BILL ANALYSIS
AB 2782
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Date of Hearing: April 21, 2010
ASSEMBLY COMMITTEE ON INSURANCE
Jose Solorio, Chair
AB 2782 (Insurance Committee) - As Amended: April 5, 2010
And As Proposed To Be Amended
SUBJECT : Insurance.
SUMMARY : Makes various licensing-related changes including
several to align California law with the National Association of
Insurance Commissioners (NAIC) Producer Licensing Model Act
(PLMA). Specifically, this bill :
1) Requires a person to be licensed as an accident and
health agent in order to transact disability insurance;
2) Separates the current fire and casualty broker-agent
license into two separate licenses - property broker-agent
license and casualty broker-agent license. It also adjusts
the pre-licensing education requirement to 20 hours for each
respective license so there is no net change resulting from
the bifurcation, and modifies the continuing education
requirement for individuals licensed less than four years to
24 hours every two years;
3) Provides the Department of Insurance (DOI) the authority
to summarily issue a restricted license to a business entity
when an officer or controlling person of the entity holds a
restricted individual license, but maintains the business
entity's right to request DOI to reconsider the decision for
the restricted license;
4) Aligns the definition of "Credit Insurance Agent" in the
Insurance Code with the NAIC PLMA definition, which permits
these credit insurance agents to transact guaranteed
automobile protection (GAP) insurance;
5) Changes the bail agent and solicitor license from a
one-year term to a two-year term, and modifies the continuing
education requirement to 12 hours biennially so there is a no
net change from current requirements.
6) Specifies that the expiration date on new bail and
insurance adjuster licenses issued after December 31, 2010, is
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the last day of the month in which the original license was
issued;
7) Clarifies the DOI's authority to summarily revoke a bail
license if the licensee is convicted of a felony;
8) Specifies that three hours of the 24 hours of continued
education that independent public insurance adjusters must
complete as a condition of license renewal must be in ethics
training.
9) Repeals the sunset date of December 31, 2010, on the law
that provides the Insurance Commissioner the authority to
receive attorney fees and costs as part of a judgment in "qui
tam" cases (suits brought in the state's name by private
parties) in which the department intervenes. The cases
impacted by this provision involve insurance fraud and the
department's involvement in such cases serves as a significant
fraud deterrent.
EXISTING LAW
1)Prevents fire and casualty broker-agents from transacting life
insurance, but permits these agents to transact disability
insurance;
2)Provides that the combined fire and casualty broker-agent
license requires a pre-licensing education requirement of 40
hour, and 25 hours of continued education annually for the
first four years of licensure and 24 hours every two years
thereafter as a condition for license renewal;
3)Requires an administrative hearing to be conducted to consider
a business entity license application when one of its officers
or controlling persons holds a restricted license;
4)Provides that the insurance that may be sold in connection
with the sale of, or incidental to a loan for, real property
may include, under specified conditions, credit life, credit
disability, credit involuntary unemployment or credit loss of
income, and credit property insurance.
5)Specifies that bail licenses are for a one year term expiring
on June 30 and insurance adjusters licenses are for a two-year
term expiring on May 31 of even-numbered years.
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6)Specifies the continuing education for bail agent and
solicitor license renewal is 6 hours;
7)Authorizes DOI to summarily revoke a license, including a bail
license, if the licensee is convicted of a felony. However,
Insurance Code Section 1807.5 specifies that a hearing is
required prior to the suspension of a bail agent license;
8)Requires independent and public insurance adjusters to
complete 24 hours of continued education as a condition of
license renewal, but does not specify the number of hours that
must involve ethics training.
9)Authorizes DOI to intervene in "qui tam" cases, but sunsets
those provisions on December 31, 2010.
FISCAL EFFECT : Minor absorbable to CDI.
COMMENTS :
1)Qui Tam : The committee bill is proposed to be amended and the
proposed amendment repeals the sunset on the provision that
permits CDI to receive attorney fees and costs in judgments
for qui tam cases in which the department intervenes. These
cases involve insurance fraud, and the department's
involvement serves as a significant fraud deterrent. CDI has
intervened in two of qui tam cases since this statute was
enacted without any concerns arising.
2)Supporters agree with efforts by the California Department of
Insurance to ensure that California's insurance regulatory
system reflects the uniformity that NAIC strives to achieve
nationally and will enhance the operation of California's
agent licensing system by making California's law consistent
with that of other jurisdiction.
REGISTERED SUPPORT / OPPOSITION :
Support
California Department of Insurance (CDI) (Sponsor)
Association of California Insurance Companies (ACIC)
California Bail Agents Association (CBAA)
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Opposition
None received.
Analysis Prepared by : Tracy Elwell / INS. / (916) 319-2086