BILL NUMBER: SB 2156	CHAPTERED  08/28/00

	CHAPTER   255
	FILED WITH SECRETARY OF STATE   AUGUST 28, 2000
	APPROVED BY GOVERNOR   AUGUST 25, 2000
	PASSED THE SENATE   AUGUST 10, 2000
	PASSED THE ASSEMBLY   JULY 6, 2000
	AMENDED IN ASSEMBLY   JUNE 15, 2000
	AMENDED IN ASSEMBLY   JUNE 8, 2000
	AMENDED IN SENATE   APRIL 24, 2000

INTRODUCED BY   Senator Johnston
   (Principal coauthor:  Senator Lewis)

                        FEBRUARY 25, 2000

   An act to amend Section 4013 of the Insurance Code,  relating to
insurance.



	LEGISLATIVE COUNSEL'S DIGEST


   SB 2156, Johnston.  Mutual insurers.
   Existing law makes each policyholder of a mutual insurer a member
during the period of insurance, and requires each director of a
mutual insurer to be a policyholder of the insurer.
   This bill would specify that the time period of a tail or extended
reporting policy or endorsement issued to permit the reporting of
claims after the policy period of a claims made policy is not part of
the period of insurance for purposes of defining membership.  This
bill would declare that this provision is declaratory of existing law
and does not affect any existing contractual rights.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  Section 4013 of the Insurance Code is amended to read:

   4013.  (a) Each policyholder of a domestic mutual insurer, other
than the holder of a reinsurance contract, is a member of the insurer
during the policy period, as defined in the policy or the
declarations page of the policy, with all rights and obligations of
that membership, and the policy shall so specify.
   (b) A "tail" or extended reporting policy or endorsement
permitting claims to be reported after the expiration or termination
of the policy period shall not extend the policy period of a "claims
made" policy and all rights and obligations of membership shall cease
upon the expiration or termination of the policy period.  If an
insurer has allowed or does allow, by contract, conduct, or
otherwise, the holder of a "tail" or extended reporting policy or
endorsement to have privileges, in whole or in part, identical, or
similar to some or all of the rights of membership, the holder is
nevertheless not deemed a member.
   (c) Subdivision (b) and the modifications to subdivision (a) made
by the act adding this subdivision, are declaratory of existing law
and do not affect any existing contract rights.