BILL ANALYSIS
AB 800
Page 1
Date of Hearing: April 22, 2009
ASSEMBLY COMMITTEE ON INSURANCE
Joe Coto, Chair
AB 800 (Duvall) - As Amended: April 16, 2009
SUBJECT : Insurance omnibus.
SUMMARY : Remedies several licensing-related issues in the
Insurance Code. Specifically, this bill :
1)Clarifies in the Insurance Code that a minor is a person
"under 18 years of age."
2)Clarifies that responding to criminal and administrative
background questions are required for license renewal by all
individuals and entities issued licenses by California
Department of Insurance's (CDI) Producer Licensing Bureau.
3)Requires licensed individuals and organizations as well as
individuals and organizations applying for licenses or
certificates of registration issued by CDI's Producer
Licensing Bureau to conduct their licensing business online,
and allows CDI to electronically send license renewal notices
to its licensees. Also, makes several technical changes
relating to individuals and organizations providing CDI with
e-mail addresses and to facilitate the electronic transmittal
of license-related information.
4)Permits California resident agents to transact on behalf of
California nonresident organizations and specifies that a
California nonresident organization must name at least one
person to perform duties under its license from a state other
than California.
5)Specifies that an organization license must designate a person
responsible for the organization's compliance with California
insurance laws, regulations, and rules who is a partner,
member, officer, director or manager of the organization.
6)Waives the pre-licensing education requirement for California
resident applicants who recently moved from another state and
hold a current California nonresident license, but continues
to require them to complete 12 hours of California Insurance
Code and ethics education to qualify for the conversion.
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7)Increases the two-year continuing education requirement for
Personal Line Broker-Agents from 20 to 24 hours.
8)Replaces a reference to the non-existent "National Association
of Securities Dealers" (NASD) with the current "Financial
Industry Regulatory Authority" (FINRA) and eliminates the
requirement for a qualifying written exam to grant the
variable contract authority on a life agent license.
9)Aligns California's statutory definition of "Credit Insurance
Agent" to the NAIC Producer Licensing Model Act's (PLMA)
definition and specifies the types of insurance that comprise
credit insurance, including guaranteed auto protection (GAP)
insurance.
EXISTING LAW :
1)Specifies that a minor is not eligible for a license to act as
a fire and casualty broker-agent, or a life agent, but does
not define minor.
2)Does not explicitly state that bail agent, independent
insurance adjuster, public insurance adjuster, surplus line
broker and life and disability analyst licensees must complete
criminal and administrative background questions as a
condition for license renewal. All other licensees of the
CDI's Producer Licensing Bureau are required to complete these
questions as a condition of license renewal. Additionally,
all applicants for licenses issued by CDI's Producer Licensing
Bureau must respond to criminal and administrative background
questions and provide fingerprints to undergo a criminal
history check as a condition for initial licensure.
3)Allows licensees of, and persons applying for licenses issued
by, CDI Producer Licensing Bureau to conduct their licensing
business via paper documents that are delivered to CDI either
through the mail or personal delivery. Additionally, current
law requires CDI to mail new license certificates and license
renewal notices in paper.
4)Prohibits California nonresident organizations to endorse
California resident agents to their license. Additionally,
current law requires a California nonresident organization to
AB 800
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endorse at least one person from its home state.
5)Requires a California nonresident licensee, other than those
licensees from states that require more pre-licensing hours
than California, applying for a California resident fire and
casualty license to have completed 40 hours of pre-licensing
education in their former resident state to be exempt from
California's pre-licensing education requirement. A
California nonresident licensee, other than those licensees
from states that require more pre-licensing hours than
California, applying for a California life-only agent license
must complete 20 hours of pre-licensing education.
6)Requires a person licensed as a personal lines broker-agent to
complete 20 hours of continuing education courses during each
two-year license term.
7)References the non-existent "National Association of
Securities Dealers" and requires the Commissioner to
administer a written qualifying exam as a condition to
granting the variable contract authority on a life agent
license.
8)Lists the types of products that constitute credit insurance
and specifies that a licensed credit insurance agent acting
for an authorized insurer may only sell the specified credit
insurance types listed.
FISCAL EFFECT : Undetermined.
COMMENTS :
1)Purpose : The author introduced the bill at the request of
California Department of Insurance to clean-up and modernize
the laws governing producer licensees.
2)Opposition : The opponent of the bill states the bill would
delete the requirement for passing a written qualifying
examination before life agents are allowed to transact
variable contracts.
3)According to the CDI, this issue was noted as a NAIC uniform
licensing standard review exception. All states except
California currently waive the pre-licensing requirement under
these conditions. As the most populous state in the nation,
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the more areas of producer licensing that are departed from,
the more arguments can be made for seeking federal regulation
of the insurance industry. The pre-licensing provision is one
of the areas where CDI can work together with the other
states to demonstrate that state cooperation is a better
strategy than federal mandate. This bill will not change any
of California's substantive laws on producer licensing in
general, and would not in any way lessen the ability and
commitment to enforce those laws.
4)There is also concern that this bill would except individuals
applying for a California resident agent or broker license who
in addition to being currently licensed in another state are
also currently licensed as a non-resident in California. CDI
estimates this change would only impact 10-20 individually
annually. These individuals would still be required to
complete 12 hours of study on the California Insurance Code
and ethics, and comply with continuing education requirements.
5)The author has agreed due to several concerns relating to the
credit insurance aspect of the bill to amend out that
language.
REGISTERED SUPPORT / OPPOSITION :
Support
California Department of Insurance (Sponsor)
Opposition
California Advocates for Nursing Home Reform (CANHR)
Analysis Prepared by : Tracy Elwell / INS. / (916) 319-2086