BILL ANALYSIS Ó SB 924 Page 1 Date of Hearing: June 29, 2016 ASSEMBLY COMMITTEE ON APPROPRIATIONS Lorena Gonzalez, Chair SB 924 (Roth) - As Amended March 28, 2016 ----------------------------------------------------------------- |Policy |Insurance |Vote:|13 - 0 | |Committee: | | | | | | | | | | | | | | ----------------------------------------------------------------- Urgency: No State Mandated Local Program: NoReimbursable: No SUMMARY: This bill expands the definition of "suitability information" (required information a seller of annuities must seek from a potential purchaser) to include the applicant's intention to apply for means-tested government benefits. FISCAL EFFECT: Negligible state fiscal effect. SB 924 Page 2 COMMENTS: 1)Purpose. The author indicates unscrupulous brokers have targeted wealthy elderly residents of nursing homes to reposition their assets in order to apply for government benefits, most commonly through those available through Medi-Cal or Department of Veterans' Affairs. This bill is intended to discourage the practice. This bill is sponsored by California Advocates for Nursing Home Reform (CANHR) and supported by California Department of Insurance, Consumer Attorneys of California, and some aging advocacy groups. It has no opposition. 2)Background. Legislation enacted in 2011 (AB 689 (Blumenfield), Chapter 295, Statutes of 2011) required insurers to establish a system to supervise the suitability of annuity sale recommendations, to ensure the needs and financial objectives of consumers at the time of the transaction are appropriately addressed. That bill established a list of specified information the consumer must provide to determine suitability, including: age, annual income, financial situation and needs, intended use of the annuity, risk tolerance, net worth and tax status. This bill would add whether the consumer intends to apply for government benefits to the above list. 3)Annuities. Annuities are financial products designed to convert premium paid by the purchaser (in either a lump sum or periodic payments) into a stream of payments to the purchaser. They are designed to provide a stable cash flow for the purchaser, most commonly for retirees, and alleviate the risk of outliving one's assets. Analysis Prepared by:Lisa Murawski / APPR. / (916) 319-2081 SB 924 Page 3