BILL ANALYSIS Ó AB 1515 Page 1 Date of Hearing: April 8, 2015 ASSEMBLY COMMITTEE ON INSURANCE Tom Daly, Chair AB 1515 (Committee on Insurance) - As Amended April 6, 2015 SUBJECT: Insurance SUMMARY: Makes numerous technical and clarifying changes to the Insurance Code. Specifically, this bill: 1)Requires automobile, property, life and disability insurers to add the Department of Insurance (DOI) website address to an existing disclosure document provided to new policy holders. 2)Increases the amount of Risk Based Capital a life insurer must hold without triggering increased financial oversight by the DOI. 3)Requires that multiple employer welfare arrangements (MEWAs) add the Department of Insurance website address to an existing disclosure document provided to participating employers and employees. 4)Requires and insurer to add the DOI consumer information phone number to an existing notice provided to the insured after a claim is filed. AB 1515 Page 2 5)Requires the minimum type size for the word "insurance" that is printed on the following documents created by insurance agents and brokers: a. Business cards b. Price quotations c. Insurance Products d. Print advertisements 6)Requires life settlement agents and title marketing representatives to notify the DOI of specified criminal convictions, bankruptcy proceedings, and admissions or judicial findings related to lying, cheating and stealing. 7)Requires a surplus lines broker to add the DOI website address to the notice that they are required to provide to the purchaser of a policy from a non-admitted insurer. 8)Repeals obsolete statutory language related to persistency discounts for automobile insurance. 9)Requires insurers pay claims on disability insurance policies that are neither health insurance nor disability income policies within 30 days. AB 1515 Page 3 10)Clarifies the disclosure requirements for life insurance policies and annuities sold to senior citizens. 11)Requires disability insurers to add the DOI website and consumer complaint phone number to promotional materials and specified insurance documents. 12)Requires that the DOI website address be added to application forms for Medicare Supplement plans. 13)Repeals obsolete language relating to long-term care insurance. 14)Corrects obsolete language describing mental illnesses. 15)Repeals obsolete language regarding the distribution of long-term care insurance policies. 16)Updates references to the long-term care model law adopted by the National Association of Insurance Commissioners. 17)Requires vehicle service contracts to include the DOI website address. 18)Permits the commissioner to delegate the authority to approve settlements for agents/brokers if the settlement does not involve financial misconduct involving more than $50,000. 19)Clarifies the continuing education requirements for bail licensees. AB 1515 Page 4 EXISTING LAW: 1)Requires automobile, property, life and disability insurers to provide specified information regarding complaint resolution processes and resources when first issuing a policy. 2)Requires insurers to maintain specified levels of "risk based capital" as a means to ensure their solvency. 3)Provides for the existence of MEWAs which allow multiple small employers to affiliate for the purpose of self-insuring employee health insurance. 4)Requires an insurer to provide the insured a specified notice regarding the fair settlement of insurance claims after a claim is filed. 5)Requires insurance agents and brokers to provide specified information on certain insurance related documents. 6)Requires most agents and brokers to notify the DOI of specified criminal convictions, bankruptcy proceedings, and admissions or judicial findings related to lying, cheating and stealing. 7)Requires a surplus lines broker to provide a specified notice to the purchaser of a policy from a non-admitted insurer. 8)Corrects obsolete references to the Vehicle Code. AB 1515 Page 5 9)Requires disability insurance policies that are neither health insurance nor disability income policies to pay claims within 30 days. 10)Requires insurers to pay claims on a disability income insurance policy to pay claims within 30 days. 11)Requires the commissioner to approve all settlements negotiated on his behalf. FISCAL EFFECT: Undetermined COMMENTS: 1) Purpose . This bill is the annual insurance omnibus bill. It contains numerous technical and/or clarifying changes to the Insurance Code. Most notably, the bill corrects erroneous cross-references to the vehicle code relating to individual motor vehicle records (MVR). Under Proposition 103, insurers are required to provide a "good driver" discount to drivers with less than two "moving violations." Subsequent legislation required insurers to use the number of "points" on a driver's MVR when determining "good driver" status and when determining auto insurance rates. Previous legislation altered the numbering of the relevant Vehicle Code section and failed to update the cross-references in the Insurance Code. REGISTERED SUPPORT / OPPOSITION: AB 1515 Page 6 Support Department of Insurance (sponsor) Opposition None Analysis Prepared by:Paul Riches / INS. / (916) 319-2086