Amended in Assembly April 20, 2015

Amended in Assembly April 6, 2015

California Legislature—2015–16 Regular Session

Assembly Bill No. 1515

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

March 5, 2015

An act to amend Sections 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.

(1) 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, begin delete and end delete when a claim is up for begin delete settlement. end delete begin insert settlement, and when a vehicle service contract form is offered. end insert

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

(2) 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.

(3) 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.

(4) 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.

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

(6) 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.

(7) 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.

(8) 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.

(9) 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.

(10) 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.

(11) 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:

SECTION 1.  

Section 510 of the Insurance Code is amended
to read:

510.  

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

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

SEC. 2.  

Section 739.3 of the Insurance Code is amended to
read:

739.3.  

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

SEC. 3.  

Section 742.34 of the Insurance Code is amended to
read:

742.34.  

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

begin delete NOTICE end delete begin insert “NOTICE end insert

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

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

(C) FOR ADDITIONAL INFORMATION ABOUT THE
MULTIPLE EMPLOYER WELFARE ARRANGEMENT YOU
SHOULD ASK QUESTIONS OF YOUR TRUST
ADMINISTRATOR OR YOU MAY CONTACT THE
CALIFORNIA DEPARTMENT OF INSURANCE AT begin delete ________. end delete
begin delete end delete
begin insert end insert
begin insert ________. end insert begin insert ” end insert
begin insert end insert

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

SEC. 4.  

Section 790.034 of the Insurance Code is amended to
read:

790.034.  

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

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

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

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

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

SEC. 5.  

Section 1725.5 of the Insurance Code is amended to
read:

1725.5.  

(a) For purposes of Sections 32.5, 1625, 1626, 1724.5,
1758.1, 1765, 1800, 14020, 14021, and 15006, every licensee shall
prominently affix, type, or cause to be printed on business cards,
written price quotations for insurance products, and print
advertisements distributed exclusively in this state for insurance
products its license number in type the same size as any indicated
telephone number, address, or fax number. If the licensee maintains
more than one organization license, one of the organization license
numbers is sufficient for compliance with this section.

(b) Effective January 1, 2005, for purposes of Sections 32.5,
1625, 1626, 1724.5, 1758.1, 1765, 14020, 14021, and 15006, every
licensee shall prominently affix, type, or cause to be printed on
business cards, written price quotations for insurance products,
and print advertisements, distributed in this state for insurance
products, the word “Insurance” in type size that is at least as large
as the smallest telephone number or 12-point begin delete font, end delete begin insert type, end insert whichever
is larger.

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

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

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

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

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

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

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

(j) This section does not apply to life insurance policy
illustrations required by Chapter 5.5 (commencing with Section
10509.950) of Part 2 of Division 2 or to life insurance cost indexes
required by Chapter 5.6 (commencing with Section 10509.970)
of Part 2 of Division 2.

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

SEC. 6.  

Section 1729.2 of the Insurance Code is amended to
read:

1729.2.  

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

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

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

(1) “License” includes all types of licenses issued by the
commissioner pursuant to Chapter 5 (commencing with Section
1621), Chapter 5A (commencing with Section 1759), Chapter 6
(commencing with Section 1760), Chapter 6.5 (commencing with
Section 1781.1), Chapter 7 (commencing with Section 1800), and
Chapter 8 (commencing with Section 1831) of Part 2 of Division
1, Chapter 1 (commencing with Section 10110) of Part 2 of
Division 2, Chapter 4 (commencing with Section 12280) of Part
5 of Division 2, Article 8 (commencing with Section 12418) of
Chapter 1 of Part 6 of Division 2, and Chapter 1 (commencing
with Section 14000) and Chapter 2 (commencing with Section
15000) of Division 5.

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

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

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

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

SEC. 7.  

Section 1764.1 of the Insurance Code is amended to
read:

1764.1.  

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

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

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

“NOTICE:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

SEC. 8.  

Section 1861.02 of the Insurance Code is amended to
read:

1861.02.  

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

(1) The insured’s driving safety record.

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

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

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

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

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

(3) (A) This subdivision shall not prevent a reciprocal insurer,
organized prior to November 8, 1988, by a motor club holding a
certificate of authority under Chapter 2 (commencing with Section
12160) of Part 5 of Division 2, and that requires membership in
the motor club as a condition precedent to applying for insurance
from requiring membership in the motor club as a condition
precedent to obtaining insurance described in this subdivision.

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

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

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

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

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

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

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

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

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

SEC. 9.  

Section 1861.025 of the Insurance Code is amended
to read:

1861.025.  

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

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

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

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

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

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

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

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

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

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

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

SEC. 10.  

Section 10111.2 of the Insurance Code is amended
to read:

10111.2.  

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

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

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

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

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

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

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

SEC. 11.  

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

10127.13.  

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

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

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

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

SEC. 12.  

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

10169.  

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

(i) The insured’s medical condition.

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

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

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

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

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

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

SEC. 13.  

Section 10192.18 of the Insurance Code is amended
to read:

10192.18.  

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

 

(Statements)

 

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

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

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

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

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

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

 

(Questions)

 

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

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

To the best of your knowledge,

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

Yes____ No____

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

Yes____ No____

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

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

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

Yes____ No____

If yes,

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

Yes____ No____

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

Yes____ No____

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

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

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

Yes____ No____

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

Yes____ No____

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

Yes____ No____

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

Yes____ No____

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

Yes____ No____

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

Yes____ No____

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

Yes____ No____

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

________________________________________________

________________________________________________

________________________________________________

________________________________________________

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

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

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

 

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

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

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

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

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

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

 

[Insurer’s name and address]

 

NOTICE TO APPLICANT REGARDING REPLACEMENT
OF MEDICARE SUPPLEMENT COVERAGE OR MEDICARE
ADVANTAGE

 

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

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

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

If you want to discuss buying Medicare supplement or Medicare
Advantage coverage with a trained insurance counselor, call the
California Department of Insurance’s toll-free telephone number
1-800-927-HELP, and ask how to contact your local Health
Insurance Counseling and Advocacy Program (HICAP) office.
HICAP is a service provided free of charge by the State of
California.

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

__ Additional benefits that are: ______

__ No change in benefits, but lower premiums.

__ Fewer benefits and lower premiums.

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

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

__ Other reasons specified here: ______

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

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

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

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

 

(Signature of Agent, Broker, or Other Representative)

(Signature of Applicant)

(Date)

 

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

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

SEC. 14.  

Section 10232.3 of the Insurance Code is amended
to read:

10232.3.  

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

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

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

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

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

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

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

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

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

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

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

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

(3) Be material to the acceptance for coverage.

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

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

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

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

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

SEC. 15.  

Section 10233.5 of the Insurance Code is amended
to read:

10233.5.  

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

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

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

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

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

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

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

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

begin delete (COMPANY end delete begin insert “ end insert begin insert (COMPANY end insert NAME)
(ADDRESS--CITY AND STATE)
(TELEPHONE NUMBER)
LONG-TERM CARE INSURANCE
OUTLINE OF COVERAGE

(Policy Number or Group Master Policy and Certificate Number)

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

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

3. TERMS UNDER WHICH THE POLICY OR
CERTIFICATE MAY BE RETURNED AND PREMIUM
REFUNDED.

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

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

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

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

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

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

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

6. BENEFITS PROVIDED BY THIS POLICY.

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

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

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

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

7. LIMITATIONS AND EXCLUSIONS.

(Describe:

(a) Preexisting conditions.

(b) Noneligible facilities/provider.

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

(d) Exclusions/exceptions.

(e) Limitations.)

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

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

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

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

(b) Any automatic benefit adjustment provisions.

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

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

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

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

(a) Describe the policy renewability provisions.

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

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

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

10. ALL MENTAL ILLNESSES COVERED.

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

11. PREMIUM.

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

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

12. ADDITIONAL FEATURES.

(a) Indicate if medical underwriting is used.

(b) Describe other important features.

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

SEC. 16.  

Section 10233.9 of the Insurance Code is repealed.

SEC. 17.  

Section 10235.35 of the Insurance Code is amended
to read:

10235.35.  

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

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

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

SEC. 18.  

Section 12418.4 of the Insurance Code is amended
to read:

12418.4.  

(a) Sections 1667, 1668, 1669, 1670, 1729, 1729.2,
1738, 1738.5, 1743, and Article 6 (commencing with Section
12404), shall apply to all applicants or holders of a certificate of
registration issued pursuant to this article.

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

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

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

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

SEC. 19.  

Section 12820 of the Insurance Code is amended to
read:

12820.  

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

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

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

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

begin insert

(C) The requirement that a vehicle service contract form include
the department’s Internet Web site shall not apply to a form for
which the department has issued a “no objection letter” as of
December 31, 2016.

end insert

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

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

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

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

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

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

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

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

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

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

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

SEC. 20.  

Section 12921 of the Insurance Code is amended to
read:

12921.  

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

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

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

(A) An insurer.

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

(C) A title company.

(D) A home protection company.

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

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

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

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

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

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

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

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

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

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

SEC. 21.  

Section 1299.04 of the Penal Code is amended to
read:

1299.04.  

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

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

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

(3) The person shall have completed a minimum of 20 hours of
classroom prelicensing education certified pursuant to Section
1810.7 of the Insurance Code. For those persons licensed by the
department as a bail licensee prior to January 1, 1994, there is no
prelicensing education requirement. For those persons licensed by
the department as a bail licensee between January 1, 1994, and
December 31, 2012, a minimum of 12 hours of classroom
prelicensing education is required.

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

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