BILL ANALYSIS Ó SB 488 Page 1 SENATE THIRD READING SB 488 (Block) As Amended August 19, 2016 Majority vote SENATE VOTE: 38-0 -------------------------------------------------------------------- |Committee |Votes|Ayes |Noes | | | | | | | | | | | | | | | | |----------------+-----+-----------------------+---------------------| |Insurance |13-0 |Daly, Melendez, Travis | | | | |Allen, Bigelow, | | | | |Calderon, Chu, Cooley, | | | | |Cooper, Dababneh, | | | | |Dahle, Frazier, Gatto, | | | | |Rodriguez | | | | | | | |----------------+-----+-----------------------+---------------------| |Appropriations |18-0 |Gonzalez, Bigelow, | | | | |Bloom, Bonta, | | | | |Calderon, Chang, Daly, | | | | |Eggman, Gallagher, | | | | | | | | | | | | | | |Roger Hernández, | | | | |Holden, Jones, | | | | |Obernolte, Quirk, | | SB 488 Page 2 | | |Santiago, Wagner, | | | | |Weber, Wood | | | | | | | | | | | | -------------------------------------------------------------------- SUMMARY: Updates existing statutes governing public insurance adjusters (public adjusters). Specifically, this bill: 1)Adds public adjusters to an existing statute regarding license renewal for those in active military service. 2)Provides that fees collected related to the licensing of public adjusters are earned fees and not refundable. 3)Defines various terms for the purposes of the Public Insurance Adjusters Act. 4)Exempts various entities involved in submitting and negotiating insurance claims from the act. 5)Requires an applicant for a public adjuster license to complete 20 hours of pre-license education. 6)Requires an applicant for a public adjuster license to have either two-years of experience adjusting property claims or completed one year while licensed as an apprentice public adjuster. 7)Permits an individual who resides in a state that does not license public adjusters to designate California as their home SB 488 Page 3 state. 8)Exempts an individual licensed as a public adjuster in another state from the pre-license education requirement. 9)Requires the issuance of a non-resident public adjuster license to an applicant that meets the requirements for a public adjuster in California and whose home state grants non-resident licenses to California licensed public adjusters on the same basis. 10)Establishes a license for apprentice public adjusters to permit individuals to engage in specified public adjusting activities under the supervision of a public adjuster while preparing to become fully licensed. 11)Requires an applicant for the apprentice public adjuster to complete 20 hours of pre-license education during the course of their apprenticeship. 12)Prohibits the fee charged by a public adjuster to result in the insured receiving less compensation from the insurer than before the public adjuster was retained. 13)Prohibits public adjusters from soliciting new business before the event causing the loss is over. 14)Permits the insured to cancel a contract with a public adjuster after a catastrophe up to five days after signing the contract. SB 488 Page 4 15)Establishes an inactive license category for public adjusters who are not actively practicing. 16)Updates the fees listed in statute to reflect the current fee schedule. 17)Resolves chaptering out conflicts with AB 2588 (Chu). 18)Makes findings and declarations related to the licensing fees for public adjusters. EXISTING LAW: 1)Requires individuals and organizations acting as public adjusters to be licensed by the Department of Insurance (DOI). 2)Defines a public adjuster as an individual or organization that assists insureds in negotiating and settling property insurance claims for a fee. 3)Requires an applicant for a public adjuster license to have sufficient experience adjusting property claims, as determined by the Insurance Commissioner (commissioner). FISCAL EFFECT: According to the Senate Appropriations Committee, pursuant to Senate Rule 28.8, negligible state costs. COMMENTS: SB 488 Page 5 1)Purpose. According to the author, this bill establishes and enhances consumer protections against unfair practices by public adjusters. The bill also more closely aligns California law with national licensing standards. Additionally, the bill enhances consumer protections by clarifying the rules governing the compensation public adjusters receive, better defines the conditions under which a public adjuster may contact consumers, and changes the notification requirement which allows consumers to cancel the services of a public adjuster in claims relating to a catastrophic disaster. 2)Public Adjusters. Insurance adjusters investigate the circumstances of an insurance claim, evaluate the covered losses, and negotiate settlements according to the policy and applicable law. Adjusters fall into one of three categories, "company adjusters" who are employed by insurers, "independent insurance adjusters" who are independent contractors used by insurers, and "public adjusters" who represent a policyholder in the settlement of a claim. Public adjusters inspect the property, evaluate the damage, prepare supporting documentation and data, help to establish replacement costs, and provide other services. They are typically paid on a contingency fee basis by the policyholder. 3)Related Legislation. AB 2588 (Chu) which greatly expands the regulation of independent insurance adjusters passed this committee in April. The bill is scheduled for a hearing before the Senate Insurance Committee on June 22. Analysis Prepared by: Paul Riches / INS. / (916) 319-2086 FN: 0004541 SB 488 Page 6