2the first page of the declaration pages.end insert
For purposes of this
3subdivision, an insurer offering workers’ compensation insurance,
4as defined in Section 109, may provide the disclosure with the
5quote offering insurance to the consumer prior to the consumer
6accepting the quote in lieu of disclosure prior to or concurrent with
7the application. Disclosure shall not be required if the policy
8provision permits, but does not require, the insurer to refund
9premium other than on a pro rata basis, and the insurer refunds
10premium on a pro rata basis.

11(2) If an application is made by telephone, the disclosure shall
12be mailed to the applicant or insured within five business days.

13(3) The disclosure may be made electronically pursuant to
14Section 38.5 in lieu of being mailed.

15(4) This section does not apply to cancellations that are
16calculated subject to paragraph (2) of subdivision (g) of Section
17673.

18(d) This section shall not apply to policies of ocean marine
19insurance. For purposes of this section, “ocean marine insurance”
20means insurance of vessels or crafts, their cargos, marine builders’
21risks, marine protection and indemnity, or other risks commonly
22insured under marine insurance governed by the provisions of
23Chapter 1 (commencing with Section 1880) of Part 1 of Division
242, and as distinguished from inland marine insurance policies.

25(e) The disclosure requirements of subdivision (c) shall be
26prospective and shall apply only to policies issued or renewed on
27or after January 1,begin delete 2012.end deletebegin insert 2016.end insert

28(f) Nothing in this section shall require any additional disclosure
29of a fee or penalty for early cancellation if that disclosure is
30required by any other provision of law.

31

SEC. 2.  

Section 510 of the Insurance Code is amended to read:

32

510.  

Whenever a policy of insurance specified in Section 660
33or 675, a policy of life insurance as defined in Section 101, a policy
34of disability insurance as defined in Section 106, or a certificate
35of coverage as defined in Section 10270.6, is first issued to or
36delivered to a new insured or a new policyholder in this state, the
37insurer shall include a written disclosure containing the name,
38address,begin delete andend delete toll-free telephonebegin delete numberend deletebegin insert number, and Internet Web
39siteend insert
of the unit within the Department of Insurance that deals with
40consumer affairs. The telephone number shall be the same as that
P6    1provided to consumers under Section 12921.1. The disclosure shall
2be printed in large, boldface type.

3The disclosure shall also contain the address and customer
4service telephone number of the insurer, or the address and
5customer service telephone number of the agent or broker of record,
6or all of those addresses and telephone numbers. All addresses and
7telephone numbers for the insurer or the agent or broker of record
8shall be prominently displayed, in boldfaced type. The disclosure
9shall also contain a statement that the Department of Insurance
10should be contacted only after discussions with the insurer, or its
11agent or other representative, or both, have failed to produce a
12satisfactory resolution to the problem. If the policy or certificate
13was issued or delivered by an agent or broker, the disclosure shall
14specifically advise the insured to contact his or her agent or broker
15for assistance.

16

SEC. 3.  

Section 739.3 of the Insurance Code is amended to
17read:

18

739.3.  

(a) “Company Action Level Event” means any of the
19following events:

20(1) The filing of an RBC Report by an insurer that indicates any
21of the following:

22(A) The insurer’s Total Adjusted Capital is greater than or equal
23to its Regulatory Action Level RBC but less than its Company
24Action Level RBC.

25(B) If a life or health insurer, the insurer has Total Adjusted
26Capital that is greater than or equal to its Company Action Level
27RBC but less than the product of its Authorized Control Level
28RBC andbegin delete 2.5,end deletebegin insert 3.0,end insert and has a negative trend.

29(C) If a property and casualty insurer, the insurer has Total
30Adjusted Capital that is greater than or equal to its Company Action
31Level RBC but less than the product of its Authorized Control
32Level RBC and 3.0, and triggers the trend test determined in
33accordance with the trend test calculation included in the Property
34and Casualty RBC instructions.

35(2) The notification by the commissioner to the insurer of an
36Adjusted RBC Report that indicates the event in paragraph (1),
37provided that the insurer does not challenge the Adjusted RBC
38Report under Section 739.7.

39(3) If the insurer challenges, under Section 739.7, an Adjusted
40RBC Report that indicates the event in paragraph (1), the
P7    1notification by the commissioner to the insurer that the
2 commissioner has, after a hearing, rejected the insurer’s challenge.

3(b) In the event of a Company Action Level Event, the insurer
4shall prepare and submit to the commissioner a comprehensive
5financial plan that shall do all of the following:

6(1) Identify the conditions in the insurer that contribute to the
7Company Action Level Event.

8(2) Contain proposals of corrective actions that the insurer
9intends to take and would be expected to result in the elimination
10of the Company Action Level Event.

11(3) Provide projections of the insurer’s financial results in the
12current year and at least the four succeeding years, both in the
13absence of proposed corrective actions and giving effect to the
14proposed corrective actions, including projections of statutory
15 operating income, net income, capital, or surplus, or a combination.
16The projections for both new and renewal business may include
17separate projections for each major line of business and separately
18identify each significant income, expense, and benefit component.

19(4) Identify the key assumptions impacting the insurer’s
20projections and the sensitivity of the projections to the assumptions.

21(5) Identify the quality of, and problems associated with, the
22insurer’s business, including, but not limited to, its assets,
23anticipated business growth and associated surplus strain,
24extraordinary exposure to risk, mix of business, and use of
25reinsurance in each case, if any.

26(c) The RBC Plan shall be submitted as follows:

27(1) Within 45 days of the Company Action Level Event.

28(2) If the insurer challenges an Adjusted RBC Report pursuant
29to Section 739.7, within 45 days after notification to the insurer
30that the commissioner has, after a hearing, rejected the insurer’s
31challenge.

32(d) Within 60 days after the submission by an insurer of an RBC
33Plan to the commissioner, the commissioner shall notify the insurer
34whether the RBC Plan shall be implemented or is, in the judgment
35of the commissioner, unsatisfactory. If the commissioner
36determines that the RBC Plan is unsatisfactory, the notification to
37the insurer shall set forth the reasons for the determination, and
38may set forth proposed revisions that will render the RBC Plan
39satisfactory, in the judgment of the commissioner. Upon
40notification from the commissioner, the insurer shall prepare a
P8    1Revised RBC Plan, which may incorporate by reference revisions
2proposed by the commissioner, and shall submit the Revised RBC
3Plan to the commissioner as follows:

4(1) Within 45 days after the notification from the commissioner.

5(2) If the insurer challenges the notification from the
6commissioner under Section 739.7, within 45 days after a
7notification to the insurer that the commissioner has, after a
8hearing, rejected the insurer’s challenge.

9(e) In the event of a notification by the commissioner to an
10insurer that the insurer’s RBC Plan or Revised RBC Plan is
11unsatisfactory, the commissioner may, at his or her discretion,
12subject to the insurer’s right to a hearing under Section 739.7,
13specify in the notification that the notification constitutes a
14Regulatory Action Level Event.

15(f) Every domestic insurer that files an RBC Plan or Revised
16RBC Plan with the commissioner shall file a copy of the RBC Plan
17or Revised RBC Plan with the insurance commissioner in any state
18in which the insurer is authorized to do business if both of the
19following apply:

20(1) That state has an RBC provision substantially similar to
21subdivision (a) of Section 739.8.

22(2) The insurance commissioner of that state has notified the
23insurer of its request for the filing in writing, in which case the
24insurer shall file a copy of the RBC Plan or Revised RBC Plan in
25that state no later than the later of:

26(A) Fifteen days after the receipt of notice to file a copy of its
27RBC Plan or Revised RBC Plan with the state.

28(B) The date on which the RBC Plan or Revised RBC Plan is
29filed under subdivision (c) of Section 739.7.

30

SEC. 4.  

Section 742.34 of the Insurance Code is amended to
31read:

32

742.34.  

(a) The following notice shall be provided to
33employers and employees who obtain coverage from a multiple
34employer welfare arrangement:

3536NOTICE
37

38(A) THE MULTIPLE EMPLOYER WELFARE
39ARRANGEMENT IS NOT AN INSURANCE COMPANY AND
40DOES NOT PARTICIPATE IN ANY OF THE GUARANTEE
P9    1FUNDS CREATED BY CALIFORNIA LAW. THEREFORE,
2THESE FUNDS WILL NOT PAY YOUR CLAIMS OR
3PROTECT YOUR ASSETS IF A MULTIPLE EMPLOYER
4WELFARE ARRANGEMENT BECOMES INSOLVENT AND
5IS UNABLE TO MAKE PAYMENTS AS PROMISED.

6(B) THE HEALTH CARE BENEFITS THAT YOU HAVE
7PURCHASED OR ARE APPLYING TO PURCHASE ARE
8BEING ISSUED BY A MULTIPLE EMPLOYER WELFARE
9ARRANGEMENT THAT IS LICENSED BY THE STATE OF
10 CALIFORNIA.

11(C) FOR ADDITIONAL INFORMATION ABOUT THE
12MULTIPLE EMPLOYER WELFARE ARRANGEMENT YOU
13SHOULD ASK QUESTIONS OF YOUR TRUST
14ADMINISTRATOR OR YOU MAY CONTACT THE
15CALIFORNIA DEPARTMENT OF INSURANCE AT ________.

16(b) Each multiple employer welfare arrangement should include
17the department’s current “800” consumer service telephone number
18begin insert and Internet Web site addressend insert in the blank provided in paragraph
19(C) of this notice.

20

SEC. 5.  

Section 790.034 of the Insurance Code is amended to
21read:

22

790.034.  

(a) Regulations adopted by the commissioner
23pursuant to this article that relate to the settlement of claims shall
24take into consideration settlement practices by classes of insurers.

25(b) (1) Upon receiving notice of a claim, every insurer shall
26immediately, but no more than 15 calendar days after receipt of
27the claim, provide the insured with a legible reproduction of
28subdivisions (h) and (i) of Section 790.03 along with a written
29notice containing the following language in at least 10-point type:


31“In addition to Section 790.03 of the Insurance Code, Fair Claims
32Settlement Practices Regulations govern how insurance claims
33must be processed in this state. These regulations are available at
34the Department of Insurance Internet Web site,
35begin delete www.insurance.ca.gov.end deletebegin insert www.insurance.ca.gov, or by calling the
36department’s consumer information line at
371-800-927-HELP(4357).end insert
You may also obtain a copy of this law
38and these regulations free of charge from this insurer.”begin insertqzqend insert


P10   1(2) Every insurer shall provide, when requested orally or in
2writing by an insured, a legible reproduction of Section 790.03 of
3the Insurance Code and copies of Sections 2695.5, 2695.7, 2695.8,
4and 2695.9 of Subchapter 7.5 of Chapter 5 of Title 10 of the
5California Code of Regulations, unless the regulations are
6inapplicable to that class of insurer. This law and these regulations
7shall be provided to the insured within 15 calendar days of request.

8(3) The provisions of this subdivision shall apply to all insurers
9except for those that are licensed pursuant to Chapter 1
10(commencing with Section 12340) of Part 6 of Division 2, with
11respect to policies and endorsements described in Section 790.031.

12

SEC. 6.  

Section 1725.5 of the Insurance Code is amended to
13read:

14

1725.5.  

(a) For purposes of Sections 32.5, 1625, 1626, 1724.5,
151758.1, 1765, 1800, 14020, 14021, and 15006, every licensee shall
16prominently affix, type, or cause to be printed on business cards,
17written price quotations for insurance products, and print
18advertisements distributed exclusively in this state for insurance
19products its license number in type the same size as any indicated
20telephone number, address, or fax number. If the licensee maintains
21more than one organization license, one of the organization license
22numbers is sufficient for compliance with this section.

23(b) Effective January 1, 2005, for purposes of Sections 32.5,
241625, 1626, 1724.5, 1758.1, 1765,begin delete 1800,end delete 14020, 14021, and 15006,
25every licensee shall prominently affix, type, or cause to be printed
26on business cards, written price quotations for insurance products,
27and print advertisements, distributed in this state for insurance
28products, the word “Insurance” in type sizebegin delete no smaller than the
29largest indicated telephone number.end delete
begin insert that is at least as large as the
30smallest telephone number or 12-point font, whichever is larger.end insert

31(c) In the case of transactors, or agent and broker licensees, who
32are classified for licensing purposes as solicitors, working as
33exclusive employees of motor clubs, organizational licensee
34numbers shall be used.

35(d) Any person in violation of this section shall be subject to a
36fine levied by the commissioner in the amount of two hundred
37dollars ($200) for the first offense, five hundred dollars ($500) for
38the second offense, and one thousand dollars ($1,000) for the third
39and subsequent offenses. The penalty shall not exceed one thousand
P11   1dollars ($1,000) for any one offense. These fines shall be deposited
2into the Insurance Fund.

3(e) A separate penalty shall not be imposed upon each piece of
4printed material that fails to conform to the requirements of this
5section.

6(f) If the commissioner finds that the failure of a licensee to
7comply with the provisions of subdivision (a) or (b) is due to
8reasonable cause or circumstance beyond the licensee’s control,
9and occurred notwithstanding the exercise of ordinary care and in
10the absence of willful neglect, the licensee may be relieved of the
11penalty in subdivision (d).

12(g) A licensee seeking to be relieved of the penalty in
13subdivision (d) shall file with the department a statement with
14supporting documents setting forth the facts upon which the
15licensee bases its claims for relief.

16(h) This section does not apply to any person or entity that is
17not currently required to be licensed by the department or that is
18exempted from licensure.

19(i) This section does not apply to general advertisements of
20motor clubs that merely list insurance products as one of several
21services offered by the motor club, and do not provide any details
22of the insurance products.

23(j) This section does not apply to life insurance policy
24illustrations required by Chapter 5.5 (commencing with Section
2510509.950) of Part 2 of Division 2 or to life insurance cost indexes
26required by Chapter 5.6 (commencing with Section 10509.970)
27of Part 2 of Division 2.

28(k) This section shall become operative January 1, 1997.

29

SEC. 7.  

Section 1729.2 of the Insurance Code is amended to
30read:

31

1729.2.  

(a) An applicant or licensee shall notify the
32commissioner when any of the background information set forth
33in this section changes after the application has been submitted or
34the license has been issued. If the licensee is listed as an endorsee
35on any business entity license, the licensee shall also provide this
36notice to any officer, director, or partner listed on that business
37entity license.

38(b) A business entity licensee, upon learning of a change in
39background information pertaining to any unlicensed person listed
40on its business entity license or application therefor, shall notify
P12   1the commissioner of that change. The changes subject to this
2requirement include changes pertaining to any unlicensed officer,
3director, partner, member, or controlling person, or any other
4natural person named under the business entity license or in an
5application therefor.

6(c) The following definitions apply for the purposes of this
7section:

8(1) “License” includes all types of licenses issued by the
9 commissioner pursuant to Chapter 5 (commencing with Section
101621), Chapter 5A (commencing with Section 1759), Chapter 6
11(commencing with Section 1760), Chapter 6.5 (commencing with
12Section 1781.1), Chapter 7 (commencing with Section 1800), and
13Chapter 8 (commencing with Section 1831) of Part 2 of Division
141,begin insert Chapter 1 (commencing with Section 10110) of Part 2 of
15Division 2,end insert
Chapter 4 (commencing with Section 12280) of Part
165 of Division 2,begin insert Article 8 (commencing with Section 12418) of
17Chapter 1 of Part 6 of Division 2,end insert
and Chapter 1 (commencing
18with Section 14000) and Chapter 2 (commencing with Section
1915000) of Division 5.

20(2) “Background information” means any of the following: a
21misdemeanor or felony conviction; a filing of felony criminal
22charges in state or federal court; an administrative action regarding
23a professional or occupational license; any licensee’s discharge or
24attempt to discharge, in a personal or organizational bankruptcy
25proceeding, an obligation regarding any insurance premiums or
26fiduciary funds owed to any company, including a premium finance
27company, or managing general agent; and any admission, or
28judicial finding or determination, of fraud, misappropriation or
29conversion of funds, misrepresentation, or breach of fiduciary
30duty.

31(3) “Applicant” and “licensee” include individual and
32organization applicants and licensees, and officers, directors,
33partners, members, and controlling persons (as defined in
34subdivision (b) of Section 1668.5) of an organization.

35(d) Notification to the commissioner shall be in writing and
36shall be sent within 30 days of the date the applicant or licensee
37learns of the change in background information.

38(e) The commissioner may adopt regulations necessary or
39desirable to implement this section.

P13   1

SEC. 8.  

Section 1764.1 of the Insurance Code is amended to
2read:

3

1764.1.  

(a) (1) Every nonadmitted insurer, in the case of
4insurance to be purchased by a home state insured pursuant to
5Section 1760, and surplus line broker, in the case of any insurance
6with a nonadmitted carrier for a home state insured to be transacted
7by the surplus line broker, shall be responsible to ensure that, at
8the time of accepting an application for an insurance policy, other
9than a renewal of that policy, issued by a nonadmitted insurer, the
10signature of the applicant on the disclosure statement set forth in
11subdivision (b) is obtained. In fulfillment of this responsibility,
12the nonadmitted insurer and the surplus line broker may rely, if it
13is reasonable under all the circumstances to do so, on the disclosure
14statement received from a licensee involved in the transaction as
15prima facie evidence that the disclosure statement and appropriate
16signature from the applicant have been obtained. The surplus line
17broker shall maintain a copy of the signed disclosure statement in
18his or her records for a period of at least five years. These records
19shall be made available to the commissioner and the insured upon
20request. This disclosure shall be signed by the applicant, and is
21not subject to a limited power of attorney agreement between the
22applicant and an agent or broker or a surplus line broker. The
23disclosure statement shall be in boldface 16-point type on a
24freestanding document. In addition, every policy issued by a
25nonadmitted insurer and every certificate evidencing the placement
26of insurance shall contain, or have affixed to it by the insurer or
27surplus line broker, the disclosure statement set forth in subdivision
28(b) in boldface 16-point type on the front page of the policy.

29(2) In a case in which the applicant has not received and
30 completed the signed disclosure form required by this section, he
31or she may cancel the insurance so placed. The cancellation shall
32be on a pro rata basis as to premium, and the applicant shall be
33entitled to the return of any broker’s fees charged for the placement.

34(b) The following notice shall be provided to home state insureds
35and home state insured applicants for insurance as provided by
36subdivision (a), and shall be printed in English and in the language
37principally used by the surplus line broker and nonadmitted insurer
38to advertise, solicit, or negotiate the sale and purchase of surplus
39line insurance. The surplus line broker and nonadmitted insurer
P14   1shall use the appropriate bracketed language for application and
2issued policy disclosures:

34“NOTICE:
5

61. THE INSURANCE POLICY THAT YOU [HAVE
7PURCHASED] [ARE APPLYING TO PURCHASE] IS BEING
8ISSUED BY AN INSURER THAT IS NOT LICENSED BY THE
9STATE OF CALIFORNIA. THESE COMPANIES ARE CALLED
10“NONADMITTED” OR “SURPLUS LINE” INSURERS.

112. THE INSURER IS NOT SUBJECT TO THE FINANCIAL
12SOLVENCY REGULATION AND ENFORCEMENT THAT
13APPLY TO CALIFORNIA LICENSED INSURERS.

143. THE INSURER DOES NOT PARTICIPATE IN ANY OF
15THE INSURANCE GUARANTEE FUNDS CREATED BY
16CALIFORNIA LAW. THEREFORE, THESE FUNDS WILL
17NOT PAY YOUR CLAIMS OR PROTECT YOUR ASSETS IF
18THE INSURER BECOMES INSOLVENT AND IS UNABLE
19TO MAKE PAYMENTS AS PROMISED.

204. THE INSURER SHOULD BE LICENSED EITHER AS A
21FOREIGN INSURER IN ANOTHER STATE IN THE UNITED
22STATES OR AS A NON-UNITED STATES (ALIEN) INSURER.
23YOU SHOULD ASK QUESTIONS OF YOUR INSURANCE
24AGENT, BROKER, OR “SURPLUS LINE” BROKER OR
25CONTACT THE CALIFORNIA DEPARTMENT OF
26INSURANCE AT THE FOLLOWING TOLL-FREE
27TELEPHONE NUMBER ____begin insert OR INTERNET WEB SITE
28WWW.INSURANCE.CA.GOVend insert
. ASK WHETHER OR NOT THE
29INSURER IS LICENSED AS A FOREIGN OR NON-UNITED
30STATES (ALIEN) INSURER AND FOR ADDITIONAL
31INFORMATION ABOUT THE INSURER. YOU MAY ALSO
32CONTACT THE NAIC’S INTERNET WEB SITE AT
33WWW.NAIC.ORG.

345. FOREIGN INSURERS SHOULD BE LICENSED BY A
35STATE IN THE UNITED STATES AND YOU MAY CONTACT
36THAT STATE’S DEPARTMENT OF INSURANCE TO OBTAIN
37MORE INFORMATION ABOUT THAT INSURER.

386. FOR NON-UNITED STATES (ALIEN) INSURERS, THE
39INSURER SHOULD BE LICENSED BY A COUNTRY
40OUTSIDE OF THE UNITED STATES AND SHOULD BE ON
P15   1THE NAIC’S INTERNATIONAL INSURERS DEPARTMENT
2(IID) LISTING OF APPROVED NONADMITTED
3NON-UNITED STATES INSURERS. ASK YOUR AGENT,
4BROKER, OR “SURPLUS LINE” BROKER TO OBTAIN MORE
5INFORMATION ABOUT THAT INSURER.

67. CALIFORNIA MAINTAINS A LIST OF APPROVED
7SURPLUS LINE INSURERS. ASK YOUR AGENT OR BROKER
8IF THE INSURER IS ON THAT LIST, OR VIEW THAT LIST
9AT THE INTERNET WEB SITE OF THE CALIFORNIA
10DEPARTMENT OF INSURANCE:
11WWW.INSURANCE.CA.GOV.

128. IF YOU, AS THE APPLICANT, REQUIRED THAT THE
13INSURANCE POLICY YOU HAVE PURCHASED BE BOUND
14IMMEDIATELY, EITHER BECAUSE EXISTING COVERAGE
15WAS GOING TO LAPSE WITHIN TWO BUSINESS DAYS OR
16BECAUSE YOU WERE REQUIRED TO HAVE COVERAGE
17WITHIN TWO BUSINESS DAYS, AND YOU DID NOT
18RECEIVE THIS DISCLOSURE FORM AND A REQUEST FOR
19YOUR SIGNATURE UNTIL AFTER COVERAGE BECAME
20EFFECTIVE, YOU HAVE THE RIGHT TO CANCEL THIS
21POLICY WITHIN FIVE DAYS OF RECEIVING THIS
22DISCLOSURE. IF YOU CANCEL COVERAGE, THE PREMIUM
23WILL BE PRORATED AND ANY BROKER’S FEE CHARGED
24FOR THIS INSURANCE WILL BE RETURNED TO YOU.”


26(c) When a contract is issued to an industrial insured, neither
27the nonadmitted insurer nor the surplus line broker is required to
28provide the notice required in this section except on the
29confirmation of insurance, the certificate of placement, or the
30policy, whichever is first provided to the insured, nor is the insurer
31or surplus line broker required to obtain the insured’s signature.
32The producer shall ensure that the notice affixed to the confirmation
33of insurance, certificate of placement, or the policy is provided to
34the insured. The producer shall insert the current toll-free telephone
35number of the Department of Insurance as provided in paragraph
364 of the notice.

37(1) An industrial insured is an insured that does both of the
38following:

39(A) Employs at least 25 employees on average during the prior
4012 months.

P16   1(B) Has aggregate annual premiums for insurance for all risks
2other than workers’ compensation and health coverage totaling no
3less than twenty-five thousand dollars ($25,000) or obtains
4insurance through the services of a full-time employee acting as
5an insurance manager or a continuously retained insurance
6consultant. A “continuously retained insurance consultant” does
7not include: (i) an agent or broker through whom the insurance is
8 being placed, (ii) a subagent or subproducer involved in the
9transaction, or (iii) an agent or broker that is a business organization
10employing or contracting with a person mentioned in clauses (i)
11and (ii).

12(2) The surplus line broker shall be responsible for ensuring
13that the applicant is an industrial insured. A surplus line broker
14who reasonably relies on information provided in good faith by
15the applicant, whether directly or through the producer, shall be
16deemed to be in compliance with this requirement.

17(d) For purposes of compliance with the requirement of
18subdivision (a) that the signature of the applicant be obtained, the
19following shall apply:

20(1) If the insurance transaction is not conducted at an in-person,
21face-to-face meeting, the applicant’s signature on the disclosure
22form may be transmitted by the applicant to the agent or broker
23via facsimile or comparable electronic transmittal.

24(2) In the case of commercial lines coverage, or personal
25insurance coverage subject to Section 675 and any umbrella
26coverage associated therewith, where an applicant requires that
27insurance coverage be bound immediately, either because existing
28coverage will lapse within two business days of the time the
29insurance is bound or because the applicant is required to have
30 coverage in place within two business days, and the applicant
31cannot meet in person with the agent or broker to sign the
32disclosure form, the agent or broker may obtain the signature of
33the applicant within five days of binding coverage, provided that
34the applicant may cancel the insurance so placed within five days
35of receiving the disclosure form from the agent or broker. The
36cancellation shall be on a pro rata basis, and the applicant shall be
37entitled to the rescission or return of any broker’s fees charged for
38the placement. When a policy is canceled, the broker shall inform
39the applicant that the broker’s fee must be returned and that the
40premium must be prorated.

P17   1(e) Notwithstanding subdivision (a), this section shall not apply
2to insurance issued or delivered in this state by a nonadmitted
3Mexican insurer by and through a surplus line broker affording
4coverage exclusively in the Republic of Mexico on property located
5temporarily or permanently in, or operations conducted temporarily
6or permanently within, the Republic of Mexico.

7

SEC. 9.  

Section 1861.02 of the Insurance Code is amended to
8read:

9

1861.02.  

(a) Rates and premiums for an automobile insurance
10policy, as described in subdivision (a) of Section 660, shall be
11determined by application of the following factors in decreasing
12order of importance:

13(1) The insured’s driving safety record.

14(2) The number of miles he or she drives annually.

15(3) The number of years of driving experience the insured has
16had.

17(4) Those other factors that the commissioner may adopt by
18regulation and that have a substantial relationship to the risk of
19loss. The regulations shall set forth the respective weight to be
20given each factor in determining automobile rates and premiums.
21Notwithstanding any other provision of law, the use of any criterion
22without approval shall constitute unfair discrimination.

23(b) (1) Every person who meets the criteria of Section 1861.025
24shall be qualified to purchase a Good Driver Discount policy from
25the insurer of his or her choice. An insurer shall not refuse to offer
26and sell a Good Driver Discount policy to any person who meets
27the standards of this subdivision.

28(2) The rate charged for a Good Driver Discount policy shall
29comply with subdivision (a) and shall be at leastbegin delete 20%end deletebegin insert 20 percentend insert
30 below the rate the insured would otherwise have been charged for
31the same coverage. Rates for Good Driver Discount policies shall
32be approved pursuant to this article.

33(3) (A) This subdivision shall not prevent a reciprocal insurer,
34organized prior to November 8, 1988, by a motor club holding a
35certificate of authority under Chapter 2 (commencing with Section
3612160) of Part 5 of Division 2, andbegin delete whichend deletebegin insert thatend insert requires membership
37in the motor club as a condition precedent to applying for insurance
38from requiring membership in the motor club as a condition
39precedent to obtaining insurance described in this subdivision.

P18   1(B) This subdivision shall not prevent an insurerbegin delete whichend deletebegin insert thatend insert
2 requires membership in a specified voluntary, nonprofit
3organization, which was in existence prior to November 8, 1988,
4as a condition precedent to applying for insurance issued to or
5through those membership groups, including franchise groups,
6from requiringbegin delete suchend deletebegin insert thatend insert membership as a condition to applying
7for the coverage offered to members of the group, provided that
8it or an affiliate also offers and sells coverage to those who are not
9members of those membership groups.

10(C) However, all of the following conditions shall be applicable
11to the insurance authorized by subparagraphs (A) and (B):

12(i) Membership, if conditioned, is conditioned only on timely
13payment of membership dues and other bona fide criteria not based
14upon driving record or insurance, provided that membership in a
15motor club may not be based on residence in any area within the
16state.

17(ii) Membership dues are paid solely for and in consideration
18of the membership and membership benefits and bear a reasonable
19relationship to the benefits provided. The amount of the dues shall
20not depend on whether the member purchases insurance offered
21by the membership organization. None of those membership dues
22or any portion thereof shall be transferred by the membership
23organization to the insurer, or any affiliate of the insurer,
24attorney-in-fact, subsidiary, or holding company thereof, provided
25that this provision shall not prevent any bona fide transaction
26between the membership organization and those entities.

27(iii) Membership provides bona fide services or benefits in
28addition to the right to apply for insurance. Those services shall
29be reasonably available to all members within each class of
30membership.

31Any insurer that violates clause (i), (ii), or (iii) shall be subject
32to the penalties set forth in Section 1861.14.

33(c) The absence of prior automobile insurance coverage, in and
34of itself, shall not be a criterion for determining eligibility for a
35Good Driver Discount policy, or generally for automobile rates,
36premiums, or insurability. begin delete However, notwithstanding subdivision
37(a), an insurer may use persistency of automobile insurance
38coverage with the insurer, an affiliate, or another insurer as an
39optional rating factor. The Legislature hereby finds and declares
40that it furthers the purpose of Proposition 103 to encourage
P19   1competition among carriers so that coverage overall will be priced
2competitively. The Legislature further finds and declares that
3competition is furthered when insureds are able to claim a discount
4for regular purchases of insurance from any carrier offering this
5discount irrespective of whether or not the insured has previously
6purchased from a given carrier offering the discount. Persistency
7of coverage may be demonstrated by coverage under the low-cost
8automobile insurance program pursuant to Article 5.5 (commencing
9with Section 11629.7) and Article 5.6 (commencing with Section
1011629.9) of Chapter 1 of Part 3 of Division 2, or by coverage under
11the assigned risk plans pursuant to Article 4 (commencing with
12Section 11620) of Chapter 1 of Part 3 of Division 2. Persistency
13shall be deemed to exist even if there is a lapse of coverage of up
14to two years due to an insured’s absence from the state while in
15military service, and up to 90 days in the last five years for any
16other reason.end delete

17(d) An insurer may refuse to sell a Good Driver Discount policy
18insuring a motorcycle unless all named insureds have been licensed
19to drive a motorcycle for the previous three years.

20(e) This section shall become operative on November 8, 1989.
21The commissioner shall adopt regulations implementing this
22section and insurers may submit applications pursuant to this article
23which comply with those regulations prior to that date, provided
24that no such application shall be approved prior to that date.

25

SEC. 10.  

Section 1861.025 of the Insurance Code is amended
26to read:

27

1861.025.  

A person is qualified to purchase a Good Driver
28Discount policy if he or she meets all of the following criteria:

29(a) He or she has been licensed to drive a motor vehicle for the
30previous three years.

31(b) During the previous three years, he or she has not done any
32of the following:

33(1) Had more than one violation point count determined as
34provided by subdivision (a), (b), (c), (d),begin delete (e), (g), or (h)end deletebegin insert (f), or (j)
35of, or paragraph (1) of subdivision (i) of,end insert
of Section 12810 of the
36Vehicle Code, but subject to the following modifications:

37(A) For the purposes of this section, the driver of a motor vehicle
38involved in an accident for which he or she was principally at fault
39that resulted only in damage to property shall receive one violation
P20   1point count, in addition to any other violation points that may be
2imposed for this accident.

3(B) If, under Section 488 or 488.5, an insurer is prohibited from
4increasing the premium on a policy on account of a violation, that
5violation shall not be included in determining the point count of
6the person.

7(C) If a violation is required to be reported under Section 1816
8of the Vehicle Code, or under Section 784 of the Welfare and
9Institutions Code, or any other provision requiring the reporting
10of a violation by a minor, the violation shall be included for the
11purposes of this section in determining the point count in the same
12manner as is applicable to adult violations.

13(2) Had more than one dismissal pursuant to Section 1803.5 of
14the Vehicle Code that was not made confidential pursuant to
15Section 1808.7 of the Vehicle Code, in the 36-month period for
16violations that would have resulted in the imposition of more than
17one violation point count under paragraph (1) if the complaint had
18not been dismissed.

19(3) Was the driver of a motor vehicle involved in an accident
20that resulted in bodily injury or in the death of any person and was
21principally at fault. The commissioner shall adopt regulations
22setting guidelines to be used by insurers for the determination of
23fault for the purposes of this paragraph and paragraph (1).

24(c) During the period commencing on January 1, 1999, or the
25date 10 years prior to the date of application for the issuance or
26renewal of the Good Driver Discount policy, whichever is later,
27and ending on the date of the application for the issuance or
28renewal of the Good Driver Discount policy, he or she has not
29been convicted of a violation of Section 23140, 23152, or 23153
30of the Vehicle Code, a felony violation of Section 23550 or 23566,
31or former Section 23175 or, as those sections read on January 1,
321999, of the Vehicle Code, or a violation of Section 191.5 or
33subdivision (a) of Section 192.5 of the Penal Code.

34(d) Any person who claims that he or she meets the criteria of
35subdivisions (a), (b), and (c) based entirely or partially on a driver’s
36license and driving experience acquired anywhere other than in
37the United States or Canada is rebuttably presumed to be qualified
38to purchase a Good Driver Discount policy if he or she has been
39licensed to drive in the United States or Canada for at least the
P21   1previous 18 months and meets the criteria of subdivisions (a), (b),
2and (c) for that period.

3

SEC. 11.  

Section 10111.2 of the Insurance Code is amended
4to read:

5

10111.2.  

(a) Under abegin insert policy of disability insuranceend insertbegin insert other than
6health insurance, as defined in Section 106, including aend insert
policy of
7disability income insurance, as defined in subdivision (i) of Section
8799.01, payment of benefits to the insured shall be made within
930 calendar days after the insurer has received all information
10needed to determine liability for a claim. However, the
1130-calendar-day period shall not include any time during which
12the insurer is doing any of the following:

13(1) Awaiting a response for relevant medical information from
14a health care provider.

15(2) Awaiting a response from the claimant to a request for
16additional relevant information.

17(3) Investigating possible fraud that has been reported to the
18department’s Fraud Division in compliance with subdivision (a)
19of Section 1872.4.

20(b) If the insurer has not received all information needed to
21determine liability for a claim within 30 calendar days after receipt
22of the claim, the insurer shall notify the insured in writing and
23include a written list of all information it reasonably needs to
24determine liability for the claim. In that event, the 30-calendar-day
25period set out in subdivision (a) shall commence when the insured
26has provided to the insurer all information in that notification. If
27no notice is sent by the insurer within 30 calendar days after the
28claim is filed by the insured, interest shall begin to accrue on the
29payment of benefits on the 31st calendar day after receipt of the
30claim, at the rate of 10 percent per year.

31(c) When the insurer has received all information needed to
32determine liability for a claim, and the insurer determines that
33liability exists and fails to make payment of benefits to the insured
34within 30 calendar days after the insurer has received that
35information, any delayed payment shall bear interest, beginning
36the 31st calendar day, at the rate of 10 percent per year. Liability
37shall, in all cases, be determined by the insurer within 30 calendar
38days of receiving all information set out in the insurer’s written
39notification to the insured.

P22   1(d) Nothing in this section is intended to restrict any other
2remedies available to an insured by statute or any other law.

3

SEC. 12.  

Section 10127.13 of the Insurance Code, as added
4by Section 8 of Chapter 166 of the Statutes of 2014, is amended
5to read:

6

10127.13.  

(a) All individual life insurance policies and
7individual annuity contracts for senior citizens that contain a charge
8upon surrender, partial surrender, excess withdrawal, or penalties
9upon surrender shall contain a notice disclosing the location ofbegin insert all
10of the following:end insert
the charge, the charge time period, the charge
11information, and any associated penaltybegin delete information,end deletebegin insert information.
12The notice shall beend insert
in bold 12-point print on the front of the policy
13jacket or on the cover page of the policy.

14(b) A policy shall have just one cover page. If the notice required
15by this section and the statutorily required right to examine notice
16are both on the cover page, as opposed to the front cover of the
17policy jacket, they shall appear on the same page.

18(c) General references to “policy” in this section refer to both
19life insurance policies and annuity contracts.

20(d) This section shall become operative on July 1, 2015.

21

SEC. 13.  

Section 10169 of the Insurance Code, as added by
22Section 8 of Chapter 872 of the Statutes of 2012, is amended to
23read:

24

10169.  

(a) Commencing January 1, 2001, there is hereby
25established in the department the Independent Medical Review
26System.

27(b) For the purposes of this chapter, “disputed health care
28service” means any health care service eligible for coverage and
29payment under a disability insurance contract that has been denied,
30modified, or delayed by a decision of the insurer, or by one of its
31contracting providers, in whole or in part due to a finding that the
32service is not medically necessary. A decision regarding a disputed
33health care service relates to the practice of medicine and is not a
34coverage decision. A disputed health care service does not include
35services provided by a group or individual policy of vision-only
36or dental-only coverage, except to the extent that (1) the service
37involves the practice of medicine, or (2) is provided pursuant to a
38contract with a disability insurer that covers hospital, medical, or
39surgical benefits. If an insurer, or one of its contracting providers,
40issues a decision denying, modifying, or delaying health care
P23   1services, based in whole or in part on a finding that the proposed
2health care services are not a covered benefit under the contract
3that applies to the insured, the statement of decision shall clearly
4specify the provision in the contract that excludes that coverage.

5(c) For the purposes of this chapter, “coverage decision” means
6the approval or denial of health care services by a disability insurer,
7or by one of its contracting entities, substantially based on a finding
8that the provision of a particular service is included or excluded
9as a covered benefit under the terms and conditions of the disability
10insurance contract. A coverage decision does not encompass a
11 disability insurer or contracting provider decision regarding a
12disputed health care service.

13(d) (1) All insured grievances involving a disputed health care
14service are eligible for review under the Independent Medical
15Review System if the requirements of this article are met. If the
16department finds that an insured grievance involving a disputed
17health care service does not meet the requirements of this article
18for review under the Independent Medical Review System, the
19insured request for review shall be treated as a request for the
20department to review the grievance. All other insured grievances,
21including grievances involving coverage decisions, remain eligible
22for review by the department.

23(2) In any case in which an insured or provider asserts that a
24decision to deny, modify, or delay health care services was based,
25in whole or in part, on consideration of medical necessity, the
26department shall have the final authority to determine whether the
27grievance is more properly resolved pursuant to an independent
28medical review as provided under this article.

29(3) The department shall be the final arbiter when there is a
30question as to whether an insured grievance is a disputed health
31care service or a coverage decision. The department shall establish
32a process to complete an initial screening of an insured grievance.
33If there appears to be any medical necessity issue, the grievance
34shall be resolved pursuant to an independent medical review as
35provided under this article.

36(e) Every disability insurance contract that is issued, amended,
37renewed, or delivered in this state on or after January 1, 2000, shall
38provide an insured with the opportunity to seek an independent
39medical review whenever health care services have been denied,
40modified, or delayed by the insurer, or by one of its contracting
P24   1providers, if the decision was based in whole or in part on a finding
2that the proposed health care services are not medically necessary.
3For purposes of this article, an insured may designate an agent to
4act on his or her behalf. The provider may join with or otherwise
5assist the insured in seeking an independent medical review, and
6may advocate on behalf of the insured.

7(f) Medicare beneficiaries enrolled in Medicare + Choice
8products shall not be excluded unless expressly preempted by
9federal law.

10(g) The department may seek to integrate the quality of care
11and consumer protection provisions, including remedies, of the
12Independent Medical Review System with related dispute
13resolution procedures of other health care agency programs,
14including the Medicare program, in a way that minimizes the
15potential for duplication, conflict, and added costs. Nothing in this
16subdivision shall be construed to limit any rights conferred upon
17insureds under this chapter.

18(h) The independent medical review process authorized by this
19article is in addition to any other procedures or remedies that may
20be available.

21(i) Every disability insurer shall prominently display in every
22insurer member handbook or relevant informational brochure, in
23every insurance contract, on insured evidence of coverage forms,
24on copies of insurer procedures for resolving grievances, on letters
25of denials issued by either the insurer or its contracting
26organization, and on all written responses to grievances,
27information concerning the right of an insured to request an
28independent medical reviewbegin delete in cases whereend deletebegin insert whenend insert the insured
29believes that health care services have been improperly denied,
30modified, or delayed by the insurer, or by one of its contracting
31providers.begin insert The department’s telephone number, 1-800-927-4357,
32and Internet Web site, www.insurance.ca.gov, shall also be
33displayed.end insert

34(j) An insured may apply to the department for an independent
35medical review when all of the following conditions are met:

36(1) (A) The insured’s provider has recommended a health care
37service as medically necessary, or

38(B) The insured has received urgent care or emergency services
39that a provider determined was medically necessary, or

P25   1(C) The insured, in the absence of a provider recommendation
2under subparagraph (A) or the receipt of urgent care or emergency
3services by a provider under subparagraph (B), has been seen by
4a contracting provider for the diagnosis or treatment of the medical
5condition for which the insured seeks independent review. The
6insurer shall expedite access to a contracting provider upon request
7of an insured. The contracting provider need not recommend the
8disputed health care service as a condition for the insured to be
9eligible for an independent review.

10For purposes of this article, the insured’s provider may be a
11noncontracting provider. However, the insurer shall have no
12liability for payment of services provided by a noncontracting
13provider, except as provided pursuant to Section 10169.3.

14(2) The disputed health care service has been denied, modified,
15or delayed by the insurer, or by one of its contracting providers,
16based in whole or in part on a decision that the health care service
17is not medically necessary.

18(3) The insured has filed a grievance with the insurer or its
19contracting provider, and the disputed decision is upheld or the
20grievance remains unresolved after 30 days. The insured shall not
21be required to participate in the insurer’s grievance process for
22more than 30 days. In the case of a grievance that requires
23expedited review, the insured shall not be required to participate
24in the insurer’s grievance process for more than three days.

25(k) An insured may apply to the department for an independent
26medical review of a decision to deny, modify, or delay health care
27services, based in whole or in part on a finding that the disputed
28health care services are not medically necessary, within six months
29of any of the qualifying periods or events under subdivision (j).
30The commissioner may extend the application deadline beyond
31six months if the circumstances of a case warrant the extension.

32(l) The insured shall pay no application or processing fees of
33any kind.

34(m) As part of its notification to the insured regarding a
35disposition of the insured’s grievance that denies, modifies, or
36delays health care services, the insurer shall provide the insured
37with a one- or two-page application form approved by the
38department, and an addressed envelope, which the insured may
39return to initiate an independent medical review. The insurer shall
40include on the form any information required by the department
P26   1to facilitate the completion of the independent medical review,
2such as the insured’s diagnosis or condition, the nature of the
3disputed health care service sought by the insured, a means to
4identify the insured’s case, and any other material information.
5The form shall also include the following:

6(1) Notice that a decision not to participate in the independent
7review process may cause the insured to forfeit any statutory right
8to pursue legal action against the insurer regarding the disputed
9health care service.

10(2) A statement indicating the insured’s consent to obtain any
11necessary medical records from the insurer, any of its contracting
12providers, and any noncontracting provider the insured may have
13consulted on the matter, to be signed by the insured.

14(3) Notice of the insured’s right to provide information or
15documentation, either directly or through the insured’s provider,
16regarding any of the following:

17(A) A provider recommendation indicating that the disputed
18health care service is medically necessary for the insured’s medical
19condition.

20(B) Medical information or justification that a disputed health
21care service, on an urgent care or emergency basis, was medically
22necessary for the insured’s medical condition.

23(C) Reasonable information supporting the insured’s position
24that the disputed health care service is or was medically necessary
25for the insured’s medical condition, including all information
26provided to the insured by the insurer or any of its contracting
27providers, still in the possession of the insured, concerning an
28insurer or provider decision regarding disputed health care services,
29and a copy of any materials the insured submitted to the insurer,
30still in the possession of the insured, in support of the grievance,
31as well as any additional material that the insured believes is
32 relevant.

33(4) A section designed to collect information on the insured’s
34ethnicity, race, and primary language spoken that includes both of
35the following:

36(A) A statement of intent indicating that the information is used
37for statistics only, in order to ensure that all insureds get the best
38care possible.

P27   1(B) A statement indicating that providing this information is
2optional and will not affect the independent medical review process
3in any way.

4(n) Upon notice from the department that the insured has applied
5for an independent medical review, the insurer or its contracting
6providers, shall provide to the independent medical review
7organization designated by the department a copy of all of the
8following documents within three business days of the insurer’s
9receipt of the department’s notice of a request by an insured for
10an independent review:

11(1) (A) A copy of all of the insured’s medical records in the
12possession of the insurer or its contracting providers relevant to
13each of the following:

14(i) The insured’s medical condition.

15(ii) The health care services being provided by the insurer and
16its contracting providers for the condition.

17(iii) The disputed health care services requested by the insured
18for the condition.

19(B) Any newly developed or discovered relevant medical records
20in the possession of the insurer or its contracting providers after
21the initial documents are provided to the independent medical
22 review organization shall be forwarded immediately to the
23independent medical review organization. The insurer shall
24concurrently provide a copy of medical records required by this
25subparagraph to the insured or the insured’s provider, if authorized
26by the insured, unless the offer of medical records is declined or
27otherwise prohibited by law. The confidentiality of all medical
28record information shall be maintained pursuant to applicable state
29and federal laws.

30(2) A copy of all information provided to the insured by the
31insurer and any of its contracting providers concerning insurer and
32provider decisions regarding the insured’s condition and care, and
33a copy of any materials the insured or the insured’s provider
34submitted to the insurer and to the insurer’s contracting providers
35in support of the insured’s request for disputed health care services.
36This documentation shall include the written response to the
37insured’s grievance. The confidentiality of any insured medical
38information shall be maintained pursuant to applicable state and
39federal laws.

P28   1(3) A copy of any other relevant documents or information used
2by the insurer or its contracting providers in determining whether
3disputed health care services should have been provided, and any
4statements by the insurer and its contracting providers explaining
5the reasons for the decision to deny, modify, or delay disputed
6health care services on the basis of medical necessity. The insurer
7shall concurrently provide a copy of documents required by this
8paragraph, except for any information found by the commissioner
9to be legally privileged information, to the insured and the insured’s
10provider. The department and the independent medical review
11organization shall maintain the confidentiality of any information
12found by the commissioner to be the proprietary information of
13the insurer.

14(o) This section shall become operative on July 1, 2015.

15

SEC. 14.  

Section 10192.18 of the Insurance Code is amended
16to read:

17

10192.18.  

(a) Application forms shall include the following
18questions designed to elicit information as to whether, as of the
19date of the application, the applicant currently has Medicare
20supplement, Medicare Advantage, Medi-Cal coverage, or another
21health insurance policy or certificate in force or whether a Medicare
22supplement policy or certificate is intended to replace any other
23disability policy or certificate presently in force. A supplementary
24application or other form to be signed by the applicant and agent
25containing those questions and statements may be used.

26

27(Statements)

28

29(1) You do not need more than one Medicare supplement policy.

30(2) If you purchase this policy, you may want to evaluate your
31existing health coverage and decide if you need multiple coverages.

32(3) You may be eligible for benefits under Medi-Cal and may
33not need a Medicare supplement policy.

34(4)  If after purchasing this policy you become eligible for
35Medi-Cal, the benefits and premiums under your Medicare
36supplement policy can be suspended, if requested, during your
37entitlement to benefits under Medi-Cal for 24 months. You must
38request this suspension within 90 days of becoming eligible for
39Medi-Cal. If you are no longer entitled to Medi-Cal, your
40suspended Medicare supplement policy or if that is no longer
P29   1available, a substantially equivalent policy, will be reinstituted if
2requested within 90 days of losing Medi-Cal eligibility. If the
3Medicare supplement policy provided coverage for outpatient
4prescription drugs and you enrolled in Medicare Part D while your
5policy was suspended, the reinstituted policy will not have
6outpatient prescription drug coverage, but will otherwise be
7substantially equivalent to your coverage before the date of the
8suspension.

9(5) If you are eligible for, and have enrolled in, a Medicare
10supplement policy by reason of disability and you later become
11covered by an employer or union-based group health plan, the
12benefits and premiums under your Medicare supplement policy
13can be suspended, if requested, while you are covered under the
14employer or union-based group health plan. If you suspend your
15Medicare supplement policy under these circumstances and later
16lose your employer or union-based group health plan, your
17suspended Medicare supplement policy or if that is no longer
18available, a substantially equivalent policy, will be reinstituted if
19requested within 90 days of losing your employer or union-based
20group health plan. If the Medicare supplement policy provided
21coverage for outpatient prescription drugs and you enrolled in
22Medicare Part D while your policy was suspended, the reinstituted
23policy will not have outpatient prescription drug coverage, but will
24otherwise be substantially equivalent to your coverage before the
25date of the suspension.

26(6) Counseling services are available in this state to provide
27advice concerning your purchase of Medicare supplement insurance
28and concerning medical assistance through the Medi-Cal program,
29including benefits as a qualified Medicare beneficiary (QMB) and
30a specified low-income Medicare beneficiary (SLMB). If you want
31to discuss buying Medicare supplement insurance with a trained
32insurance counselor, call the California Department of Insurance’s
33toll-free telephone number 1-800-927-HELP,begin insert or access the
34department’s Internet Web site, www.insurance.ca.gov,end insert
and ask
35how to contact your local Health Insurance Counseling and
36Advocacy Program (HICAP) office. HICAP is a service provided
37free of charge by the State of California.

38

39(Questions)

40

P30   1If you lost or are losing other health insurance coverage and
2received a notice from your prior insurer saying you were eligible
3for guaranteed issue of a Medicare supplement insurance policy
4or that you had certain rights to buy such a policy, you may be
5guaranteed acceptance in one or more of our Medicare supplement
6plans. Please include a copy of the notice from your prior insurer
7with your application. PLEASE ANSWER ALL QUESTIONS.

8[Please mark Yes or No below with an “X.”]

9To the best of your knowledge,

10(1) (a) Did you turn 65 years of age in the last 6 months

11Yes____ No____

12(b) Did you enroll in Medicare Part B in the last 6 months

13Yes____ No____

14(c) If yes, what is the effective date  ___________________

15(2) Are you covered for medical assistance through California’s
16Medi-Cal program

17NOTE TO APPLICANT: If you have a share of cost under the
18Medi-Cal program, please answer NO to this question.

19Yes____ No____

20If yes,

21(a) Will Medi-Cal pay your premiums for this Medicare
22supplement policy

23Yes____ No____

24(b) Do you receive benefits from Medi-Cal OTHER THAN
25payments toward your Medicare Part B premium

26Yes____ No____

27(3) (a) If you had coverage from any Medicare plan other than
28original Medicare within the past 63 days (for example, a Medicare
29Advantage plan or a Medicare HMO or PPO), fill in your start and
30end dates below. If you are still covered under this plan, leave
31“END” blank.

32START __/__/__ END __/__/__

33(b) If you are still covered under the Medicare plan, do you
34intend to replace your current coverage with this new Medicare
35supplement policy

36Yes____ No____

37(c) Was this your first time in this type of Medicare plan

38Yes____ No____

39(d) Did you drop a Medicare supplement policy to enroll in the
40Medicare plan

P31   1Yes____ No____

2(4) (a) Do you have another Medicare supplement policy in
3force

4Yes____ No____

5(b) If so, with what company, and what plan do you have
6[optional for direct mailers]

7Yes____ No____

8(c) If so, do you intend to replace your current Medicare
9supplement policy with this policy

10Yes____ No____

11(5) Have you had coverage under any other health insurance
12within the past 63 days (For example, an employer, union, or
13individual plan)

14Yes____ No____

15(a) If so, with what companies and what kind of policy

16________________________________________________

17________________________________________________

18________________________________________________

19________________________________________________

20(b) What are your dates of coverage under the other policy

21START __/__/__ END __/__/__

22(If you are still covered under the other policy, leave “END”
23blank.)

24

25(b) Agents shall list any other health insurance policies they
26have sold to the applicant as follows:

27(1) List policies sold that are still in force.

28(2) List policies sold in the past five years that are no longer in
29force.

30(c) In the case of a direct response issuer, a copy of the
31application or supplemental form, signed by the applicant, and
32acknowledged by the issuer, shall be returned to the applicant by
33the issuer upon delivery of the policy.

34(d) Upon determining that a sale will involve replacement of
35Medicare supplement coverage, any issuer, other than a direct
36response issuer, or its agent, shall furnish the applicant, prior to
37issuance for delivery of the Medicare supplement policy or
38certificate, a notice regarding replacement of Medicare supplement
39coverage. One copy of the notice signed by the applicant and the
40agent, except where the coverage is sold without an agent, shall
P32   1be provided to the applicant and an additional signed copy shall
2be retained by the issuer as provided in Section 10508. A direct
3response issuer shall deliver to the applicant at the time of the
4issuance of the policy the notice regarding replacement of Medicare
5supplement coverage.

6(e) The notice required by subdivision (d) for an issuer shall be
7in the form specified by the commissioner, using, to the extent
8practicable, a model notice prepared by the National Association
9of Insurance Commissioners for this purpose. The replacement
10notice shall be printed in no less than 12-point type in substantially
11the following form:

12

13[Insurer’s name and address]

14

15NOTICE TO APPLICANT REGARDING REPLACEMENT
16OF MEDICARE SUPPLEMENT COVERAGE OR MEDICARE
17ADVANTAGE

18

19SAVE THIS NOTICE! IT MAY BE IMPORTANT IN THE
20FUTURE.

21If you intend to cancel or terminate existing Medicare supplement
22or Medicare Advantage insurance and replace it with coverage
23issued by [company name], please review the new coverage
24carefully and replace the existing coverage ONLY if the new
25coverage materially improves your position. DO NOT CANCEL
26YOUR PRESENT COVERAGE UNTIL YOU HAVE RECEIVED
27YOUR NEW POLICY AND ARE SURE THAT YOU WANT
28TO KEEP IT.

29If you decide to purchase the new coverage, you will have 30
30days after you receive the policy to return it to the insurer, for any
31reason, and receive a refund of your money.

32If you want to discuss buying Medicare supplement or Medicare
33Advantage coverage with a trained insurance counselor, call the
34California Department of Insurance’s toll-free telephone number
351-800-927-HELP, and ask how to contact your local Health
36Insurance Counseling and Advocacy Program (HICAP) office.
37HICAP is a service provided free of charge by the State of
38California.

39STATEMENT TO APPLICANT FROM THE INSURER AND
40AGENT: I have reviewed your current health insurance coverage.
P33   1To the best of my knowledge, the replacement of insurance
2involved in this transaction does not duplicate coverage or, if
3applicable, Medicare Advantage coverage because you intend to
4terminate your existing Medicare supplement coverage or leave
5your Medicare Advantage plan. In addition, the replacement
6coverage contains benefits that are clearly and substantially greater
7than your current benefits for the following reasons:

8__ Additional benefits that are: ______

9__ No change in benefits, but lower premiums.

10__ Fewer benefits and lower premiums.

11__ Plan has outpatient prescription drug coverage and applicant
12is enrolled in Medicare Part D.

13__ Disenrollment from a Medicare Advantage plan. Reasons for
14disenrollment:

15__ Other reasons specified here: ______

161. Note: If the issuer of the Medicare supplement policy being
17applied for does not impose, or is otherwise prohibited from
18imposing, preexisting condition limitations, please skip to statement
193 below. Health conditions that you may presently have
20(preexisting conditions) may not be immediately or fully covered
21under the new policy. This could result in denial or delay of a claim
22for benefits under the new policy, whereas a similar claim might
23have been payable under your present policy.

242. State law provides that your replacement Medicare supplement
25policy may not contain new preexisting conditions, waiting periods,
26elimination periods, or probationary periods. The insurer will waive
27any time periods applicable to preexisting conditions, waiting
28periods, elimination periods, or probationary periods in the new
29coverage for similar benefits to the extent that time was spent
30(depleted) under the original policy.

313. If you still wish to terminate your present policy and replace
32it with new coverage, be certain to truthfully and completely
33answer any and all questions on the application concerning your
34medical and health history. Failure to include all material medical
35information on an application requesting that information may
36provide a basis for the insurer to deny any future claims and to
37refund your premium as though your policy had never been in
38force. After the application has been completed and before you
39sign it, review it carefully to be certain that all information has
P34   1been properly recorded. [If the policy or certificate is guaranteed
2issue, this paragraph need not appear.]

3DO NOT CANCEL YOUR PRESENT POLICY UNTIL YOU
4HAVE RECEIVED YOUR NEW POLICY AND ARE SURE
5THAT YOU WANT TO KEEP IT.


6

 

   

(Signature of Agent, Broker, or Other Representative)

   

(Signature of Applicant)

   

(Date)

P34  13

 

14(f) No issuer, broker, agent, or other person shall cause an
15insured to replace a Medicare supplement insurance policy
16unnecessarily. In recommending replacement of any Medicare
17supplement insurance, an agent shall make reasonable efforts to
18determine the appropriateness to the potential insured.

19(g) An issuer shall not require, request, or obtain health
20information as part of the application process for an applicant who
21is eligible for guaranteed issuance of, or open enrollment for, any
22Medicare supplement coverage pursuant to Section 10192.11 or
2310192.12, except for purposes of paragraph (1) or (2) of subdivision
24(a) of Section 10192.11 when the applicant is first enrolled in
25Medicare Part B. The application form shall include a clear and
26conspicuous statement that the applicant is not required to provide
27health information during a period where guaranteed issue or open
28enrollment applies, as specified in Section 10192.11 or 10192.12,
29except for purposes of paragraph (1) or (2) of subdivision (a) of
30Section 10192.11 when the applicant is first enrolled in Medicare
31Part B, and shall inform the applicant of those periods of
32guaranteed issuance of Medicare supplement coverage. This
33subdivision shall not prohibit an issuer from requiring proof of
34eligibility for a guaranteed issuance of Medicare supplement
35coverage.

36

SEC. 15.  

Section 10232.3 of the Insurance Code is amended
37to read:

38

10232.3.  

(a) All applications for long-term care insurance
39except that which is guaranteed issue, shall contain clear,
40unambiguous, short, simple questions designed to ascertain the
P35   1health condition of the applicant. Each question shall contain only
2one health status inquiry and shall require only a “yes” or “no”
3answer, except that the application may include a request for the
4name of any prescribed medication and the name of a prescribing
5physician. If the application requests the name of any prescribed
6medication or prescribing physician, then any mistake or omission
7shall not be used as a basis for the denial of a claim or the
8rescission of a policy or certificate.

9(b) The following warning shall be printed conspicuously and
10in close conjunction with the applicant’s signature block:

11“Caution: If your answers on this application are misstated or
12untrue, the insurer may have the right to deny benefits or rescind
13your coverage.”

14(c) Every application for long-term care insurance shall include
15a checklist that enumerates each of the specific documents that
16this chapter requires be given to the applicant at the time of
17solicitation. The documents and notices to be listed in the checklist
18include, but are not limited to, the following:

begin delete

19(1) The “Important Notice Regarding Policies Available”
20pursuant to Section 10232.25.

end delete
begin delete

21(2)

end delete

22begin insert(1)end insert The outline of coverage pursuant to Section 10233.5.

begin delete

23(3)

end delete

24begin insert(2)end insert The HICAP notice pursuant to paragraph (8) of subdivision
25(a) of Section 10234.93.

begin delete

26(4)

end delete

27begin insert(3)end insert The long-term care insurance shoppers guide pursuant to
28paragraph (9) of subdivision (a) of Section 10234.93.

begin delete

29(5)

end delete

30begin insert(4)end insert The “Long-Term Care Insurance Personal Worksheet”
31pursuant to subdivision (c) of Section 10234.95.

begin delete

32(6)

end delete

33begin insert(5)end insert The “Notice to Applicant Regarding Replacement of
34Accident and Sickness or Long-Term Care Insurance” pursuant
35to Section 10235.16 if replacement is not made by direct response
36solicitation or Section 10235.18 if replacement is made by direct
37response solicitation. Unless the solicitation was made by a direct
38response method, the agent and applicant shall both sign at the
39bottom of the checklist to indicate the required documents were
40delivered and received.

P36   1(d) If an insurer does not complete medical underwriting and
2resolve all reasonable questions arising from information submitted
3on or with an application before issuing the policy or certificate,
4then the insurer may only rescind the policy or certificate or deny
5an otherwise valid claim, upon clear and convincing evidence of
6fraud or material misrepresentation of the risk by the applicant.
7The evidence shall:

8(1) Pertain to the condition for which benefits are sought.

9(2) Involve a chronic condition or involve dates of treatment
10before the date of application.

11(3) Be material to the acceptance for coverage.

12(e) No long-term care policy or certificate may be field issued.

13(f) The contestability period as defined in Section 10350.2 for
14long-term care insurance shall be two years.

15(g) A copy of the completed application shall be delivered to
16the insured at the time of delivery of the policy or certificate.

17(h) Every insurer shall maintain a record, in accordance with
18Section 10508, of all policy or certificate rescissions, both state
19and countrywide, and shall annually furnish this information to
20the commissioner, which shall include the reason for rescission,
21the length of time the policy or certificate was in force, and the
22age and gender of the insured person, in a format prescribed by
23the commissioner.

24(i) The commissioner may, in his or her discretion, make public
25the aggregate data collected under subdivision (h), upon request.

26

SEC. 16.  

Section 10233.5 of the Insurance Code is amended
27to read:

28

10233.5.  

(a) An outline of coverage shall be delivered to a
29prospective applicant for long-term care insurance at the time of
30initial solicitation through means which prominently direct the
31attention of the recipient to the document and its purpose.

32(b) In the case of agent solicitations, an agent shall deliver the
33outline of coverage prior to the presentation of an application or
34enrollment form.

35(c) In the case of direct response solicitations, the outline of
36coverage shall be presented in conjunction with any application
37or enrollment form.

38(d) The outline of coverage shall be a freestanding document,
39 using no smaller than 10-point type.

P37   1(e) The outline of coverage shall contain no material of an
2advertising nature.

3(f) Use of the text and sequence of the text of the outline of
4coverage set forth in this section is mandatory, unless otherwise
5specifically indicated.

6(g) Textbegin delete whichend deletebegin insert thatend insert is capitalized or underscored in the outline
7of coverage may be emphasized by other meansbegin delete whichend deletebegin insert thatend insert provide
8prominence equivalent to capitalization or underscoring.

9(h) The outline of coverage shall be in the following form:

1011(COMPANY NAME)
12(ADDRESS--CITY AND STATE)
13(TELEPHONE NUMBER)
14LONG-TERM CARE INSURANCE
15OUTLINE OF COVERAGE
16(Policy Number or Group Master Policy and Certificate Number)
17

181. This policy is (an individual policy of insurance) ((a group
19policy) which was issued in the (indicate jurisdiction in which
20group policy was issued)).

212. PURPOSE OF OUTLINE OF COVERAGE. This outline
22of coverage provides a very brief description of the important
23features of the policy. You should compare this outline of coverage
24to outlines of coverage for other policies available to you. This is
25not an insurance contract, but only a summary of coverage. Only
26the individual or group policy contains governing contractual
27provisions. This means that the policy or group policy sets forth
28in detail the rights and obligations of both you and the insurance
29company. Therefore, if you purchase this coverage, or any other
30coverage, it is important that you READ YOUR POLICY (OR
31CERTIFICATE) CAREFULLY!

323. TERMS UNDER WHICH THE POLICY OR
33CERTIFICATE MAY BE RETURNED AND PREMIUM
34REFUNDED.

35(a) Provide a brief description of the right to return--“free look”
36provision of the policy.

37(b) Include a statement that the policy either does or does not
38contain provisions providing for a refund or partial refund of
39premium upon the death of an insured or surrender of the policy
P38   1or certificate. If the policy contains those provisions, include a
2description of them.

34. THIS IS NOT MEDICARE SUPPLEMENT COVERAGE.
4If you are eligible for Medicare, review the Medicare Supplement
5Buyer’s Guide available from the insurance company.

6(a) (For agents) Neither (insert company name) nor its agents
7represent Medicare, the federal government or any state
8government.

9(b) (For direct response) (insert company name) is not
10representing Medicare, the federal government or any state
11government.

125. LONG-TERM CARE COVERAGE. Policies of this category
13are designed to provide coverage for one or more necessary or
14medically necessary diagnostic, preventive, therapeutic,
15rehabilitative, maintenance, or personal care services, provided in
16a setting other than an acute care unit of a hospital, such as in a
17nursing home, in the community, or in the home.

18This policy provides coverage in the form of a fixed dollar
19indemnity benefit for covered long-term care expenses, subject to
20policy (limitations) (waiting periods) and (coinsurance)
21requirements. (Modify this paragraph if the policy is not an
22indemnity policy.)

236. BENEFITS PROVIDED BY THIS POLICY.

24(a) (Covered services, related deductible(s), waiting periods,
25elimination periods, and benefit maximums.)

26(b) (Institutional benefits, by skill level.)

27(c) (Noninstitutional benefits, by skill level.)

28(Any benefit screens must be explained in this section. If these
29screens differ for different benefits, explanation of the screen
30should accompany each benefit description. If an attending
31physician or other specified person must certify a certain level of
32functional dependency in order to be eligible for benefits, this too
33must be specified. If activities of daily living (ADLs) are used to
34measure an insured’s need for long-term care, then these qualifying
35criteria or screens must be explained.)

367. LIMITATIONS AND EXCLUSIONS.

37(Describe:

38(a) Preexisting conditions.

39(b) Noneligible facilities/provider.

P39   1(c) Noneligible levels of care (e.g., unlicensed providers, care
2or treatments provided by a family member, etc.).

3(d) Exclusions/exceptions.

4(e) Limitations.)

5(This section should provide a brief specific description of any
6policy provisions which limit, exclude, restrict, reduce, delay, or
7in any other manner operate to qualify payment of the benefits
8described in (6) above.)

9THIS POLICY MAY NOT COVER ALL THE EXPENSES
10ASSOCIATED WITH YOUR LONG-TERM CARE NEEDS.

118. RELATIONSHIP OF COST OF CARE AND BENEFITS.
12Because the costs of long-term care services will likely increase
13over time, you should consider whether and how the benefits of
14this plan may be adjusted. (As applicable, indicate the following:

15(a) That the benefit level will NOT increase over time.

16(b) Any automatic benefit adjustment provisions.

17(c) Whether the insured will be guaranteed the option to buy
18additional benefits and the basis upon which benefits will be
19increased over time if not by a specified amount or percentage.

20(d) If there is a guarantee, include whether additional
21underwriting or health screening will be required, the frequency
22and amounts of the upgrade options, and any significant restrictions
23or limitations.

24(e) And finally, describe whether there will be any additional
25premium charge imposed, and how that is to be calculated.)

269. TERMS UNDER WHICH THE POLICY (OR
27CERTIFICATE) MAY BE CONTINUED IN FORCE OR
28DISCONTINUED.

29(a) Describe the policy renewability provisions.

30(b) For group coverage, specifically describe
31continuation/conversion provisions applicable to the certificate
32and group policy.

33(c) Describe waiver of premium provisions or state that there
34are no waiver of premium provisions.

35(d) State whether or not the company has a right to change
36premium, and if that right exists, describe clearly and concisely
37each circumstance under which the premium may change.

3810. begin deleteALZHEIMER’S DISEASE, ORGANIC DISORDERS,
39AND RELATED MENTAL DISEASES. end delete
begin insertALL MENTAL
40ILLNESSES COVERED.end insert

P40   1(State that the policy provides coverage for insuredsbegin delete clinically
2diagnosed as having Alzheimer’s Disease, organic disorders, or
3related degenerative and dementing illnesses.end delete
begin insert for all mental
4illnesses.end insert
Specifically describe each benefit screen or other policy
5provision that provides preconditions to the availability of policy
6benefits for that insured.)

711. PREMIUM.

8(a) State the total annual premium for the policy.

9(b) If the premium varies with an applicant’s choice among
10benefit options, indicate the portion of annual premium which
11corresponds to each benefit option.

1212. ADDITIONAL FEATURES.

13(a) Indicate if medical underwriting is used.

14(b) Describe other important features.

1513. INFORMATION AND COUNSELING. The California
16Department of Insurance has prepared a Consumer Guide to
17Long-Term Care Insurance. This guide can be obtained by calling
18the Department of Insurance toll-free telephonebegin delete number. Thisend delete
19begin insert number or by accessing the department’s Internet Web site at
20www.insurance.ca.gov. The department’send insert
number is
211-800-927-HELP. Additionally, the Health Insurance Counseling
22and Advocacy Program (HICAP) administered by the California
23Department of Aging, provides long-term care insurance counseling
24to California senior citizens. Call the HICAP toll-free telephone
25number 1-800-434-0222 for a referral to your local HICAP office.”

26

SEC. 17.  

Section 10233.9 of the Insurance Code is repealed.

begin delete
27

10233.9.  

Any insurer offering long-term care insurance under
28this chapter shall provide to the Department of Insurance, for the
29commissioner’s conveyance to the Department of Aging, a copy
30of the following materials for all long-term care insurance coverage
31advertised, marketed, or offered by that insurer in this state:

32(a) Specimen individual policy form or group master policy and
33certificate forms.

34(b) Corresponding outline of coverage.

35(c) Representative advertising materials to be used in this state.

end delete
36

SEC. 18.  

Section 10235.35 of the Insurance Code is amended
37to read:

38

10235.35.  

(a) Notwithstanding any other provision of law, the
39commissioner may require the administration by an insurer of the
40contingent benefit upon lapse, as described in Sectionbegin delete 26end deletebegin insert 28end insert (A),
P41   1(D) (3), (E), (F), (G), and (J) of the Long-Term Care Insurance
2Model Regulation promulgated by the National Association of
3Insurance Commissioners, as adopted inbegin delete October 2000,end deletebegin insert September
42014,end insert
as a condition of approval or acknowledgment of a rate
5adjustment for a block of business for which the contingent benefit
6upon lapse is not otherwise available.

7(b) The insurer shall notify policyholders and certificate holders
8of the contingent benefit upon lapse when required by the
9commissioner in conjunction with the implementation of a rate
10adjustment. The commissioner may require an insurer who files
11for such a rate adjustment to allow policyholders and certificate
12holders to reduce coverage pursuant to Section 10235.50 to avoid
13an increase in the policy’s premium amount.

14(c) The commissioner may also approve any other alternative
15mechanism filed by the insurer in lieu of the contingent benefit
16upon lapse.

17

SEC. 19.  

Section 12418.4 of the Insurance Code is amended
18to read:

19

12418.4.  

(a) begin deleteThe provisions set forth in end deleteSections 1667, 1668,
201669, 1670,begin insert 1729, 1729.2,end insert 1738, 1738.5, 1743, andbegin delete inend delete Article 6
21(commencing with Section 12404), shall apply to all applicants or
22holders of a certificate of registration issued pursuant to this article.

23(b) The department may revoke, suspend, restrict, or decline to
24issue a certificate of registration if it determines that the title
25marketing representative or applicant has violated provisions of
26 Article 6 (commencing with Section 12404) pursuant to the due
27process and hearing requirements set forth in subdivision (c).

28(c) Except as provided in Section 1669, a certificate of
29registration shall not be denied, restricted, suspended, or revoked
30without a hearing conducted in accordance with Chapter 5
31(commencing with Section 11500) of Part 1 of Division 3 of Title
322 of the Government Code.

33(d) In addition to, or in lieu of, any other penalty that may be
34imposed under this article against a title marketing representative,
35the commissioner may bring an administrative action against a
36title marketing representative for any violation of the provisions
37of Article 6 (commencing with Section 12404). If a title marketing
38representative charged with a violation of Article 6 (commencing
39with Section 12404) is determined by the commissioner to have
40committed the violation, the commissioner may require the
P42   1surrender of, temporarily suspend or revoke either permanently or
2temporarily the title marketing representative’s certificate of
3registration, and, in addition, may impose a monetary penalty. Any
4payment of a monetary penalty pursuant to a settlement or final
5adjudication shall be made from the title marketing representative’s
6personal funds and not by his or her employer either directly or
7through the title marketing representative. This article shall not
8preclude an action against a company that had actual knowledge
9of the violation by the title marketing representative. A title
10marketing representative who is issued a certificate of registration
11under this article may not engage in any activity that is otherwise
12prohibited through a separate entity controlled by the title
13marketing representative or by the company or entity that employs
14him or her.

15(e) A title marketing representative who has his or her certificate
16of registration revoked by the department shall not be permitted
17to reapply for another certificate of registration with the department
18for five years from the date of revocation.

19

SEC. 20.  

Section 12820 of the Insurance Code is amended to
20read:

21

12820.  

(a) Prior to offering a vehicle service contract form to
22a purchaser or providing a vehicle service contract form to a seller,
23an obligor shall file with the commissioner a specimen of that
24vehicle service contract form.

25(b) A vehicle service contract form may include any or all of
26the benefits described in subdivision (c) of Section 12800 and shall
27comply with all of the following requirements:

28(1) (A) If an obligor has complied with Section 12830, the
29vehicle service contract shall include a disclosure in substantially
30the following form: “Performance to you under this contract is
31guaranteed by a California approved insurance company. You may
32file a claim with this insurance company if any promise made in
33the contract has been denied or has not been honored within 60
34days after your request. The name and address of the insurance
35company is: (insert name and address). If you are not satisfied with
36the insurance company’s response, you may contact the California
37Department of Insurance atbegin delete 1-800-927-4357.”end deletebegin insert 1-800-927-4357 or
38access the department’s Internet Web site
39(www.insurance.ca.gov).end insert
begin insertend insert

P43   1(B) If an obligor has complied with Section 12836, the vehicle
2service contract shall include a disclosure in substantially the
3following form: “If any promise made in the contract has been
4denied or has not been honored within 60 days after your request,
5you may contact the California Department of Insurance at
6begin delete 1-800-927-4357.”end deletebegin insert 1-800-927-4357 or access the department’s
7Internet Web site (www.insurance.ca.gov).end insert
begin insertend insert

8(2) All vehicle service contract language that excludes coverage,
9or imposes duties upon the purchaser, shall be conspicuously
10printed in boldface type no smaller than the surrounding type.

11(3) The vehicle service contract shall do each of the following:

12(A) State the obligor’s full corporate name or a fictitious name
13approved by the commissioner, the obligor’s mailing address, the
14obligor’s telephone number, and the obligor’s vehicle service
15contract provider license number.

16(B) State the name of the purchaser and the name of the seller.

17(C) Conspicuously state the vehicle service contract’s purchase
18price.

19(D) Comply with Sections 1794.4 and 1794.41 of the Civil
20Code.

21(E) Name the administrator, if any, and provide the
22administrator’s license number.

23(4) If the vehicle service contract excludes coverage for
24preexisting conditions, the contract must disclose this exclusion
25in 12-point type.

26(c) The following benefits constitute insurance, whether offered
27as part of a vehicle service contract or in a separate agreement:

28(1) Indemnification for a loss caused by misplacement, theft,
29collision, fire, or other peril typically covered in the comprehensive
30coverage section of an automobile insurance policy, a homeowner’s
31policy, or a marine or inland marine policy.

32(2) Locksmith services, unless offered as part of an emergency
33road service benefit.

34

SEC. 21.  

Section 12921 of the Insurance Code is amended to
35read:

36

12921.  

(a) The commissioner shall perform all duties imposed
37upon him or her by the provisions of this code and other laws
38regulating the business of insurance in this state, and shall enforce
39the execution of those provisions and laws.

P44   1(b) In an administrative action to enforce the provisions of this
2code and other laws regulating the business of insurance in this
3state, any settlement is subject to all of the following:

begin delete

4(1) The commissioner may delegate the power to negotiate the
5terms and conditions of a settlement but the commissioner may
6not delegate the power to approve the settlement.

end delete

7begin insert(1)end insertbegin insertend insertbegin insertThe commissioner may delegate the power to negotiate the
8terms and conditions of a settlement. The commissioner may
9delegate the power to approve a settlement, unless the settlement
10involves any of the following:end insert

begin insert

11(A) An insurer.

end insert
begin insert

12(B) A managing general agent or production agent that manages
13the business of an insurer.

end insert
begin insert

14(C) A title company.

end insert
begin insert

15(D) A home protection company.

end insert
begin insert

16(E) An insurance adjuster whose claims practices are at issue.

end insert
begin insert

17(F) An insurance agent or broker, or an applicant for an
18insurance agent or broker license, who has allegedly engaged in
19theft, fraud, or the misappropriation of premium or other funds in
20an amount that exceeds fifty thousand dollars ($50,000).

end insert

21(2) Unless specifically provided for in a provision of this code,
22the commissioner may not agree to any of the following:

23(A) That the respondent contribute, deposit, or transfer any
24moneys or other resources to a nonprofit entity.

25(B) That a respondent contribute, deposit, or transfer any fine,
26penalty, assessment, cost, or fee except to the commissioner for
27deposit in the appropriate state fund pursuant to Section 12975.7.

28(C) That the commissioner may or shall direct the transfer,
29distribution, or payment to another person or entity of any fine,
30penalty, assessment, cost, or fee.

31(D) The use of the commissioner’s name, likeness, or voice in
32any printed material or audio or visual medium, either for general
33distribution or for distribution to specific recipients.

34(3) The commissioner may only agree to payment to those
35persons or entities to whom payment may be due because of the
36respondent’s violation of a provision of this code or other law
37regulating the business of insurance in this state.

38(4) A settlement may only include the sanctions provided by
39this code or other laws regulating the business of insurance in this
40state, except that the settlement may include attorney’s fees, costs
P45   1of the department in bringing the enforcement action, and future
2costs of the department to ensure compliance with the settlement
3agreement.

4(c) Notwithstanding any other provision of law, the
5commissioner may accept documents submitted for filing or
6approval, process transactions, and maintain records in electronic
7form or as paper documents, and may adopt regulations to further
8this subdivision.

9

SEC. 22.  

Section 1299.04 of the Penal Code is amended to
10read:

11

1299.04.  

(a) A bail fugitive recovery person, a bail agent, bail
12permittee, or bail solicitor who contracts his or her services to
13another bail agent or surety as a bail fugitive recovery person for
14the purposes specified in subdivision (d) of Section 1299.01, and
15any bail agent, bail permittee, or bail solicitor who obtains licensing
16after January 1, 2000, and who engages in the arrest of a defendant
17pursuant to Section 1301 shall comply with the following
18requirements:

19(1) The person shall be at least 18 years of age.

20(2) The person shall have completed a 40-hour power of arrest
21course certified by the Commission on Peace Officer Standards
22and Training pursuant to Section 832. Completion of the course
23shall be for educational purposes only and not intended to confer
24the power of arrest of a peace officer or public officer, or agent of
25any federal, state, or local government, unless the person is so
26employed by a governmental agency.

27(3) The person shall have completed a minimum of 20 hours of
28classroombegin insert prelicensingend insert education certified pursuant to Section
291810.7 of the Insurance Code.begin insert For those persons licensed by the
30department as a bail licensee prior to January 1, 1994, there is
31no prelicensing education requirement. For those persons licensed
32by the department as a bail licensee between January 1, 1994, and
33December 31, 2012, a minimum of 12 hours of classroom
34prelicensing education is required.end insert

35(4) The person shall not have been convicted of a felony, unless
36the person is licensed by the Department of Insurance pursuant to
37Section 1800 of the Insurance Code.

38(b) Upon completion of any course or training program required
39by this section, an individual authorized by Section 1299.02 to
40apprehend a bail fugitive shall carry certificates of completion
P46   1with him or her at all times in the course of performing his or her
2duties under this article.



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