BILL ANALYSIS
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|SENATE RULES COMMITTEE | AB 299|
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THIRD READING
Bill No: AB 299
Author: Assembly Insurance Committee
Amended: 7/15/09 in Senate
Vote: 21
SENATE BANKING, FINANCE, AND INS. COMMITTEE : 11-0, 7/9/09
AYES: Calderon, Cogdill, Correa, Cox, Florez, Kehoe, Liu,
Lowenthal, Padilla, Price, Runner
NO VOTE RECORDED: Harman
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
ASSEMBLY FLOOR : 78-1, 5/11/09 - See last page for vote
SUBJECT : Insurance
SOURCE : Department of Insurance
DIGEST : This bill makes a number of technical,
corrective and clarifying amendments to the Insurance Code
and the Vehicle Code.
ANALYSIS :
Existing law:
1. Requires the Insurance Commissioner (IC) to annually
mail a notice to every domestic insurer, specifying the
"reciprocal states." A domestic insurer is prohibited
from selling insurance in a "reciprocal state" unless
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the insurer is authorized pursuant to the laws of that
other state to transact insurance.
2. Authorizes the IC to examine any insurer as often as
he/she deems it appropriate, and requires the IC to
conduct an examination of every "admitted insurer" at
least once every five years. (An "admitted insurer" is
an insurance company entitled to transact insurance in
this state as a result of meeting the conditions
required by law.) In determining the nature and
frequency of the examination, the IC shall consider the
results of financial statement analyses and ratios,
changes in management or ownership, actuarial opinions,
reports of independent certified public accountants, and
other criteria set forth in the Examiner's Handbook
adopted by the National Association of Insurance
Commissioners (NAIC).
3. Allows the IC to use and, if appropriate, to make public
any final or preliminary examination report, any
examiner or company work papers or other documents, or
other information discovered during the course of the
examination in the furtherance of a legal or regulatory
action which the IC deems appropriate.
4. Requires the expenses of insurer examinations incurred
by the IC to be payable by the insurers, except that
special examinations which are in addition to regular
examinations may be at the expense of the state in the
discretion of the IC.
5. Requires all insurers doing business in this state to
have an annual audit conducted by an independent
certified public accountant. The audit shall be
conducted in conformity with the Annual Audited
Financial Reports instructions contained in the annual
statement instructions adopted by the NAIC.
6. Authorizes the IC to grant a 30-day extension on the
filing of the annual audit upon a showing by the insurer
and its independent certified public accountant of the
reasons for the extension request and the determination
by the IC of substantial cause for an extension.
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7. Requires requests for an extension to be submitted in
writing within 20 days of the due date.
8. Allows domestic incorporated insurers to invest in
accounts in banks or savings and loan associations to
the extent the accounts are insured by an agency or
instrumentality of the federal government.
9. Limits the percentage of excess funds investments that
can be made in a loan to any one borrower, including all
affiliates, to 10 percent of the capital stock and
surplus or one percent of the admitted assets of the
lending insurer, whichever amount is greater.
This bill makes a series of technical non-controversial
changes to laws governing the authority and duties of the
IC and insurance companies. Specifically, this bill:
1. Requires the IC to mail a notice every four years to
every domestic insurer (i.e., California-domiciled
insurance company), specifying the "reciprocal states."
A "reciprocal state" is a state with laws that prohibit
an insurer based in that state from insuring the lives
or property located in California unless that insurer
holds a valid certificate of authority issued by the IC.
2. Adds the following information on which the IC is
required to consider when determining the nature and
frequency of an examination of an insurer:
A. Market analysis results including consumer
complaint analysis, evaluation of recent and ongoing
regulatory activities.
B. Analysis of data derived from industry surveys or
interrogatories.
C. Other criteria in the Market Regulation Handbook
adopted by the NAIC.
3. Adds market analysis data to the list of information
that may be shared with other government entities and to
the NAIC, provided that the recipient of the information
agrees to main confidentiality of the information.
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4. Clarifies that insurer analyses as required in Section
730 to be at the expense of the insurer.
5. Requires the mandatory annual audit of all insurers
doing business in this state to include required auditor
and management reporting in conformity with the
standards adopted by the NAIC.
6. Permits the IC to grant multiple 30-day extension and
require insurers to request the extension within 10 days
of the audit due date.
7. Corrects reference to two non-existent sections in the
Insurance Code to accurately reference Section 11691,
which applies to deposits by workers' compensation
insurers.
8. Corrects an obsolete reference to law that allows
domestic incorporated insurers to invest their assets in
the purchase of certain securities or in loans upon such
securities if they conform to specified conditions.
9. Allows domestic incorporated insurers to invest in
credit unions to the extent the accounts are insured by
an agency or instrumentality of the federal government.
10.Limits the percentage of excess funds investments that
can be made in a loan or any other obligation to any one
borrower or obligor, including all affiliates, to 10
percent of the capital stock and surplus or one percent
of the admitted assets of the lending insurer, whichever
amount is greater.
11.Requires policies of automobile insurance to provide for
the replacement of a child passenger restraint system
that was in use by a child during an accident, or if the
child passenger restraint system was in the vehicle and
it sustained a loss covered by the policy. This applies
to automobile liability insurance, automobile collision
coverage, and automobile physical damage coverage.
12.Requires insurers to give the IC advanced notification
of its intent to enter into tax sharing agreements.
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13.Authorizes fraternal benefit societies to use mortality
tables approved by bulletin (not just through
regulations) issued by the IC for purposes of
determining actuary values.
14.Provides that if an enforcement action against a
licensee is withdrawn, then each pleading, document, or
order against that licensee shall be removed from the
Department of Insurance (CDI) web site within 30 days of
the withdrawal. If a matter involves multiple licensees
and the CDI withdraws all allegations against one or
more of the licensees, the CDI will be required to post
, on its Internet website, a statement in the previously
posted pleading, document, or order that clarifies that
the action has been withdrawn.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
SUPPORT : (Verified 8/17/09)
Department of Insurance (source)
America's Health Insurance Plans
ASSEMBLY FLOOR :
AYES: Adams, Ammiano, Arambula, Beall, Bill Berryhill, Tom
Berryhill, Blakeslee, Block, Blumenfield, Brownley,
Buchanan, Caballero, Charles Calderon, Carter, Chesbro,
Conway, Cook, Coto, Davis, De La Torre, De Leon, DeVore,
Duvall, Emmerson, Eng, Evans, Feuer, Fletcher, Fong,
Fuentes, Fuller, Furutani, Gaines, Galgiani, Garrick,
Gilmore, Hagman, Hall, Harkey, Hayashi, Hernandez, Hill,
Huber, Huffman, Jeffries, Jones, Knight, Krekorian, Lieu,
Logue, Bonnie Lowenthal, Ma, Mendoza, Miller, Monning,
Nava, Nestande, Niello, Nielsen, John A. Perez, V. Manuel
Perez, Portantino, Price, Ruskin, Salas, Saldana, Silva,
Skinner, Smyth, Solorio, Audra Strickland, Swanson,
Torres, Torrico, Tran, Villines, Yamada, Bass
NOES: Anderson
NO VOTE RECORDED: Torlakson
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JJA:mw 8/17/09 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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