Amended in Senate April 19, 2016

Senate Bill No. 1302

Introduced by Senator McGuire

(Coauthors: Senators Berryhill and Roth)

( begin delete Coauthor: end delete begin insert Coauthors: end insert Assembly begin delete Member Dodd end delete begin insert Members Bigelow, Dodd, and Maienschein end insert )

February 19, 2016

An act to amend begin delete Sections 10095 and end delete begin insert Section end insert 10095.5 of begin insert , and to amend, repeal, and add Section 10095 of, end insert the Insurance Code, relating to insurance, and declaring the urgency thereof, to take effect immediately.

LEGISLATIVE COUNSEL’S DIGEST

SB 1302, as amended, 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 begin insert telephone end insert 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 begin delete plan. end delete begin insert plan and would require the association to include the toll-free telephone number and the Internet Web site address on all communications with an applicant or an insured. end insert The bill begin insert , beginning March 1, 2017, end insert 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. begin delete 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. end delete begin insert The bill would delete the provision permitting an agent or broker to provide the toll-free telephone number of the plan as an alternative to assisting a person in making an application for insurance through the plan, and would instead require an agent or broker to assist a person in making an application through the plan by submitting an application at the person’s request or by providing the person with the California FAIR Plan’s Internet Web site address and the toll-free telephone number. end insert

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 of basic
property insurance in homeowners or other dwelling multiperil
policies. An insurer described in this subdivision 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, an insurer shall participate in the writings,
expenses, begin insert and end insert 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 the governing committee
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 of a revised plan, and, if the
association fails to do so, or if the revised plan is unacceptable,
the commissioner shall promulgate a plan of operation or part of
a plan as he or she may deem necessary to carry out the purposes
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 begin delete facility end delete begin insert facility, end insert 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.

begin delete

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

end delete begin insert

(h) Every insurer member of the plan shall provide to applicants
who are denied coverage the statewide toll-free telephone number
for the plan established pursuant to Section 10095.5 for the
purpose of obtaining information and assistance in obtaining basic
property insurance.

end insert begin insert

(i) This section shall remain in effect only until March 1, 2017,
and as of that date is repealed, unless a later enacted statute, that
is enacted before March 1, 2017, deletes or extends that date.

end insert

begin insert

begin insert SEC. 2. end insert   

end insert

begin insert Section 10095 is added to the end insert begin insert Insurance Code end insert begin insert , to read: end insert

begin insert

begin insert 10095. end insert   

(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 of
basic property insurance in homeowners or other dwelling
multiperil policies. An insurer described in this subdivision 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, an insurer shall participate in the writings,
expenses, and 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 the governing committee
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 of a revised plan, and, if the
association fails to do so, or if the revised plan is unacceptable,
the commissioner shall promulgate a plan of operation or part of
a plan as he or she may deem necessary to carry out the purposes
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) An insurer member of the plan shall provide to an applicant
who is denied coverage, or a policyholder whose policy is canceled
or not renewed, the Internet Web site address and statewide
toll-free telephone number for the plan established pursuant to
Section 10095.5 for the purpose of obtaining information and
assistance in obtaining basic property insurance.

(i) This section shall become operative March 1, 2017.

end insert

begin delete SEC. 2. end delete

begin insert SEC. 3. end insert   

Section 10095.5 of the Insurance Code is amended to
read:

10095.5.  

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

(b) An insurance agent or broker transacting basic property
insurance shall assist a person in making an application for
insurance through the begin delete plan. end delete begin insert plan by submitting an application at
the person’s request or by providing the person with the California
FAIR Plan’s Internet Web site address and the toll-free telephone
number. end insert

begin delete SEC. 3. end delete

begin insert SEC. 4. end insert   

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 begin insert California end insert FAIR (fair access to insurance requirements)
Plan, it is necessary for this act to take effect immediately.