Amended in Assembly April 6, 2015

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 Sectionsbegin delete 481,end delete 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 amended, Committee on Insurance. Insurance.

begin delete

(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.

end delete
begin delete

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

end delete
begin delete

(2)

end delete

begin insert(1)end insert 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.

begin delete

(3)

end delete

begin insert(2)end insert 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.

begin delete

(4)

end delete

begin insert(3)end insert 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.

begin delete

(5)

end delete

begin insert(4)end insert 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.

begin delete

(6)

end delete

begin insert(5)end insert This bill would make technical, nonsubstantive changes to correct obsolete cross-references and would delete obsolete provisions.

begin delete

(7)

end delete

begin insert(6)end insert 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.

begin delete

(8)

end delete

begin insert(7)end insert 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.

begin delete

(9)

end delete

begin insert(8)end insert 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.

begin delete

(10)

end delete

begin insert(9)end insert 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.

begin delete

(11)

end delete

begin insert(10)end insert 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.

begin delete

(12)

end delete

begin insert(11)end insert 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:

begin delete
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) When the insurance is made for a definite period of time
9and the insured surrenders his or her policy, to that proportion of
10the premium as corresponds with the unexpired time, after
11deducting from the whole premium any claim for loss or damage
12under the policy that has previously accrued. The provisions of
13Section 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
16that mandates that the premium for the policy shall be fully earned
17upon the happening of any contingency except the expiration of
18the policy itself. This subdivision shall not apply to policy fees or
19membership fees.

P5    1(c) (1) Any insurance policy that includes a provision to refund
2premium other than on a pro rata basis, including the assessment
3of cancellation fees, shall disclose that fact in writing, including
4the actual or maximum fees or penalties to be applied, which may
5be stated in the form of percentages of the premium. The disclosure
6shall be provided prior to, or concurrent with, the application and
7prior to each renewal to which the policy provision applies. The
8disclosure shall be in at least 11-point font. For personal lines new
9business, the disclosure shall be included on the first page of the
10application. For commercial lines new business, the disclosure
11shall be included on the first page of the application or as a separate
12stand-alone page in the application. For renewals, the disclosure
13shall be included in the actual notice and displayed on the first
14page of the declaration pages. For purposes of this subdivision, an
15insurer offering workers’ compensation insurance, as defined in
16Section 109, may provide the disclosure with the quote offering
17insurance to the consumer prior to the consumer accepting the
18quote in lieu of disclosure prior to or concurrent with the
19application. Disclosure shall not be required if the policy provision
20permits, but does not require, the insurer to refund premium other
21than on a pro rata basis, and the insurer refunds premium on a pro
22rata basis.

23(2) If an application is made by telephone, the disclosure shall
24be mailed to the applicant or insured within five business days.

25(3) The disclosure may be made electronically pursuant to
26Section 38.5 in lieu of being mailed.

27(4) This section does not apply to cancellations that are
28calculated subject to paragraph (2) of subdivision (g) of Section
29673.

30(d) This section shall not apply to policies of ocean marine
31insurance. For purposes of this section, “ocean marine insurance”
32means insurance of vessels or crafts, their cargos, marine builders’
33risks, marine protection and indemnity, or other risks commonly
34insured under marine insurance governed by the provisions of
35Chapter 1 (commencing with Section 1880) of Part 1 of Division
362, and as distinguished from inland marine insurance policies.

37(e) The disclosure requirements of subdivision (c) shall be
38prospective and shall apply only to policies issued or renewed on
39or after January 1, 2016.

P6    1(f) Nothing in this section shall require any additional disclosure
2of a fee or penalty for early cancellation if that disclosure is
3required by any other provision of law.

end delete
4

begin deleteSEC. 2.end delete
5begin insertSECTION 1.end insert  

Section 510 of the Insurance Code is amended to
6read:

7

510.  

Whenever a policy of insurance specified in Section 660
8or 675, a policy of life insurance as defined in Section 101, a policy
9of disability insurance as defined in Section 106, or a certificate
10of coverage as defined in Section 10270.6, is first issued to or
11delivered to a new insured or a new policyholder in this state, the
12insurer shall include a written disclosure containing the name,
13address, toll-free telephone number, and Internet Web site of the
14unit within the Department of Insurance that deals with consumer
15affairs. The telephone number shall be the same as that provided
16to consumers under Section 12921.1. The disclosure shall be
17printed in large, boldface type.

18The disclosure shall also contain the address and customer
19service telephone number of the insurer, or the address and
20customer service telephone number of the agent or broker of record,
21or all of those addresses and telephone numbers. All addresses and
22telephone numbers for the insurer or the agent or broker of record
23shall be prominently displayed, in boldfaced type. The disclosure
24shall also contain a statement that the Department of Insurance
25should be contacted only after discussions with the insurer, or its
26agent or other representative, or both, have failed to produce a
27satisfactory resolution to the problem. If the policy or certificate
28was issued or delivered by an agent or broker, the disclosure shall
29specifically advise the insured to contact his or her agent or broker
30for assistance.

31

begin deleteSEC. 3.end delete
32begin insertSEC. 2.end insert  

Section 739.3 of the Insurance Code is amended to
33read:

34

739.3.  

(a) “Company Action Level Event” means any of the
35following events:

36(1) The filing of an RBC Report by an insurer that indicates any
37of the following:

38(A) The insurer’s Total Adjusted Capital is greater than or equal
39to its Regulatory Action Level RBC but less than its Company
40Action Level RBC.

P7    1(B) If a life or health insurer, the insurer has Total Adjusted
2Capital that is greater than or equal to its Company Action Level
3RBC but less than the product of its Authorized Control Level
4RBC and 3.0, and has a negative trend.

5(C) If a property and casualty insurer, the insurer has Total
6Adjusted Capital that is greater than or equal to its Company Action
7Level RBC but less than the product of its Authorized Control
8Level RBC and 3.0, and triggers the trend test determined in
9accordance with the trend test calculation included in the Property
10and Casualty RBC instructions.

11(2) The notification by the commissioner to the insurer of an
12Adjusted RBC Report that indicates the event in paragraph (1),
13provided that the insurer does not challenge the Adjusted RBC
14Report under Section 739.7.

15(3) If the insurer challenges, under Section 739.7, an Adjusted
16RBC Report that indicates the event in paragraph (1), the
17notification by the commissioner to the insurer that the
18 commissioner has, after a hearing, rejected the insurer’s challenge.

19(b) In the event of a Company Action Level Event, the insurer
20shall prepare and submit to the commissioner a comprehensive
21financial plan that shall do all of the following:

22(1) Identify the conditions in the insurer that contribute to the
23Company Action Level Event.

24(2) Contain proposals of corrective actions that the insurer
25intends to take and would be expected to result in the elimination
26of the Company Action Level Event.

27(3) Provide projections of the insurer’s financial results in the
28current year and at least the four succeeding years, both in the
29absence of proposed corrective actions and giving effect to the
30proposed corrective actions, including projections of statutory
31 operating income, net income, capital, or surplus, or a combination.
32The projections for both new and renewal business may include
33separate projections for each major line of business and separately
34identify each significant income, expense, and benefit component.

35(4) Identify the key assumptions impacting the insurer’s
36projections and the sensitivity of the projections to the assumptions.

37(5) Identify the quality of, and problems associated with, the
38insurer’s business, including, but not limited to, its assets,
39anticipated business growth and associated surplus strain,
P8    1extraordinary exposure to risk, mix of business, and use of
2reinsurance in each case, if any.

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

4(1) Within 45 days of the Company Action Level Event.

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

9(d) Within 60 days after the submission by an insurer of an RBC
10Plan to the commissioner, the commissioner shall notify the insurer
11whether the RBC Plan shall be implemented or is, in the judgment
12of the commissioner, unsatisfactory. If the commissioner
13determines that the RBC Plan is unsatisfactory, the notification to
14the insurer shall set forth the reasons for the determination, and
15may set forth proposed revisions that will render the RBC Plan
16satisfactory, in the judgment of the commissioner. Upon
17notification from the commissioner, the insurer shall prepare a
18Revised RBC Plan, which may incorporate by reference revisions
19proposed by the commissioner, and shall submit the Revised RBC
20Plan to the commissioner as follows:

21(1) Within 45 days after the notification from the commissioner.

22(2) If the insurer challenges the notification from the
23commissioner under Section 739.7, within 45 days after a
24notification to the insurer that the commissioner has, after a
25hearing, rejected the insurer’s challenge.

26(e) In the event of a notification by the commissioner to an
27insurer that the insurer’s RBC Plan or Revised RBC Plan is
28unsatisfactory, the commissioner may, at his or her discretion,
29subject to the insurer’s right to a hearing under Section 739.7,
30specify in the notification that the notification constitutes a
31Regulatory Action Level Event.

32(f) Every domestic insurer that files an RBC Plan or Revised
33RBC Plan with the commissioner shall file a copy of the RBC Plan
34or Revised RBC Plan with the insurance commissioner in any state
35in which the insurer is authorized to do business if both of the
36following apply:

37(1) That state has an RBC provision substantially similar to
38subdivision (a) of Section 739.8.

39(2) The insurance commissioner of that state has notified the
40insurer of its request for the filing in writing, in which case the
P9    1insurer shall file a copy of the RBC Plan or Revised RBC Plan in
2that state no later than the later of:

3(A) Fifteen days after the receipt of notice to file a copy of its
4RBC Plan or Revised RBC Plan with the state.

5(B) The date on which the RBC Plan or Revised RBC Plan is
6filed under subdivision (c) of Section 739.7.

7

begin deleteSEC. 4.end delete
8begin insertSEC. 3.end insert  

Section 742.34 of the Insurance Code is amended to
9read:

10

742.34.  

(a) The following notice shall be provided to
11employers and employees who obtain coverage from a multiple
12employer welfare arrangement:

1314NOTICE
15

16(A) THE MULTIPLE EMPLOYER WELFARE
17ARRANGEMENT IS NOT AN INSURANCE COMPANY AND
18DOES NOT PARTICIPATE IN ANY OF THE GUARANTEE
19FUNDS CREATED BY CALIFORNIA LAW. THEREFORE,
20THESE FUNDS WILL NOT PAY YOUR CLAIMS OR
21PROTECT YOUR ASSETS IF A MULTIPLE EMPLOYER
22WELFARE ARRANGEMENT BECOMES INSOLVENT AND
23IS UNABLE TO MAKE PAYMENTS AS PROMISED.

24(B) THE HEALTH CARE BENEFITS THAT YOU HAVE
25PURCHASED OR ARE APPLYING TO PURCHASE ARE
26BEING ISSUED BY A MULTIPLE EMPLOYER WELFARE
27ARRANGEMENT THAT IS LICENSED BY THE STATE OF
28 CALIFORNIA.

29(C) FOR ADDITIONAL INFORMATION ABOUT THE
30MULTIPLE EMPLOYER WELFARE ARRANGEMENT YOU
31SHOULD ASK QUESTIONS OF YOUR TRUST
32ADMINISTRATOR OR YOU MAY CONTACT THE
33CALIFORNIA DEPARTMENT OF INSURANCE AT ________.

34(b) Each multiple employer welfare arrangement should include
35the department’s current “800” consumer service telephone number
36and Internet Web site address in the blank provided in paragraph
37(C) of this notice.

38

begin deleteSEC. 5.end delete
39begin insertSEC. 4.end insert  

Section 790.034 of the Insurance Code is amended to
40read:

P10   1

790.034.  

(a) Regulations adopted by the commissioner
2pursuant to this article that relate to the settlement of claims shall
3take into consideration settlement practices by classes of insurers.

4(b) (1) Upon receiving notice of a claim, every insurer shall
5immediately, but no more than 15 calendar days after receipt of
6the claim, provide the insured with a legible reproduction of
7subdivisions (h) and (i) of Section 790.03 along with a written
8notice containing the following language in at least 10-point type:


10“In addition to Section 790.03 of the Insurance Code, Fair Claims
11Settlement Practices Regulations govern how insurance claims
12must be processed in this state. These regulations are available at
13the Department of Insurance Internet Web site,
14www.insurance.ca.gov, or by calling the department’s consumer
15information line at 1-800-927-HELP(4357). You may also obtain
16a copy of this law and these regulations free of charge from this
17begin delete insurer.”qzqend deletebegin insert insurer.end insertbegin insertend insert


19(2) Every insurer shall provide, when requested orally or in
20writing by an insured, a legible reproduction of Section 790.03 of
21the Insurance Code and copies of Sections 2695.5, 2695.7, 2695.8,
22and 2695.9 of Subchapter 7.5 of Chapter 5 of Title 10 of the
23California Code of Regulations, unless the regulations are
24inapplicable to that class of insurer. This law and these regulations
25shall be provided to the insured within 15 calendar days of request.

26(3) The provisions of this subdivision shall apply to all insurers
27except for those that are licensed pursuant to Chapter 1
28(commencing with Section 12340) of Part 6 of Division 2, with
29respect to policies and endorsements described in Section 790.031.

30

begin deleteSEC. 6.end delete
31begin insertSEC. 5.end insert  

Section 1725.5 of the Insurance Code is amended to
32read:

33

1725.5.  

(a) For purposes of Sections 32.5, 1625, 1626, 1724.5,
341758.1, 1765, 1800, 14020, 14021, and 15006, every licensee shall
35prominently affix, type, or cause to be printed on business cards,
36written price quotations for insurance products, and print
37advertisements distributed exclusively in this state for insurance
38products its license number in type the same size as any indicated
39telephone number, address, or fax number. If the licensee maintains
P11   1more than one organization license, one of the organization license
2numbers is sufficient for compliance with this section.

3(b) Effective January 1, 2005, for purposes of Sections 32.5,
41625, 1626, 1724.5, 1758.1, 1765, 14020, 14021, and 15006, every
5licensee shall prominently affix, type, or cause to be printed on
6business cards, written price quotations for insurance products,
7and print advertisements, distributed in this state for insurance
8products, the word “Insurance” in type size that is at least as large
9as the smallest telephone number or 12-point font, whichever is
10larger.

11(c) In the case of transactors, or agent and broker licensees, who
12are classified for licensing purposes as solicitors, working as
13exclusive employees of motor clubs, organizational licensee
14numbers shall be used.

15(d) Any person in violation of this section shall be subject to a
16fine levied by the commissioner in the amount of two hundred
17dollars ($200) for the first offense, five hundred dollars ($500) for
18the second offense, and one thousand dollars ($1,000) for the third
19and subsequent offenses. The penalty shall not exceed one thousand
20dollars ($1,000) for any one offense. These fines shall be deposited
21into the Insurance Fund.

22(e) A separate penalty shall not be imposed upon each piece of
23printed material that fails to conform to the requirements of this
24section.

25(f) If the commissioner finds that the failure of a licensee to
26comply with the provisions of subdivision (a) or (b) is due to
27reasonable cause or circumstance beyond the licensee’s control,
28and occurred notwithstanding the exercise of ordinary care and in
29the absence of willful neglect, the licensee may be relieved of the
30penalty in subdivision (d).

31(g) A licensee seeking to be relieved of the penalty in
32subdivision (d) shall file with the department a statement with
33supporting documents setting forth the facts upon which the
34licensee bases its claims for relief.

35(h) This section does not apply to any person or entity that is
36not currently required to be licensed by the department or that is
37exempted from licensure.

38(i) This section does not apply to general advertisements of
39motor clubs that merely list insurance products as one of several
P12   1services offered by the motor club, and do not provide any details
2of the insurance products.

3(j) This section does not apply to life insurance policy
4illustrations required by Chapter 5.5 (commencing with Section
510509.950) of Part 2 of Division 2 or to life insurance cost indexes
6required by Chapter 5.6 (commencing with Section 10509.970)
7of Part 2 of Division 2.

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

9

begin deleteSEC. 7.end delete
10begin insertSEC. 6.end insert  

Section 1729.2 of the Insurance Code is amended to
11read:

12

1729.2.  

(a) An applicant or licensee shall notify the
13commissioner when any of the background information set forth
14in this section changes after the application has been submitted or
15the license has been issued. If the licensee is listed as an endorsee
16on any business entity license, the licensee shall also provide this
17notice to any officer, director, or partner listed on that business
18entity license.

19(b) A business entity licensee, upon learning of a change in
20background information pertaining to any unlicensed person listed
21on its business entity license or application therefor, shall notify
22the commissioner of that change. The changes subject to this
23requirement include changes pertaining to any unlicensed officer,
24director, partner, member, or controlling person, or any other
25natural person named under the business entity license or in an
26application therefor.

27(c) The following definitions apply for the purposes of this
28section:

29(1) “License” includes all types of licenses issued by the
30commissioner pursuant to Chapter 5 (commencing with Section
311621), Chapter 5A (commencing with Section 1759), Chapter 6
32(commencing with Section 1760), Chapter 6.5 (commencing with
33Section 1781.1), Chapter 7 (commencing with Section 1800), and
34Chapter 8 (commencing with Section 1831) of Part 2 of Division
351, Chapter 1 (commencing with Section 10110) of Part 2 of
36Division 2, Chapter 4 (commencing with Section 12280) of Part
375 of Division 2, Article 8 (commencing with Section 12418) of
38Chapter 1 of Part 6 of Division 2, and Chapter 1 (commencing
39with Section 14000) and Chapter 2 (commencing with Section
4015000) of Division 5.

P13   1(2) “Background information” means any of the following: a
2misdemeanor or felony conviction; a filing of felony criminal
3charges in state or federal court; an administrative action regarding
4a professional or occupational license; any licensee’s discharge or
5attempt to discharge, in a personal or organizational bankruptcy
6proceeding, an obligation regarding any insurance premiums or
7fiduciary funds owed to any company, including a premium finance
8company, or managing general agent; and any admission, or
9judicial finding or determination, of fraud, misappropriation or
10conversion of funds, misrepresentation, or breach of fiduciary
11duty.

12(3) “Applicant” and “licensee” include individual and
13organization applicants and licensees, and officers, directors,
14partners, members, and controlling persons (as defined in
15subdivision (b) of Section 1668.5) of an organization.

16(d) Notification to the commissioner shall be in writing and
17shall be sent within 30 days of the date the applicant or licensee
18learns of the change in background information.

19(e) The commissioner may adopt regulations necessary or
20desirable to implement this section.

21

begin deleteSEC. 8.end delete
22begin insertSEC. 7.end insert  

Section 1764.1 of the Insurance Code is amended to
23read:

24

1764.1.  

(a) (1) Every nonadmitted insurer, in the case of
25insurance to be purchased by a home state insured pursuant to
26Section 1760, and surplus line broker, in the case of any insurance
27with a nonadmitted carrier for a home state insured to be transacted
28by the surplus line broker, shall be responsible to ensure that, at
29the time of accepting an application for an insurance policy, other
30than a renewal of that policy, issued by a nonadmitted insurer, the
31signature of the applicant on the disclosure statement set forth in
32subdivision (b) is obtained. In fulfillment of this responsibility,
33the nonadmitted insurer and the surplus line broker may rely, if it
34is reasonable under all the circumstances to do so, on the disclosure
35statement received from a licensee involved in the transaction as
36prima facie evidence that the disclosure statement and appropriate
37signature from the applicant have been obtained. The surplus line
38broker shall maintain a copy of the signed disclosure statement in
39his or her records for a period of at least five years. These records
40shall be made available to the commissioner and the insured upon
P14   1request. This disclosure shall be signed by the applicant, and is
2not subject to a limited power of attorney agreement between the
3applicant and an agent or broker or a surplus line broker. The
4disclosure statement shall be in boldface 16-point type on a
5freestanding document. In addition, every policy issued by a
6nonadmitted insurer and every certificate evidencing the placement
7of insurance shall contain, or have affixed to it by the insurer or
8surplus line broker, the disclosure statement set forth in subdivision
9(b) in boldface 16-point type on the front page of the policy.

10(2) In a case in which the applicant has not received and
11 completed the signed disclosure form required by this section, he
12or she may cancel the insurance so placed. The cancellation shall
13be on a pro rata basis as to premium, and the applicant shall be
14entitled to the return of any broker’s fees charged for the placement.

15(b) The following notice shall be provided to home state insureds
16and home state insured applicants for insurance as provided by
17subdivision (a), and shall be printed in English and in the language
18principally used by the surplus line broker and nonadmitted insurer
19to advertise, solicit, or negotiate the sale and purchase of surplus
20line insurance. The surplus line broker and nonadmitted insurer
21shall use the appropriate bracketed language for application and
22issued policy disclosures:

2324“NOTICE:
25

261. THE INSURANCE POLICY THAT YOU [HAVE
27PURCHASED] [ARE APPLYING TO PURCHASE] IS BEING
28ISSUED BY AN INSURER THAT IS NOT LICENSED BY THE
29STATE OF CALIFORNIA. THESE COMPANIES ARE CALLED
30“NONADMITTED” OR “SURPLUS LINE” INSURERS.

312. THE INSURER IS NOT SUBJECT TO THE FINANCIAL
32SOLVENCY REGULATION AND ENFORCEMENT THAT
33APPLY TO CALIFORNIA LICENSED INSURERS.

343. THE INSURER DOES NOT PARTICIPATE IN ANY OF
35THE INSURANCE GUARANTEE FUNDS CREATED BY
36CALIFORNIA LAW. THEREFORE, THESE FUNDS WILL
37NOT PAY YOUR CLAIMS OR PROTECT YOUR ASSETS IF
38THE INSURER BECOMES INSOLVENT AND IS UNABLE
39TO MAKE PAYMENTS AS PROMISED.

P15   14. THE INSURER SHOULD BE LICENSED EITHER AS A
2FOREIGN INSURER IN ANOTHER STATE IN THE UNITED
3STATES OR AS A NON-UNITED STATES (ALIEN) INSURER.
4YOU SHOULD ASK QUESTIONS OF YOUR INSURANCE
5AGENT, BROKER, OR “SURPLUS LINE” BROKER OR
6CONTACT THE CALIFORNIA DEPARTMENT OF
7INSURANCE AT THE FOLLOWING TOLL-FREE
8TELEPHONE NUMBER ____ OR INTERNET WEB SITE
9WWW.INSURANCE.CA.GOV. ASK WHETHER OR NOT THE
10INSURER IS LICENSED AS A FOREIGN OR NON-UNITED
11STATES (ALIEN) INSURER AND FOR ADDITIONAL
12INFORMATION ABOUT THE INSURER. YOU MAY ALSO
13CONTACT THE NAIC’S INTERNET WEB SITE AT
14WWW.NAIC.ORG.

155. FOREIGN INSURERS SHOULD BE LICENSED BY A
16STATE IN THE UNITED STATES AND YOU MAY CONTACT
17THAT STATE’S DEPARTMENT OF INSURANCE TO OBTAIN
18MORE INFORMATION ABOUT THAT INSURER.

196. FOR NON-UNITED STATES (ALIEN) INSURERS, THE
20INSURER SHOULD BE LICENSED BY A COUNTRY
21OUTSIDE OF THE UNITED STATES AND SHOULD BE ON
22THE NAIC’S INTERNATIONAL INSURERS DEPARTMENT
23(IID) LISTING OF APPROVED NONADMITTED
24NON-UNITED STATES INSURERS. ASK YOUR AGENT,
25BROKER, OR “SURPLUS LINE” BROKER TO OBTAIN MORE
26INFORMATION ABOUT THAT INSURER.

277. CALIFORNIA MAINTAINS A LIST OF APPROVED
28SURPLUS LINE INSURERS. ASK YOUR AGENT OR BROKER
29IF THE INSURER IS ON THAT LIST, OR VIEW THAT LIST
30AT THE INTERNET WEB SITE OF THE CALIFORNIA
31DEPARTMENT OF INSURANCE:
32WWW.INSURANCE.CA.GOV.

338. IF YOU, AS THE APPLICANT, REQUIRED THAT THE
34INSURANCE POLICY YOU HAVE PURCHASED BE BOUND
35IMMEDIATELY, EITHER BECAUSE EXISTING COVERAGE
36WAS GOING TO LAPSE WITHIN TWO BUSINESS DAYS OR
37BECAUSE YOU WERE REQUIRED TO HAVE COVERAGE
38WITHIN TWO BUSINESS DAYS, AND YOU DID NOT
39RECEIVE THIS DISCLOSURE FORM AND A REQUEST FOR
40YOUR SIGNATURE UNTIL AFTER COVERAGE BECAME
P16   1EFFECTIVE, YOU HAVE THE RIGHT TO CANCEL THIS
2POLICY WITHIN FIVE DAYS OF RECEIVING THIS
3DISCLOSURE. IF YOU CANCEL COVERAGE, THE PREMIUM
4WILL BE PRORATED AND ANY BROKER’S FEE CHARGED
5FOR THIS INSURANCE WILL BE RETURNED TO YOU.”


7(c) When a contract is issued to an industrial insured, neither
8the nonadmitted insurer nor the surplus line broker is required to
9provide the notice required in this section except on the
10confirmation of insurance, the certificate of placement, or the
11policy, whichever is first provided to the insured, nor is the insurer
12or surplus line broker required to obtain the insured’s signature.
13The producer shall ensure that the notice affixed to the confirmation
14of insurance, certificate of placement, or the policy is provided to
15the insured. The producer shall insert the current toll-free telephone
16number of the Department of Insurance as provided in paragraph
174 of the notice.

18(1) An industrial insured is an insured that does both of the
19following:

20(A) Employs at least 25 employees on average during the prior
2112 months.

22(B) Has aggregate annual premiums for insurance for all risks
23other than workers’ compensation and health coverage totaling no
24less than twenty-five thousand dollars ($25,000) or obtains
25insurance through the services of a full-time employee acting as
26an insurance manager or a continuously retained insurance
27consultant. A “continuously retained insurance consultant” does
28not include: (i) an agent or broker through whom the insurance is
29being placed, (ii) a subagent or subproducer involved in the
30transaction, or (iii) an agent or broker that is a business organization
31employing or contracting with a person mentioned in clauses (i)
32and (ii).

33(2) The surplus line broker shall be responsible for ensuring
34that the applicant is an industrial insured. A surplus line broker
35who reasonably relies on information provided in good faith by
36the applicant, whether directly or through the producer, shall be
37deemed to be in compliance with this requirement.

38(d) For purposes of compliance with the requirement of
39subdivision (a) that the signature of the applicant be obtained, the
40following shall apply:

P17   1(1) If the insurance transaction is not conducted at an in-person,
2face-to-face meeting, the applicant’s signature on the disclosure
3form may be transmitted by the applicant to the agent or broker
4via facsimile or comparable electronic transmittal.

5(2) In the case of commercial lines coverage, or personal
6insurance coverage subject to Section 675 and any umbrella
7coverage associated therewith, where an applicant requires that
8insurance coverage be bound immediately, either because existing
9coverage will lapse within two business days of the time the
10insurance is bound or because the applicant is required to have
11 coverage in place within two business days, and the applicant
12cannot meet in person with the agent or broker to sign the
13disclosure form, the agent or broker may obtain the signature of
14the applicant within five days of binding coverage, provided that
15the applicant may cancel the insurance so placed within five days
16of receiving the disclosure form from the agent or broker. The
17cancellation shall be on a pro rata basis, and the applicant shall be
18entitled to the rescission or return of any broker’s fees charged for
19the placement. When a policy is canceled, the broker shall inform
20the applicant that the broker’s fee must be returned and that the
21premium must be prorated.

22(e) Notwithstanding subdivision (a), this section shall not apply
23to insurance issued or delivered in this state by a nonadmitted
24Mexican insurer by and through a surplus line broker affording
25coverage exclusively in the Republic of Mexico on property located
26temporarily or permanently in, or operations conducted temporarily
27or permanently within, the Republic of Mexico.

28

begin deleteSEC. 9.end delete
29begin insertSEC. 8.end insert  

Section 1861.02 of the Insurance Code is amended to
30read:

31

1861.02.  

(a) Rates and premiums for an automobile insurance
32policy, as described in subdivision (a) of Section 660, shall be
33determined by application of the following factors in decreasing
34order of importance:

35(1) The insured’s driving safety record.

36(2) The number of miles he or she drives annually.

37(3) The number of years of driving experience the insured has
38had.

39(4) Those other factors that the commissioner may adopt by
40regulation and that have a substantial relationship to the risk of
P18   1loss. The regulations shall set forth the respective weight to be
2given each factor in determining automobile rates and premiums.
3Notwithstanding any other provision of law, the use of any criterion
4without approval shall constitute unfair discrimination.

5(b) (1) Every person who meets the criteria of Section 1861.025
6shall be qualified to purchase a Good Driver Discount policy from
7the insurer of his or her choice. An insurer shall not refuse to offer
8and sell a Good Driver Discount policy to any person who meets
9the standards of this subdivision.

10(2) The rate charged for a Good Driver Discount policy shall
11comply with subdivision (a) and shall be at least 20 percent below
12the rate the insured would otherwise have been charged for the
13 same coverage. Rates for Good Driver Discount policies shall be
14approved pursuant to this article.

15(3) (A) This subdivision shall not prevent a reciprocal insurer,
16organized prior to November 8, 1988, by a motor club holding a
17certificate of authority under Chapter 2 (commencing with Section
1812160) of Part 5 of Division 2, and that requires membership in
19the motor club as a condition precedent to applying for insurance
20from requiring membership in the motor club as a condition
21precedent to obtaining insurance described in this subdivision.

22(B) This subdivision shall not prevent an insurer that requires
23membership in a specified voluntary, nonprofit organization, which
24was in existence prior to November 8, 1988, as a condition
25precedent to applying for insurance issued to or through those
26membership groups, including franchise groups, from requiring
27that membership as a condition to applying for the coverage offered
28to members of the group, provided that it or an affiliate also offers
29and sells coverage to those who are not members of those
30membership groups.

31(C) However, all of the following conditions shall be applicable
32to the insurance authorized by subparagraphs (A) and (B):

33(i) Membership, if conditioned, is conditioned only on timely
34payment of membership dues and other bona fide criteria not based
35upon driving record or insurance, provided that membership in a
36motor club may not be based on residence in any area within the
37state.

38(ii) Membership dues are paid solely for and in consideration
39of the membership and membership benefits and bear a reasonable
40relationship to the benefits provided. The amount of the dues shall
P19   1not depend on whether the member purchases insurance offered
2by the membership organization. None of those membership dues
3or any portion thereof shall be transferred by the membership
4organization to the insurer, or any affiliate of the insurer,
5attorney-in-fact, subsidiary, or holding company thereof, provided
6that this provision shall not prevent any bona fide transaction
7between the membership organization and those entities.

8(iii) Membership provides bona fide services or benefits in
9addition to the right to apply for insurance. Those services shall
10be reasonably available to all members within each class of
11membership.

12Any insurer that violates clause (i), (ii), or (iii) shall be subject
13to the penalties set forth in Section 1861.14.

14(c) The absence of prior automobile insurance coverage, in and
15of itself, shall not be a criterion for determining eligibility for a
16Good Driver Discount policy, or generally for automobile rates,
17premiums, or insurability.

18(d) An insurer may refuse to sell a Good Driver Discount policy
19insuring a motorcycle unless all named insureds have been licensed
20to drive a motorcycle for the previous three years.

21(e) This section shall become operative on November 8, 1989.
22The commissioner shall adopt regulations implementing this
23section and insurers may submit applications pursuant to this article
24which comply with those regulations prior to that date, provided
25that no such application shall be approved prior to that date.

26

begin deleteSEC. 10.end delete
27begin insertSEC. 9.end insert  

Section 1861.025 of the Insurance Code is amended
28to read:

29

1861.025.  

A person is qualified to purchase a Good Driver
30Discount policy if he or she meets all of the following criteria:

31(a) He or she has been licensed to drive a motor vehicle for the
32previous three years.

33(b) During the previous three years, he or she has not done any
34of the following:

35(1) Had more than one violation point count determined as
36provided by subdivision (a), (b), (c), (d), (f), or (j) of, or paragraph
37(1) of subdivision (i) of, of Section 12810 of the Vehicle Code,
38but subject to the following modifications:

39(A) For the purposes of this section, the driver of a motor vehicle
40involved in an accident for which he or she was principally at fault
P20   1that resulted only in damage to property shall receive one violation
2point count, in addition to any other violation points that may be
3imposed for this accident.

4(B) If, under Section 488 or 488.5, an insurer is prohibited from
5increasing the premium on a policy on account of a violation, that
6violation shall not be included in determining the point count of
7the person.

8(C) If a violation is required to be reported under Section 1816
9of the Vehicle Code, or under Section 784 of the Welfare and
10Institutions Code, or any other provision requiring the reporting
11of a violation by a minor, the violation shall be included for the
12purposes of this section in determining the point count in the same
13manner as is applicable to adult violations.

14(2) Had more than one dismissal pursuant to Section 1803.5 of
15the Vehicle Code that was not made confidential pursuant to
16Section 1808.7 of the Vehicle Code, in the 36-month period for
17violations that would have resulted in the imposition of more than
18one violation point count under paragraph (1) if the complaint had
19not been dismissed.

20(3) Was the driver of a motor vehicle involved in an accident
21that resulted in bodily injury or in the death of any person and was
22principally at fault. The commissioner shall adopt regulations
23setting guidelines to be used by insurers for the determination of
24fault for the purposes of this paragraph and paragraph (1).

25(c) During the period commencing on January 1, 1999, or the
26date 10 years prior to the date of application for the issuance or
27renewal of the Good Driver Discount policy, whichever is later,
28and ending on the date of the application for the issuance or
29renewal of the Good Driver Discount policy, he or she has not
30been convicted of a violation of Section 23140, 23152, or 23153
31of the Vehicle Code, a felony violation of Section 23550 or 23566,
32or former Section 23175 or, as those sections read on January 1,
331999, of the Vehicle Code, or a violation of Section 191.5 or
34subdivision (a) of Section 192.5 of the Penal Code.

35(d) Any person who claims that he or she meets the criteria of
36subdivisions (a), (b), and (c) based entirely or partially on a driver’s
37license and driving experience acquired anywhere other than in
38the United States or Canada is rebuttably presumed to be qualified
39to purchase a Good Driver Discount policy if he or she has been
40licensed 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

begin deleteSEC. 11.end delete
4begin insertSEC. 10.end insert  

Section 10111.2 of the Insurance Code is amended
5to read:

6

10111.2.  

(a) Under a policy of disability insurance other than
7health insurance, as defined in Section 106, including a policy of
8disability income insurance, as defined in subdivision (i) of Section
9799.01, payment of benefits to the insured shall be made within
1030 calendar days after the insurer has received all information
11needed to determine liability for a claim. However, the
1230-calendar-day period shall not include any time during which
13the insurer is doing any of the following:

14(1) Awaiting a response for relevant medical information from
15a health care provider.

16(2) Awaiting a response from the claimant to a request for
17additional relevant information.

18(3) Investigating possible fraud that has been reported to the
19department’s Fraud Division in compliance with subdivision (a)
20of Section 1872.4.

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

32(c) When the insurer has received all information needed to
33determine liability for a claim, and the insurer determines that
34liability exists and fails to make payment of benefits to the insured
35within 30 calendar days after the insurer has received that
36information, any delayed payment shall bear interest, beginning
37the 31st calendar day, at the rate of 10 percent per year. Liability
38shall, in all cases, be determined by the insurer within 30 calendar
39days of receiving all information set out in the insurer’s written
40notification 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

begin deleteSEC. 12.end delete
4begin insertSEC. 11.end insert  

Section 10127.13 of the Insurance Code, as added
5by Section 8 of Chapter 166 of the Statutes of 2014, is amended
6to read:

7

10127.13.  

(a) All individual life insurance policies and
8individual annuity contracts for senior citizens that contain a charge
9upon surrender, partial surrender, excess withdrawal, or penalties
10upon surrender shall contain a notice disclosing the location of all
11of the following: the charge, the charge time period, the charge
12information, and any associated penalty information. The notice
13shall be in bold 12-point print on the front of the policy jacket or
14on the cover page of the policy.

15(b) A policy shall have just one cover page. If the notice required
16by this section and the statutorily required right to examine notice
17are both on the cover page, as opposed to the front cover of the
18policy jacket, they shall appear on the same page.

19(c) General references to “policy” in this section refer to both
20life insurance policies and annuity contracts.

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

22

begin deleteSEC. 13.end delete
23begin insertSEC. 12.end insert  

Section 10169 of the Insurance Code, as added by
24Section 8 of Chapter 872 of the Statutes of 2012, is amended to
25read:

26

10169.  

(a) Commencing January 1, 2001, there is hereby
27established in the department the Independent Medical Review
28System.

29(b) For the purposes of this chapter, “disputed health care
30service” means any health care service eligible for coverage and
31payment under a disability insurance contract that has been denied,
32modified, or delayed by a decision of the insurer, or by one of its
33contracting providers, in whole or in part due to a finding that the
34service is not medically necessary. A decision regarding a disputed
35health care service relates to the practice of medicine and is not a
36coverage decision. A disputed health care service does not include
37services provided by a group or individual policy of vision-only
38or dental-only coverage, except to the extent that (1) the service
39involves the practice of medicine, or (2) is provided pursuant to a
40contract with a disability insurer that covers hospital, medical, or
P23   1surgical benefits. If an insurer, or one of its contracting providers,
2issues a decision denying, modifying, or delaying health care
3services, based in whole or in part on a finding that the proposed
4health care services are not a covered benefit under the contract
5that applies to the insured, the statement of decision shall clearly
6specify the provision in the contract that excludes that coverage.

7(c) For the purposes of this chapter, “coverage decision” means
8the approval or denial of health care services by a disability insurer,
9or by one of its contracting entities, substantially based on a finding
10that the provision of a particular service is included or excluded
11as a covered benefit under the terms and conditions of the disability
12insurance contract. A coverage decision does not encompass a
13 disability insurer or contracting provider decision regarding a
14disputed health care service.

15(d) (1) All insured grievances involving a disputed health care
16service are eligible for review under the Independent Medical
17Review System if the requirements of this article are met. If the
18department finds that an insured grievance involving a disputed
19health care service does not meet the requirements of this article
20for review under the Independent Medical Review System, the
21insured request for review shall be treated as a request for the
22department to review the grievance. All other insured grievances,
23including grievances involving coverage decisions, remain eligible
24for review by the department.

25(2) In any case in which an insured or provider asserts that a
26decision to deny, modify, or delay health care services was based,
27in whole or in part, on consideration of medical necessity, the
28department shall have the final authority to determine whether the
29grievance is more properly resolved pursuant to an independent
30medical review as provided under this article.

31(3) The department shall be the final arbiter when there is a
32question as to whether an insured grievance is a disputed health
33care service or a coverage decision. The department shall establish
34a process to complete an initial screening of an insured grievance.
35If there appears to be any medical necessity issue, the grievance
36shall be resolved pursuant to an independent medical review as
37provided under this article.

38(e) Every disability insurance contract that is issued, amended,
39renewed, or delivered in this state on or after January 1, 2000, shall
40provide an insured with the opportunity to seek an independent
P24   1medical review whenever health care services have been denied,
2modified, or delayed by the insurer, or by one of its contracting
3providers, if the decision was based in whole or in part on a finding
4that the proposed health care services are not medically necessary.
5For purposes of this article, an insured may designate an agent to
6act on his or her behalf. The provider may join with or otherwise
7assist the insured in seeking an independent medical review, and
8may advocate on behalf of the insured.

9(f) Medicare beneficiaries enrolled in Medicare + Choice
10products shall not be excluded unless expressly preempted by
11federal law.

12(g) The department may seek to integrate the quality of care
13and consumer protection provisions, including remedies, of the
14Independent Medical Review System with related dispute
15resolution procedures of other health care agency programs,
16including the Medicare program, in a way that minimizes the
17potential for duplication, conflict, and added costs. Nothing in this
18subdivision shall be construed to limit any rights conferred upon
19insureds under this chapter.

20(h) The independent medical review process authorized by this
21article is in addition to any other procedures or remedies that may
22be available.

23(i) Every disability insurer shall prominently display in every
24insurer member handbook or relevant informational brochure, in
25every insurance contract, on insured evidence of coverage forms,
26on copies of insurer procedures for resolving grievances, on letters
27of denials issued by either the insurer or its contracting
28organization, and on all written responses to grievances,
29information concerning the right of an insured to request an
30independent medical review when the insured believes that health
31care services have been improperly denied, modified, or delayed
32by the insurer, or by one of its contracting providers. The
33department’s telephone number, 1-800-927-4357, and Internet
34Web site, www.insurance.ca.gov, shall also be displayed.

35(j) An insured may apply to the department for an independent
36medical review when all of the following conditions are met:

37(1) (A) The insured’s provider has recommended a health care
38service as medically necessary, or

39(B) The insured has received urgent care or emergency services
40that 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

begin deleteSEC. 14.end delete
16begin insertSEC. 13.end insert  

Section 10192.18 of the Insurance Code is amended
17to read:

18

10192.18.  

(a) Application forms shall include the following
19questions designed to elicit information as to whether, as of the
20date of the application, the applicant currently has Medicare
21supplement, Medicare Advantage, Medi-Cal coverage, or another
22health insurance policy or certificate in force or whether a Medicare
23supplement policy or certificate is intended to replace any other
24disability policy or certificate presently in force. A supplementary
25application or other form to be signed by the applicant and agent
26containing those questions and statements may be used.

27

28(Statements)

29

30(1) You do not need more than one Medicare supplement policy.

31(2) If you purchase this policy, you may want to evaluate your
32existing health coverage and decide if you need multiple coverages.

33(3) You may be eligible for benefits under Medi-Cal and may
34not need a Medicare supplement policy.

35(4)  If after purchasing this policy you become eligible for
36Medi-Cal, the benefits and premiums under your Medicare
37supplement policy can be suspended, if requested, during your
38entitlement to benefits under Medi-Cal for 24 months. You must
39request this suspension within 90 days of becoming eligible for
40Medi-Cal. If you are no longer entitled to Medi-Cal, your
P29   1suspended Medicare supplement policy or if that is no longer
2available, a substantially equivalent policy, will be reinstituted if
3requested within 90 days of losing Medi-Cal eligibility. If the
4Medicare supplement policy provided coverage for outpatient
5prescription drugs and you enrolled in Medicare Part D while your
6policy was suspended, the reinstituted policy will not have
7outpatient prescription drug coverage, but will otherwise be
8substantially equivalent to your coverage before the date of the
9suspension.

10(5) If you are eligible for, and have enrolled in, a Medicare
11supplement policy by reason of disability and you later become
12covered by an employer or union-based group health plan, the
13benefits and premiums under your Medicare supplement policy
14can be suspended, if requested, while you are covered under the
15employer or union-based group health plan. If you suspend your
16Medicare supplement policy under these circumstances and later
17lose your employer or union-based group health plan, your
18suspended Medicare supplement policy or if that is no longer
19available, a substantially equivalent policy, will be reinstituted if
20requested within 90 days of losing your employer or union-based
21group health plan. If the Medicare supplement policy provided
22coverage for outpatient prescription drugs and you enrolled in
23Medicare Part D while your policy was suspended, the reinstituted
24policy will not have outpatient prescription drug coverage, but will
25otherwise be substantially equivalent to your coverage before the
26date of the suspension.

27(6) Counseling services are available in this state to provide
28advice concerning your purchase of Medicare supplement insurance
29and concerning medical assistance through the Medi-Cal program,
30including benefits as a qualified Medicare beneficiary (QMB) and
31a specified low-income Medicare beneficiary (SLMB). If you want
32to discuss buying Medicare supplement insurance with a trained
33insurance counselor, call the California Department of Insurance’s
34toll-free telephone number 1-800-927-HELP, or access the
35department’s Internet Web site, www.insurance.ca.gov, and ask
36how to contact your local Health Insurance Counseling and
37Advocacy Program (HICAP) office. HICAP is a service provided
38free of charge by the State of California.

39

40(Questions)

P30   1

2If you lost or are losing other health insurance coverage and
3received a notice from your prior insurer saying you were eligible
4for guaranteed issue of a Medicare supplement insurance policy
5or that you had certain rights to buy such a policy, you may be
6guaranteed acceptance in one or more of our Medicare supplement
7plans. Please include a copy of the notice from your prior insurer
8with your application. PLEASE ANSWER ALL QUESTIONS.

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

10To the best of your knowledge,

11(1) (a) Did you turn 65 years of age in the last 6 months

12Yes____ No____

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

14Yes____ No____

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

16(2) Are you covered for medical assistance through California’s
17Medi-Cal program

18NOTE TO APPLICANT: If you have a share of cost under the
19Medi-Cal program, please answer NO to this question.

20Yes____ No____

21If yes,

22(a) Will Medi-Cal pay your premiums for this Medicare
23supplement policy

24Yes____ No____

25(b) Do you receive benefits from Medi-Cal OTHER THAN
26payments toward your Medicare Part B premium

27Yes____ No____

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

33START __/__/__ END __/__/__

34(b) If you are still covered under the Medicare plan, do you
35intend to replace your current coverage with this new Medicare
36supplement policy

37Yes____ No____

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

39Yes____ No____

P31   1(d) Did you drop a Medicare supplement policy to enroll in the
2Medicare plan

3Yes____ No____

4(4) (a) Do you have another Medicare supplement policy in
5force

6Yes____ No____

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

9Yes____ No____

10(c) If so, do you intend to replace your current Medicare
11supplement policy with this policy

12Yes____ No____

13(5) Have you had coverage under any other health insurance
14within the past 63 days (For example, an employer, union, or
15individual plan)

16Yes____ No____

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

18________________________________________________

19________________________________________________

20________________________________________________

21________________________________________________

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

23START __/__/__ END __/__/__

24(If you are still covered under the other policy, leave “END”
25blank.)

26

27(b) Agents shall list any other health insurance policies they
28have sold to the applicant as follows:

29(1) List policies sold that are still in force.

30(2) List policies sold in the past five years that are no longer in
31force.

32(c) In the case of a direct response issuer, a copy of the
33application or supplemental form, signed by the applicant, and
34acknowledged by the issuer, shall be returned to the applicant by
35the issuer upon delivery of the policy.

36(d) Upon determining that a sale will involve replacement of
37Medicare supplement coverage, any issuer, other than a direct
38response issuer, or its agent, shall furnish the applicant, prior to
39issuance for delivery of the Medicare supplement policy or
40certificate, a notice regarding replacement of Medicare supplement
P32   1coverage. One copy of the notice signed by the applicant and the
2agent, except where the coverage is sold without an agent, shall
3be provided to the applicant and an additional signed copy shall
4be retained by the issuer as provided in Section 10508. A direct
5response issuer shall deliver to the applicant at the time of the
6issuance of the policy the notice regarding replacement of Medicare
7supplement coverage.

8(e) The notice required by subdivision (d) for an issuer shall be
9in the form specified by the commissioner, using, to the extent
10practicable, a model notice prepared by the National Association
11of Insurance Commissioners for this purpose. The replacement
12notice shall be printed in no less than 12-point type in substantially
13the following form:

14

15[Insurer’s name and address]

16

17NOTICE TO APPLICANT REGARDING REPLACEMENT
18OF MEDICARE SUPPLEMENT COVERAGE OR MEDICARE
19ADVANTAGE

20

21SAVE THIS NOTICE! IT MAY BE IMPORTANT IN THE
22FUTURE.

23If you intend to cancel or terminate existing Medicare supplement
24or Medicare Advantage insurance and replace it with coverage
25issued by [company name], please review the new coverage
26carefully and replace the existing coverage ONLY if the new
27coverage materially improves your position. DO NOT CANCEL
28YOUR PRESENT COVERAGE UNTIL YOU HAVE RECEIVED
29YOUR NEW POLICY AND ARE SURE THAT YOU WANT
30TO KEEP IT.

31If you decide to purchase the new coverage, you will have 30
32days after you receive the policy to return it to the insurer, for any
33reason, and receive a refund of your money.

34If you want to discuss buying Medicare supplement or Medicare
35Advantage coverage with a trained insurance counselor, call the
36California Department of Insurance’s toll-free telephone number
371-800-927-HELP, and ask how to contact your local Health
38Insurance Counseling and Advocacy Program (HICAP) office.
39HICAP is a service provided free of charge by the State of
40California.

P33   1STATEMENT TO APPLICANT FROM THE INSURER AND
2AGENT: I have reviewed your current health insurance coverage.
3To the best of my knowledge, the replacement of insurance
4involved in this transaction does not duplicate coverage or, if
5applicable, Medicare Advantage coverage because you intend to
6terminate your existing Medicare supplement coverage or leave
7your Medicare Advantage plan. In addition, the replacement
8coverage contains benefits that are clearly and substantially greater
9than your current benefits for the following reasons:

10__ Additional benefits that are: ______

11__ No change in benefits, but lower premiums.

12__ Fewer benefits and lower premiums.

13__ Plan has outpatient prescription drug coverage and applicant
14is enrolled in Medicare Part D.

15__ Disenrollment from a Medicare Advantage plan. Reasons for
16disenrollment:

17__ Other reasons specified here: ______

181. Note: If the issuer of the Medicare supplement policy being
19applied for does not impose, or is otherwise prohibited from
20imposing, preexisting condition limitations, please skip to statement
213 below. Health conditions that you may presently have
22(preexisting conditions) may not be immediately or fully covered
23under the new policy. This could result in denial or delay of a claim
24for benefits under the new policy, whereas a similar claim might
25have been payable under your present policy.

262. State law provides that your replacement Medicare supplement
27policy may not contain new preexisting conditions, waiting periods,
28elimination periods, or probationary periods. The insurer will waive
29any time periods applicable to preexisting conditions, waiting
30periods, elimination periods, or probationary periods in the new
31coverage for similar benefits to the extent that time was spent
32(depleted) under the original policy.

333. If you still wish to terminate your present policy and replace
34it with new coverage, be certain to truthfully and completely
35answer any and all questions on the application concerning your
36medical and health history. Failure to include all material medical
37information on an application requesting that information may
38provide a basis for the insurer to deny any future claims and to
39refund your premium as though your policy had never been in
40force. After the application has been completed and before you
P34   1sign it, review it carefully to be certain that all information has
2been properly recorded. [If the policy or certificate is guaranteed
3issue, this paragraph need not appear.]

4DO NOT CANCEL YOUR PRESENT POLICY UNTIL YOU
5HAVE RECEIVED YOUR NEW POLICY AND ARE SURE
6THAT YOU WANT TO KEEP IT.


7

 

   

(Signature of Agent, Broker, or Other Representative)

   

(Signature of Applicant)

   

(Date)

P34  14

 

15(f) No issuer, broker, agent, or other person shall cause an
16insured to replace a Medicare supplement insurance policy
17unnecessarily. In recommending replacement of any Medicare
18supplement insurance, an agent shall make reasonable efforts to
19determine the appropriateness to the potential insured.

20(g) An issuer shall not require, request, or obtain health
21information as part of the application process for an applicant who
22is eligible for guaranteed issuance of, or open enrollment for, any
23Medicare supplement coverage pursuant to Section 10192.11 or
2410192.12, except for purposes of paragraph (1) or (2) of subdivision
25(a) of Section 10192.11 when the applicant is first enrolled in
26Medicare Part B. The application form shall include a clear and
27conspicuous statement that the applicant is not required to provide
28health information during a period where guaranteed issue or open
29enrollment applies, as specified in Section 10192.11 or 10192.12,
30except for purposes of paragraph (1) or (2) of subdivision (a) of
31Section 10192.11 when the applicant is first enrolled in Medicare
32Part B, and shall inform the applicant of those periods of
33guaranteed issuance of Medicare supplement coverage. This
34subdivision shall not prohibit an issuer from requiring proof of
35eligibility for a guaranteed issuance of Medicare supplement
36coverage.

37

begin deleteSEC. 15.end delete
38begin insertSEC. 14.end insert  

Section 10232.3 of the Insurance Code is amended
39to read:

P35   1

10232.3.  

(a) All applications for long-term care insurance
2except that which is guaranteed issue, shall contain clear,
3unambiguous, short, simple questions designed to ascertain the
4health condition of the applicant. Each question shall contain only
5one health status inquiry and shall require only a “yes” or “no”
6answer, except that the application may include a request for the
7name of any prescribed medication and the name of a prescribing
8physician. If the application requests the name of any prescribed
9medication or prescribing physician, then any mistake or omission
10shall not be used as a basis for the denial of a claim or the
11rescission of a policy or certificate.

12(b) The following warning shall be printed conspicuously and
13in close conjunction with the applicant’s signature block:

14“Caution: If your answers on this application are misstated or
15untrue, the insurer may have the right to deny benefits or rescind
16your coverage.”

17(c) Every application for long-term care insurance shall include
18a checklist that enumerates each of the specific documents that
19this chapter requires be given to the applicant at the time of
20solicitation. The documents and notices to be listed in the checklist
21include, but are not limited to, the following:

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

23(2) The HICAP notice pursuant to paragraph (8) of subdivision
24(a) of Section 10234.93.

25(3) The long-term care insurance shoppers guide pursuant to
26paragraph (9) of subdivision (a) of Section 10234.93.

27(4) The “Long-Term Care Insurance Personal Worksheet”
28pursuant to subdivision (c) of Section 10234.95.

29(5) The “Notice to Applicant Regarding Replacement of
30Accident and Sickness or Long-Term Care Insurance” pursuant
31to Section 10235.16 if replacement is not made by direct response
32solicitation or Section 10235.18 if replacement is made by direct
33response solicitation. Unless the solicitation was made by a direct
34response method, the agent and applicant shall both sign at the
35bottom of the checklist to indicate the required documents were
36delivered and received.

37(d) If an insurer does not complete medical underwriting and
38resolve all reasonable questions arising from information submitted
39on or with an application before issuing the policy or certificate,
40then the insurer may only rescind the policy or certificate or deny
P36   1an otherwise valid claim, upon clear and convincing evidence of
2fraud or material misrepresentation of the risk by the applicant.
3The evidence shall:

4(1) Pertain to the condition for which benefits are sought.

5(2) Involve a chronic condition or involve dates of treatment
6before the date of application.

7(3) Be material to the acceptance for coverage.

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

9(f) The contestability period as defined in Section 10350.2 for
10long-term care insurance shall be two years.

11(g) A copy of the completed application shall be delivered to
12the insured at the time of delivery of the policy or certificate.

13(h) Every insurer shall maintain a record, in accordance with
14Section 10508, of all policy or certificate rescissions, both state
15and countrywide, and shall annually furnish this information to
16the commissioner, which shall include the reason for rescission,
17the length of time the policy or certificate was in force, and the
18age and gender of the insured person, in a format prescribed by
19the commissioner.

20(i) The commissioner may, in his or her discretion, make public
21the aggregate data collected under subdivision (h), upon request.

22

begin deleteSEC. 16.end delete
23begin insertSEC. 15.end insert  

Section 10233.5 of the Insurance Code is amended
24to read:

25

10233.5.  

(a) An outline of coverage shall be delivered to a
26prospective applicant for long-term care insurance at the time of
27initial solicitation through means which prominently direct the
28attention of the recipient to the document and its purpose.

29(b) In the case of agent solicitations, an agent shall deliver the
30outline of coverage prior to the presentation of an application or
31enrollment form.

32(c) In the case of direct response solicitations, the outline of
33coverage shall be presented in conjunction with any application
34or enrollment form.

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

37(e) The outline of coverage shall contain no material of an
38advertising nature.

P37   1(f) Use of the text and sequence of the text of the outline of
2coverage set forth in this section is mandatory, unless otherwise
3specifically indicated.

4(g) Text that is capitalized or underscored in the outline of
5coverage may be emphasized by other means that provide
6prominence equivalent to capitalization or underscoring.

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

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

161. This policy is (an individual policy of insurance) ((a group
17policy) which was issued in the (indicate jurisdiction in which
18group policy was issued)).

192. PURPOSE OF OUTLINE OF COVERAGE. This outline
20of coverage provides a very brief description of the important
21features of the policy. You should compare this outline of coverage
22to outlines of coverage for other policies available to you. This is
23not an insurance contract, but only a summary of coverage. Only
24the individual or group policy contains governing contractual
25provisions. This means that the policy or group policy sets forth
26in detail the rights and obligations of both you and the insurance
27company. Therefore, if you purchase this coverage, or any other
28coverage, it is important that you READ YOUR POLICY (OR
29CERTIFICATE) CAREFULLY!

303. TERMS UNDER WHICH THE POLICY OR
31CERTIFICATE MAY BE RETURNED AND PREMIUM
32REFUNDED.

33(a) Provide a brief description of the right to return--“free look”
34provision of the policy.

35(b) Include a statement that the policy either does or does not
36contain provisions providing for a refund or partial refund of
37premium upon the death of an insured or surrender of the policy
38or certificate. If the policy contains those provisions, include a
39description of them.

P38   14. THIS IS NOT MEDICARE SUPPLEMENT COVERAGE.
2If you are eligible for Medicare, review the Medicare Supplement
3Buyer’s Guide available from the insurance company.

4(a) (For agents) Neither (insert company name) nor its agents
5represent Medicare, the federal government or any state
6government.

7(b) (For direct response) (insert company name) is not
8representing Medicare, the federal government or any state
9government.

105. LONG-TERM CARE COVERAGE. Policies of this category
11are designed to provide coverage for one or more necessary or
12medically necessary diagnostic, preventive, therapeutic,
13rehabilitative, maintenance, or personal care services, provided in
14a setting other than an acute care unit of a hospital, such as in a
15nursing home, in the community, or in the home.

16This policy provides coverage in the form of a fixed dollar
17indemnity benefit for covered long-term care expenses, subject to
18policy (limitations) (waiting periods) and (coinsurance)
19requirements. (Modify this paragraph if the policy is not an
20indemnity policy.)

216. BENEFITS PROVIDED BY THIS POLICY.

22(a) (Covered services, related deductible(s), waiting periods,
23elimination periods, and benefit maximums.)

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

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

26(Any benefit screens must be explained in this section. If these
27screens differ for different benefits, explanation of the screen
28should accompany each benefit description. If an attending
29physician or other specified person must certify a certain level of
30functional dependency in order to be eligible for benefits, this too
31must be specified. If activities of daily living (ADLs) are used to
32measure an insured’s need for long-term care, then these qualifying
33criteria or screens must be explained.)

347. LIMITATIONS AND EXCLUSIONS.

35(Describe:

36(a) Preexisting conditions.

37(b) Noneligible facilities/provider.

38(c) Noneligible levels of care (e.g., unlicensed providers, care
39or treatments provided by a family member, etc.).

40(d) Exclusions/exceptions.

P39   1(e) Limitations.)

2(This section should provide a brief specific description of any
3policy provisions which limit, exclude, restrict, reduce, delay, or
4in any other manner operate to qualify payment of the benefits
5described in (6) above.)

6THIS POLICY MAY NOT COVER ALL THE EXPENSES
7ASSOCIATED WITH YOUR LONG-TERM CARE NEEDS.

88. RELATIONSHIP OF COST OF CARE AND BENEFITS.
9Because the costs of long-term care services will likely increase
10over time, you should consider whether and how the benefits of
11this plan may be adjusted. (As applicable, indicate the following:

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

13(b) Any automatic benefit adjustment provisions.

14(c) Whether the insured will be guaranteed the option to buy
15additional benefits and the basis upon which benefits will be
16increased over time if not by a specified amount or percentage.

17(d) If there is a guarantee, include whether additional
18underwriting or health screening will be required, the frequency
19and amounts of the upgrade options, and any significant restrictions
20or limitations.

21(e) And finally, describe whether there will be any additional
22premium charge imposed, and how that is to be calculated.)

239. TERMS UNDER WHICH THE POLICY (OR
24CERTIFICATE) MAY BE CONTINUED IN FORCE OR
25DISCONTINUED.

26(a) Describe the policy renewability provisions.

27(b) For group coverage, specifically describe
28continuation/conversion provisions applicable to the certificate
29and group policy.

30(c) Describe waiver of premium provisions or state that there
31are no waiver of premium provisions.

32(d) State whether or not the company has a right to change
33premium, and if that right exists, describe clearly and concisely
34each circumstance under which the premium may change.

3510. ALL MENTAL ILLNESSES COVERED.

36(State that the policy provides coverage for insureds for all
37mental illnesses. Specifically describe each benefit screen or other
38policy provision that provides preconditions to the availability of
39policy benefits for that insured.)

4011. PREMIUM.

P40   1(a) State the total annual premium for the policy.

2(b) If the premium varies with an applicant’s choice among
3benefit options, indicate the portion of annual premium which
4corresponds to each benefit option.

512. ADDITIONAL FEATURES.

6(a) Indicate if medical underwriting is used.

7(b) Describe other important features.

813. INFORMATION AND COUNSELING. The California
9Department of Insurance has prepared a Consumer Guide to
10Long-Term Care Insurance. This guide can be obtained by calling
11the Department of Insurance toll-free telephone number or by
12accessing the department’s Internet Web site at
13www.insurance.ca.gov. The department’s number is
141-800-927-HELP. Additionally, the Health Insurance Counseling
15and Advocacy Program (HICAP) administered by the California
16Department of Aging, provides long-term care insurance counseling
17to California senior citizens. Call the HICAP toll-free telephone
18number 1-800-434-0222 for a referral to your local HICAP office.”

19

begin deleteSEC. 17.end delete
20begin insertSEC. 16.end insert  

Section 10233.9 of the Insurance Code is repealed.

21

begin deleteSEC. 18.end delete
22begin insertSEC. 17.end insert  

Section 10235.35 of the Insurance Code is amended
23to read:

24

10235.35.  

(a) Notwithstanding any other provision of law, the
25commissioner may require the administration by an insurer of the
26contingent benefit upon lapse, as described in Section 28 (A), (D)
27(3), (E), (F), (G), and (J) of the Long-Term Care Insurance Model
28Regulation promulgated by the National Association of Insurance
29Commissioners, as adopted in September 2014, as a condition of
30approval or acknowledgment of a rate adjustment for a block of
31business for which the contingent benefit upon lapse is not
32otherwise available.

33(b) The insurer shall notify policyholders and certificate holders
34of the contingent benefit upon lapse when required by the
35commissioner in conjunction with the implementation of a rate
36adjustment. The commissioner may require an insurer who files
37for such a rate adjustment to allow policyholders and certificate
38holders to reduce coverage pursuant to Section 10235.50 to avoid
39an increase in the policy’s premium amount.

P41   1(c) The commissioner may also approve any other alternative
2mechanism filed by the insurer in lieu of the contingent benefit
3upon lapse.

4

begin deleteSEC. 19.end delete
5begin insertSEC. 18.end insert  

Section 12418.4 of the Insurance Code is amended
6to read:

7

12418.4.  

(a) Sections 1667, 1668, 1669, 1670, 1729, 1729.2,
81738, 1738.5, 1743, and Article 6 (commencing with Section
912404), shall apply to all applicants or holders of a certificate of
10registration issued pursuant to this article.

11(b) The department may revoke, suspend, restrict, or decline to
12issue a certificate of registration if it determines that the title
13marketing representative or applicant has violated provisions of
14 Article 6 (commencing with Section 12404) pursuant to the due
15process and hearing requirements set forth in subdivision (c).

16(c) Except as provided in Section 1669, a certificate of
17registration shall not be denied, restricted, suspended, or revoked
18without a hearing conducted in accordance with Chapter 5
19(commencing with Section 11500) of Part 1 of Division 3 of Title
202 of the Government Code.

21(d) In addition to, or in lieu of, any other penalty that may be
22imposed under this article against a title marketing representative,
23the commissioner may bring an administrative action against a
24title marketing representative for any violation of the provisions
25of Article 6 (commencing with Section 12404). If a title marketing
26representative charged with a violation of Article 6 (commencing
27with Section 12404) is determined by the commissioner to have
28committed the violation, the commissioner may require the
29surrender of, temporarily suspend or revoke either permanently or
30temporarily the title marketing representative’s certificate of
31registration, and, in addition, may impose a monetary penalty. Any
32payment of a monetary penalty pursuant to a settlement or final
33adjudication shall be made from the title marketing representative’s
34personal funds and not by his or her employer either directly or
35through the title marketing representative. This article shall not
36preclude an action against a company that had actual knowledge
37of the violation by the title marketing representative. A title
38marketing representative who is issued a certificate of registration
39under this article may not engage in any activity that is otherwise
40prohibited through a separate entity controlled by the title
P42   1marketing representative or by the company or entity that employs
2him or her.

3(e) A title marketing representative who has his or her certificate
4of registration revoked by the department shall not be permitted
5to reapply for another certificate of registration with the department
6for five years from the date of revocation.

7

begin deleteSEC. 20.end delete
8begin insertSEC. 19.end insert  

Section 12820 of the Insurance Code is amended to
9read:

10

12820.  

(a) Prior to offering a vehicle service contract form to
11a purchaser or providing a vehicle service contract form to a seller,
12an obligor shall file with the commissioner a specimen of that
13vehicle service contract form.

14(b) A vehicle service contract form may include any or all of
15the benefits described in subdivision (c) of Section 12800 and shall
16comply with all of the following requirements:

17(1) (A) If an obligor has complied with Section 12830, the
18vehicle service contract shall include a disclosure in substantially
19the following form: “Performance to you under this contract is
20guaranteed by a California approved insurance company. You may
21file a claim with this insurance company if any promise made in
22the contract has been denied or has not been honored within 60
23days after your request. The name and address of the insurance
24company is: (insert name and address). If you are not satisfied with
25the insurance company’s response, you may contact the California
26Department of Insurance at 1-800-927-4357 or access the
27department’s Internet Web site (www.insurance.ca.gov).”

28(B) If an obligor has complied with Section 12836, the vehicle
29service contract shall include a disclosure in substantially the
30following form: “If any promise made in the contract has been
31denied or has not been honored within 60 days after your request,
32you may contact the California Department of Insurance at
33 1-800-927-4357 or access the department’s Internet Web site
34(www.insurance.ca.gov).”

35(2) All vehicle service contract language that excludes coverage,
36or imposes duties upon the purchaser, shall be conspicuously
37printed in boldface type no smaller than the surrounding type.

38(3) The vehicle service contract shall do each of the following:

39(A) State the obligor’s full corporate name or a fictitious name
40approved by the commissioner, the obligor’s mailing address, the
P43   1obligor’s telephone number, and the obligor’s vehicle service
2contract provider license number.

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

4(C) Conspicuously state the vehicle service contract’s purchase
5price.

6(D) Comply with Sections 1794.4 and 1794.41 of the Civil
7Code.

8(E) Name the administrator, if any, and provide the
9administrator’s license number.

10(4) If the vehicle service contract excludes coverage for
11preexisting conditions, the contract must disclose this exclusion
12in 12-point type.

13(c) The following benefits constitute insurance, whether offered
14as part of a vehicle service contract or in a separate agreement:

15(1) Indemnification for a loss caused by misplacement, theft,
16collision, fire, or other peril typically covered in the comprehensive
17coverage section of an automobile insurance policy, a homeowner’s
18policy, or a marine or inland marine policy.

19(2) Locksmith services, unless offered as part of an emergency
20road service benefit.

21

begin deleteSEC. 21.end delete
22begin insertSEC. 20.end insert  

Section 12921 of the Insurance Code is amended to
23read:

24

12921.  

(a) The commissioner shall perform all duties imposed
25upon him or her by the provisions of this code and other laws
26regulating the business of insurance in this state, and shall enforce
27the execution of those provisions and laws.

28(b) In an administrative action to enforce the provisions of this
29code and other laws regulating the business of insurance in this
30state, any settlement is subject to all of the following:

31(1) The commissioner may delegate the power to negotiate the
32terms and conditions of a settlement. The commissioner may
33delegate the power to approve a settlement, unless the settlement
34involves any of the following:

35(A) An insurer.

36(B) A managing general agent or production agent that manages
37the business of an insurer.

38(C) A title company.

39(D) A home protection company.

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

P44   1(F) An insurance agent or broker, or an applicant for an
2insurance agent or broker license, who has allegedly engaged in
3theft, fraud, or the misappropriation of premium or other funds in
4an amount that exceeds fifty thousand dollars ($50,000).

5(2) Unless specifically provided for in a provision of this code,
6the commissioner may not agree to any of the following:

7(A) That the respondent contribute, deposit, or transfer any
8moneys or other resources to a nonprofit entity.

9(B) That a respondent contribute, deposit, or transfer any fine,
10penalty, assessment, cost, or fee except to the commissioner for
11deposit in the appropriate state fund pursuant to Section 12975.7.

12(C) That the commissioner may or shall direct the transfer,
13distribution, or payment to another person or entity of any fine,
14penalty, assessment, cost, or fee.

15(D) The use of the commissioner’s name, likeness, or voice in
16any printed material or audio or visual medium, either for general
17distribution or for distribution to specific recipients.

18(3) The commissioner may only agree to payment to those
19persons or entities to whom payment may be due because of the
20respondent’s violation of a provision of this code or other law
21regulating the business of insurance in this state.

22(4) A settlement may only include the sanctions provided by
23this code or other laws regulating the business of insurance in this
24state, except that the settlement may include attorney’s fees, costs
25of the department in bringing the enforcement action, and future
26costs of the department to ensure compliance with the settlement
27 agreement.

28(c) Notwithstanding any other provision of law, the
29commissioner may accept documents submitted for filing or
30approval, process transactions, and maintain records in electronic
31form or as paper documents, and may adopt regulations to further
32this subdivision.

33

begin deleteSEC. 22.end delete
34begin insertSEC. 21.end insert  

Section 1299.04 of the Penal Code is amended to
35read:

36

1299.04.  

(a) A bail fugitive recovery person, a bail agent, bail
37permittee, or bail solicitor who contracts his or her services to
38another bail agent or surety as a bail fugitive recovery person for
39the purposes specified in subdivision (d) of Section 1299.01, and
40any bail agent, bail permittee, or bail solicitor who obtains licensing
P45   1after January 1, 2000, and who engages in the arrest of a defendant
2pursuant to Section 1301 shall comply with the following
3requirements:

4(1) The person shall be at least 18 years of age.

5(2) The person shall have completed a 40-hour power of arrest
6course certified by the Commission on Peace Officer Standards
7and Training pursuant to Section 832. Completion of the course
8shall be for educational purposes only and not intended to confer
9the power of arrest of a peace officer or public officer, or agent of
10any federal, state, or local government, unless the person is so
11employed by a governmental agency.

12(3) The person shall have completed a minimum of 20 hours of
13classroom prelicensing education certified pursuant to Section
141810.7 of the Insurance Code. For those persons licensed by the
15department as a bail licensee prior to January 1, 1994, there is no
16prelicensing education requirement. For those persons licensed by
17the department as a bail licensee between January 1, 1994, and
18December 31, 2012, a minimum of 12 hours of classroom
19prelicensing education is required.

20(4) The person shall not have been convicted of a felony, unless
21the person is licensed by the Department of Insurance pursuant to
22Section 1800 of the Insurance Code.

23(b) Upon completion of any course or training program required
24by this section, an individual authorized by Section 1299.02 to
25apprehend a bail fugitive shall carry certificates of completion
26with him or her at all times in the course of performing his or her
27duties under this article.



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