BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 488|
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UNFINISHED BUSINESS
Bill No: SB 488
Author: Block (D)
Amended: 8/19/16
Vote: 21
SENATE INSURANCE COMMITTEE: 8-0, 1/13/16
AYES: Roth, Gaines, Berryhill, Glazer, Hernandez, Liu,
Mitchell, Wieckowski
NO VOTE RECORDED: Hall
SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8
SENATE FLOOR: 38-0, 1/25/16
AYES: Allen, Anderson, Beall, Berryhill, Block, Cannella, De
León, Fuller, Gaines, Galgiani, Glazer, Hall, Hancock,
Hernandez, Hertzberg, Hill, Hueso, Huff, Jackson, Lara, Leno,
Leyva, Liu, McGuire, Mendoza, Mitchell, Monning, Moorlach,
Morrell, Nguyen, Nielsen, Pan, Pavley, Roth, Runner, Vidak,
Wieckowski, Wolk
NO VOTE RECORDED: Bates, Stone
ASSEMBLY FLOOR: 79-0, 8/22/16 - See last page for vote
SUBJECT: Public insurance adjusters
SOURCE: California Department of Insurance
DIGEST: This bill revises the eligibility requirements and
regulations applicable to persons holding a license as a public
insurance adjuster (PIA).
Assembly Amendments (1) remove the new definition of PIA leaving
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the existing definition in place; (2) strike provisions related
to the compensation of an apprentice PIA; (3) add the authority
of the Insurance Commissioner (IC) to place a licensee on
inactive status if he or she fails to comply with continuing
education requirements; (4) revise various fees and added
findings and declaration that the fees in this bill codify fees
currently charged; (5) remove health care providers from the
list of exemption from the licensing requirements; (6) add a
prelicensing education requirement for an apprentice PIA
license; and (7) add double-jointing language that avoids a
potential "chaptering" conflict with AB 2588 (Chu).
ANALYSIS:
Existing law:
1) Requires a license to act as a PIA, and establishes three
categories of licenses: PIA, nonresident PIA, and interim PIA.
2) Excludes various persons from the licensing requirement.
3) Requires applicants for a PIA license to meet age, residency,
character, and other requirements; have sufficient experience in
the handling of loss claims under insurance contracts; pass an
examination; and pay a fee.
4) Requires applicants for a nonresident license to meet the same
criteria for a PIA license, except residency, and to appoint the
IC as an agent for service of process.
5) Requires applicants for an interim license to be employed and
supervised by a licensee, and meet most other the requirements
for applicants, but they are not required to have prior
experience or pass an exam.
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6) Requires specified fees and examinations for application and
renewal of a license.
7) Exempts some licensees, not including PIAs, from license
renewal if the requirement arises while the licensee is serving
in the military, and holds the license in force during the
period of service until the end of the license year for which he
or she is released from service.
8) Requires PIAs to enter into a written contract on a form
approved by the IC before acting on behalf of the client.
9) Requires PIA contracts to include specified disclosures,
information, and provisions, including a provision allowing the
client to cancel the contract, without penalty and obligation,
by the third business day after the client signs the contract.
10) Provides that if a PIA misrepresents or conceals a material
fact from the insured prior to execution of the contract, the
insured is entitled to rescind the contract without time limit.
11) Prohibits PIAs from soliciting clients between 6:00 p.m. and
8:00 a.m.; during a "loss-producing occurrence"; and, for
residential properties, during a seven-day period after a
disaster.
12) Defines "disaster."
This bill:
1) Eliminates some categories of persons exempt from the
licensing requirements, including specified public
employees, charitable organizations, and admitted insurers.
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2) Adds to the categories of persons exempt from the licensing
requirements a person that negotiates or settles claims
arising under a life or health insurance policy or an
annuity contract and a person who settles subrogation claims
between insurers.
3) Clarifies that unlicensed employees or agents of a licensee
may not conduct business for the licensee that would require
a license.
4) Revises application requirements and requires live scan
fingerprinting.
5) Requires applicants to complete a 20-hour prelicensing course
of study, but exempts applicants licensed in another state.
6) Authorizes the IC to place a licensee on inactive status if
he or she fails to comply with continuing education
requirements
7) Repeals the provisions relating to interim licenses;
establishes an apprentice PIA license effective for no more
than 12 months; and limits apprentices to participation in
the factual investigation, tentative closing, and
solicitation of losses.
8) Requires applicants for PIA license to have at least two
years of experience in the handling of loss claims under
insurance contracts, except that applicants who have served
12 months under the new apprenticeship program are deemed to
have met the requirement.
9) Requires organization applicants to designate a licensed
individual to be responsible for compliance with insurance
laws.
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10) Revises the eligibility requirements for nonresident licenses
so that, absent a history of certain types of misconduct, a
license will be granted if the person is licensed and is in
good standing in his or her home state, has paid the
necessary fees, and meets the standard financial
responsibility requirements.
11) Requires the contract with the insured to contain a notice
that the PIA may not base a fee on any amount paid to the
insured by the insurer prior to the contract.
12) Tolls the three-business-day cancellation period until the
client receives a copy of the signed contract and extends it
to five calendar days for claims resulting from a
"catastrophic disaster" as defined in this bill.
13) Permits PIAs to solicit clients between 6:00 p.m. and 8:00
a.m. if requested by the policyholder.
14) Defines "loss-producing occurrence" and clarifies that a
loss-producing occurrence is ongoing whenever any specified
circumstances are still present such as emergency responders
are still present on the property or an evacuation order is
still in effect.
15) Eliminates the definition of "disaster" and defines the
phrase "catastrophic disaster" as an event that results in
large numbers of deaths and injuries; causes extensive
damage or destruction of facilities that provide and sustain
human needs; produces an overwhelming demand on state and
local response resources and mechanisms; causes a severe
long-term effect on general economic activity; and severely
affects state, local, and private sector capabilities to
begin and sustain response activities; and also provides
that a catastrophic disaster shall be declared by the U.S.
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President or the Governor.
16) Clarifies that a PIA may not solicit clients until seven days
have elapsed from the conclusion of a loss-producing
occurrence if the property is included in an area subject to
a catastrophic disaster, but may provide written materials
without making personal contact.
17) Adjusts provisions related to application and renewal fees,
revises fees, and declares that the changes to the fees in
the bill codify those already charged by the California
Department of Insurance (CDI).
18) Adds PIAs to the list of licensees exempt from examination
and fees on renewal if the requirement arises while serving
in the military.
19) Makes various technical changes and removes obsolete
references.
Background
Insurance adjusters investigate the circumstances of an
insurance claim, evaluate the covered losses, and negotiate
settlements according to the policy and applicable law.
Adjusters may be hired by an insurer or a claimant. PIAs
represent insureds (policyholders and others who are protected
under the contract) in the negotiation or settlement of claims
involving real or personal property. They serve the consumer in
a position of trust and confidence and are regulated by CDI.
SB 488 makes comprehensive revisions to PIA licensing laws many
of which conform to the model act adopted by the National
Association of Insurance Commissioners.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: Yes
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According to the Assembly Appropriations Committee, this bill
will result in anticipated costs to CDI, which currently
licenses public adjusters, under $20,000 for the first year to
develop and approve additional pre-licensing courses, and under
$20,000 annually ongoing to accommodate a slightly increased
volume of nonresident public adjuster applications. (Insurance
Fund).
SUPPORT: (Verified8/22/16)
California Department of Insurance (source)
California Association of Public Insurance Adjusters
NCFIA Anti-Fraud Alliance
United Policyholders
OPPOSITION: (Verified8/22/16)
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None received
ARGUMENTS IN SUPPORT: CDI supports SB 488 because it clarifies
several provisions that would build stronger consumer
protections related to fees, representation agreements, and
losses arising from catastrophes. California Association of
Public Insurance Adjusters supports the bill because it conforms
California law to the National Association of Insurance
Commissioners Public Adjusters Licensing Model Act relative to
apprentice PIAs, non-resident licensees and other technical
issues, including the definition of a disaster.
ASSEMBLY FLOOR: 79-0, 8/22/16
AYES: Achadjian, Alejo, Travis Allen, Arambula, Atkins, Baker,
Bigelow, Bloom, Bonilla, Bonta, Brough, Brown, Burke,
Calderon, Campos, Chang, Chau, Chávez, Chiu, Chu, Cooley,
Cooper, Dababneh, Dahle, Daly, Dodd, Eggman, Frazier, Beth
Gaines, Gallagher, Cristina Garcia, Eduardo Garcia, Gatto,
Gipson, Gomez, Gonzalez, Gordon, Gray, Grove, Hadley, Harper,
Roger Hernández, Holden, Irwin, Jones, Jones-Sawyer, Kim,
Lackey, Levine, Linder, Lopez, Low, Maienschein, Mathis,
Mayes, McCarty, Medina, Mullin, Nazarian, Obernolte,
O'Donnell, Olsen, Patterson, Quirk, Ridley-Thomas, Rodriguez,
Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting,
Wagner, Waldron, Weber, Wilk, Williams, Wood, Rendon
NO VOTE RECORDED: Melendez
Prepared by:Hugh Slayden / INS. / (916) 651-4110
8/22/16 23:15:17
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