Senate Bill No. 1302

Introduced by Senator McGuire

(Coauthors: Senators Berryhill and Roth)

(Coauthor: Assembly Member Dodd)

February 19, 2016

An act to amend Sections 10095 and 10095.5 of the Insurance Code, relating to insurance, and declaring the urgency thereof, to take effect immediately.

LEGISLATIVE COUNSEL’S DIGEST

SB 1302, as introduced, McGuire. Basic property insurance: California FAIR Plan.

Under existing law, the California FAIR (fair access to insurance requirements) Plan Association is a joint reinsurance association of state insurers that is established to, among other things, assist persons in securing basic property insurance for qualified property for which insurance cannot be obtained through the normal insurance market. Existing law requires the association to establish and maintain a toll-free telephone number through which a person may receive assistance in applying for basic property insurance. Existing law requires an insurer member of the plan to provide to an applicant who is denied coverage the toll-free number for the plan for information and assistance in obtaining basic property insurance. Existing law requires an agent or broker transacting basic property insurance to either assist a person in making an application for insurance through the plan or to provide the person with that toll-free telephone number.

This bill would additionally require the association to establish and maintain an Internet Web site at which a person may receive information and assistance in applying for insurance through the plan. The bill would require an insurer member to provide an applicant denied coverage or a policyholder whose policy is canceled or not renewed both that Internet Web site address and toll-free telephone number. The bill would require the association to cause that toll-free telephone number and Internet Web site address to be included in all communications with an applicant or insured. The bill would require an insurance agent or broker transacting basic property insurance to assist a person in making an application for insurance through the plan, and would delete the provision that permitted the agent or broker, as an alternative, to provide the person the toll-free telephone number.

This bill would declare that it is to take effect immediately as an urgency statute.

Vote: ²⁄₃. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

SECTION 1.  

Section 10095 of the Insurance Code is amended
to read:

10095.  

(a) Within 30 days following the effective date of this
chapter, the association shall submit to the commissioner, for his
or her review, a proposed plan of operation, consistent with the
provisions of this chapter, creating an association consisting of all
insurers licensed to write and engaged in writing in this state, on
a direct basis, basic property insurance or any component begin delete thereof end delete
begin insert of basic property insurance end insert in homeowners or other dwelling
multiperil policies. begin delete Every end delete begin insert An end insert insurer begin delete so end delete described begin insert in this
subdivision end insert shall be a member of the association and shall remain
a member as a condition of its authority to transact those kinds of
insurance in this state.

(b) The proposed plan shall authorize the association to assume
and cede reinsurance on risks written by insurers in conformity
with the program.

(c) Under the plan, begin delete each end delete begin insert an end insert insurer shall participate in the
writings, expenses, profits and losses of the association in the
proportion that its premiums written during the second preceding
calendar year bear to the aggregate premiums written by all insurers
in the program, excluding that portion of the premiums written
attributable to the operation of the association. Premiums written
on a policy of basic residential earthquake insurance issued by the
California Earthquake Authority pursuant to Section 10089.6 shall
be attributed to the insurer that writes the underlying policy of
residential property insurance.

(d) The plan shall provide for administration by a governing
committee under rules to be adopted by begin delete it end delete begin insert the governing committee end insert
with the approval of the commissioner. Voting on administrative
questions of the association and facility shall be weighted in
accordance with each insurer’s premiums written during the second
preceding calendar year as disclosed in the reports filed by the
insurer with the commissioner.

(e) The plan shall provide for a plan to encourage persons to
secure basic property insurance through normal channels from an
admitted insurer or a licensed surplus line broker by informing
those persons what steps they must take in order to secure the
insurance through normal channels.

(f) The plan shall be subject to the approval of the commissioner
and shall go into effect upon the tentative approval of the
commissioner. The commissioner may, at any time, withdraw his
or her tentative approval or he or she may, at any time after he or
she has given his or her final approval, revoke that approval if he
or she feels it is necessary to carry out the purposes of the chapter.
The withdrawal or revocation of that approval shall not affect the
validity of any policies executed prior to the date of the withdrawal.
If the commissioner disapproves or withdraws or revokes his or
her approval to all or any part of the plan of operation, the
association shall, within 30 days, submit for review an
appropriately revised plan or part begin delete thereof, end delete begin insert of a revised plan, end insert and,
if the association fails to do so, or if the revised plan begin delete so filed end delete is
unacceptable, the commissioner shall promulgate a plan of
operation or part begin delete thereof end delete begin insert of a plan end insert as he or she may deem necessary
to carry out the begin delete purpose end delete begin insert purposes end insert of this chapter.

(g) The association may, on its own initiative or at the request
of the commissioner, amend the plan of operation, subject to
approval by the commissioner, who shall have supervision of the
inspection bureau, the facility and the association. The
commissioner or any person designated by him or her, shall have
the power of visitation of and examination into the operation and
free access to all the books, records, files, papers, and documents
that relate to operation of the facility and association, and may
summon, qualify, and examine as witnesses all persons having
knowledge of those operations, including officers, agents, or
employees thereof.

(h)  begin delete Every end delete begin insert An end insert insurer member of the plan shall provide to
begin delete applicants end delete begin insert an applicant end insert who begin delete are end delete begin insert is end insert denied begin delete coverage end delete begin insert coverage, or
a policyholder whose policy is canceled or not renewed, end insert the
begin insert Internet Web site address and end insert statewide toll-free begin delete “800” end delete begin insert telephone end insert
number for the plan established pursuant to Section 10095.5 for
the purpose of obtaining information and assistance in obtaining
basic property insurance.

SEC. 2.  

Section 10095.5 of the Insurance Code is amended to
read:

10095.5.  

(a) The association shall establish and maintain begin insert an
Internet Web site and end insert a statewide toll-free begin delete “800” end delete begin insert telephone end insert number
through which begin delete persons end delete begin insert a person end insert may receive begin insert information and end insert
assistance in applying for insurance through the plan. The
association shall cause the begin insert toll-free telephone end insert number to be
published in all general distribution telephone directories in
begin delete California. end delete begin insert the state and shall include the toll-free telephone and
Internet Web site address on all communications with an applicant
or insured. end insert

(b)  begin delete Every end delete begin insert An end insert insurance agent or broker transacting basic
property insurance shall begin delete either end delete assist begin delete persons end delete begin insert a person end insert in making
begin insert an end insert application for insurance through the begin delete plan or provide persons
who desire that insurance with the toll-free number established
pursuant to subdivision (a). end delete begin insert plan. end insert

SEC. 3.  

This act is an urgency statute necessary for the
immediate preservation of the public peace, health, or safety within
the meaning of Article IV of the Constitution and shall go into
immediate effect. The facts constituting the necessity are:

In order to have the consumer protections proposed in this act
become operative as soon as possible for homeowners who are
having difficulty obtaining insurance coverage for their property
because they are located in high-risk brush and wildfire areas, and
to provide insurers adequate time to amend and prepare their
required notices to customers about the availability of coverage
through the FAIR (fair access to insurance requirements) Plan, it
is necessary for this act to take effect immediately.