BILL NUMBER: AB 2295	INTRODUCED
	BILL TEXT


INTRODUCED BY   Assembly Member De La Torre

                        FEBRUARY 18, 2010

   An act to amend Sections 815 and 816 of the Insurance Code,
relating to insurance.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 2295, as introduced, De La Torre. Insurance.
   Existing law provides for the regulation of insurers by the
Department of Insurance and prohibits an insurer from paying a person
given discretion as to the settlement of claims under an insurance
policy a compensation that is contingent on the amount of the
settlement of those claims, except as otherwise provided.
   This bill would make technical, nonsubstantive changes to those
provisions.
   Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.


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

  SECTION 1.  Section 815 of the Insurance Code is amended to read:
   815.   No   An  insurer shall  not
 pay  any   a  representative given
discretion as to the settlement or adjustment of claims under life or
disability policies, whether in direct negotiation with the claimant
or in supervision of the person negotiating, a compensation 
which   that is  in any way  is 
contingent upon the amount of settlement of  such 
 those  claims.
  SEC. 2.  Section 816 of the Insurance Code is amended to read:
   816.   No   An  insurer shall  not
 pay  any   a  person given discretion
as to settlement of claims under  any   a 
policy of insurance, or surety bond, whether in direct negotiation
with the claimant or in supervision of the person negotiating, a
compensation  which   that is  in any way
 is  contingent upon the amount of settlement of
 such   those  claims, except as 
in this section  otherwise expressly provided  in this
section  .
   This section shall apply equally to a single claim, a number of
specified claims, an aggregate of claims during a specified period of
time or an aggregate of claims under  any   a
 contract, agreement  ,  or arrangement.
   This section shall not affect the interpretation or provisions of
Section 815.
   The word "person" as used in this section includes, but is not
limited to: employees, agents, brokers, representatives, general
agents, managing general agents, surplus line brokers, insureds,
coinsureds, adjusters  ,  and independent contractors  ,
 but does not include attorneys in fact or other exclusive
managers of an insurer.
   This section does not apply to:
   (a) Compensation of a producer, managing general agent, surplus
line broker  ,  or general agent under  any
  an  arrangement, agreement  ,  or
contract whereby the producer or general agent is not granted
discretion in the actual adjustment or settlement of any or all
individual claims settled for an amount exceeding five hundred
dollars ($500).
   (b) A producer, managing general agent, surplus line broker  ,
 or general agent who is compensated by a contingent commission
arrangement based wholly or partly on underwriting results, unless
the arrangement guarantees an agreed return to the insurer 
which   that  may exceed the underwriting profit
actually earned by the insurer on business written through the
producer, managing general agent, surplus line broker  ,  or
general agent.
   (c) Contracts of reinsurance between insurers.
   (d) An arrangement, schedule of charges, agreement  ,  or
contract, express or implied, for the adjustment of claims under
which the compensation for the services of the person making the
adjustment (exclusive of reimbursement for actual expenses)
consistently increases, in reasonable brackets, as the amount paid in
settlement of a claim increases.
   An insurer  which   that  in any other
jurisdiction is making payments  which   that
 would be in violation of this section if made in respect to
insurance business done in this state shall not be admitted to this
state until it presents evidence satisfactory to the commissioner
that it will not make  such   those 
payments in this state and that it will within one year after
admission to this state cease to make  any such 
 those  payments in any other jurisdiction and, within the
same period, terminate any contract or arrangement under which
 such   those  payments are to be paid.
Failure to so cease  such   those  payments
and to so terminate  such   those 
contracts and arrangements within  such period of one year
  that one-year period  shall constitute grounds
for revocation of the insurer's certificate of authority.