BILL NUMBER: SB 1805 CHAPTERED 09/30/00 CHAPTER 997 FILED WITH SECRETARY OF STATE SEPTEMBER 30, 2000 APPROVED BY GOVERNOR SEPTEMBER 29, 2000 PASSED THE SENATE AUGUST 31, 2000 PASSED THE ASSEMBLY AUGUST 31, 2000 AMENDED IN ASSEMBLY AUGUST 31, 2000 AMENDED IN ASSEMBLY AUGUST 30, 2000 AMENDED IN ASSEMBLY AUGUST 29, 2000 INTRODUCED BY Senator Escutia FEBRUARY 23, 2000 An act to amend Section 734.1 of, and to add Section 12938 to, the Insurance Code, relating to insurance. LEGISLATIVE COUNSEL'S DIGEST SB 1805, Escutia. Market conduct examinations. Existing law provides for the licensing and regulation of insurers by the Insurance Commissioner. Existing law provides that the commissioner has the power to examine and investigate into the affairs of every person engaged in the business of insurance in this state, generally known as a market conduct examination in order to determine whether the person has been or is engaged in any unfair method of competition or in any prohibited unfair or deceptive act or practice. Existing law also provides that the commissioner has the power to examine the business and affairs of an insurer relative to its financial condition and ability to fulfill its obligations, and compliance with all laws applicable to its insurance transactions. Existing law provides that certain information obtained or produced by the department with respect to insurer examinations and investigations is confidential and not subject to disclosure, except as specified. This bill would require the commissioner, if he or she suspends or terminates an examination that includes an examination of claims practices, to send a copy of the complete file to the State Bureau of Audits, and would require the State Auditor to audit the file and make a determination on the propriety of the termination or suspension. This bill, notwithstanding any other provision of law, would require the commissioner to make information concerning the resolution of market conduct examinations and the contents of every adopted report of an examination that pertains to unfair or deceptive business practices, as defined, available for public inspection and on the department's web site, as specified. This bill would require the information to be maintained in a current up-to-date condition. This bill would require all identifying and privileged information regarding individual policyholders to be redacted from the information or reports available to the public. The bill would permit an insurer to furnish comments regarding an adopted report of an examination, as specified, for publishing on the web site. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. Section 734.1 of the Insurance Code is amended to read: 734.1. (a) No later than 60 days following completion of the examination, the examiner in charge shall file with the department a verified written report of the examination under oath. Upon receipt of the verified report, the department shall transmit the report to the company examined, together with a notice that the company has 30 days to make a written submission or rebuttal with respect to any matters contained in the examination report. (b) Within 30 days of the end of the period allowed for the receipt of written submissions or rebuttals, the commissioner shall fully consider and review the report, together with any written submissions or rebuttals and any relevant portions of the examiner's workpapers, and shall either adopt the report as filed or with modifications or corrections, or reject the report with directions to the examiners to reopen the examination for purposes of obtaining additional data, documentation, or information, and refiling pursuant to subdivision (a). (c) (1) Nothing contained in this article shall be construed to limit the commissioner's authority to terminate or suspend any examination in order to pursue other legal or regulatory action pursuant to the insurance laws of this state. (2) If the commissioner terminates or suspends an examination that includes an examination of claims practices, the commissioner shall within 10 days of the termination or suspension transmit a copy of the complete examination file to the State Bureau of Audits. The State Auditor shall audit the file pursuant to Section 10527 of the Government Code to determine the propriety of the termination or suspension. SEC. 2. Section 12938 is added to the Insurance Code, to read: 12938. Notwithstanding any other provision of law, the department shall make available for public inspection and publish on its website all of the information described in subdivisions (a) and (b). This information shall be maintained in a current, up-to-date condition. All identifying and privileged information regarding individual policyholders shall be redacted from documents available for public inspection and on the website. (a) All fully executed stipulations, orders, decisions, settlements, or other forms of agreement resolving market conduct examinations, whether the examinations were finalized, terminated, or suspended, that pertain to unfair or deceptive practices in the business of insurance as defined in Section 790.03. (b) (1) Every adopted report of an examination of unfair or deceptive practices in the business of insurance as defined in Section 790.03 that is adopted as filed, or as modified or corrected, by the commissioner pursuant to Section 734.1. (2) The commissioner upon adopting the report shall by certified United States mail transmit a copy of the report to the examined insurer's designated agent for service of process. Within 10 business days after the transmittal, the examined insurer may submit comments to the commissioner relating to the adopted report. The comments shall be in a form and length as provided by regulation. (3) Ten business days after the transmittal the commissioner shall publish on the department's website the adopted report and any comments submitted by the examined insurer unless a court of competent jurisdiction has stayed the publication of the report. (c) This section may not be construed to require the disclosure of company workpapers or other company documents discovered during the course of an examination or any preliminary report of the examination, except as otherwise permitted by law.