BILL ANALYSIS
SB 119
Page 1
Date of Hearing: June 24, 2009
ASSEMBLY COMMITTEE ON INSURANCE
Jose Solorio, Chair
SB 119 (Wyland) - As Amended: May 12, 2009
SUBJECT : Professional liability insurance.
SUMMARY : Extends the sunset date on a law that provides
immunity from liability for insurers that issue professional
liability insurance to health care providers for statements made
in the notice of nonrenewal. Specifically, this bill extends
from January 1, 2011, until January 1, 2013, the sunset date on
the immunity from liability for any insurer that issues
professional liability insurance policies to health care
providers, or authorized representatives, agents, employees, or
licensed insurance agents or brokers, for any statement made,
except a statement made in bad faith, in any of the following:
1)A written notice of nonrenewal, or any other oral or written
communication specifying the reasons for nonrenewal of a
policy issued to a health care provider.
2)Any communication providing information pertaining to the
nonrenewal.
3)Evidence submitted at any court proceeding or informal inquiry
in which the nonrenewal is an issue.
EXISTING LAW:
1)Provides immunity from liability for any insurer that issues
professional liability insurance policies to health care
providers, or its authorized representatives, agents, or
employees, or any licensed insurance agent or broker, for any
statement made, unless made in bad faith, in any of the
following:
a) A written notice of nonrenewal, or any other oral or
written communication specifying the reasons for nonrenewal
of a policy issued to a health care provider.
b) Any communication providing information pertaining to
the nonrenewal.
SB 119
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c) Evidence submitted at any court proceeding or informal
inquiry in which the nonrenewal is an issue.
2)Specifies that provision 1 (above) applies only to nonrenewals
for which written notice is provided by the insurer on or
after January 1, 2006.
3)Specifies that provision 1 (above) will remain in effect until
January 1, 2011.
4)Requires a professional liability insurer that intends not to
renew a policy, or to place specified conditions, to give
written notice of the nonrenewal and the reasons for the
nonrenwal at least 60 days, but not more than 120 days, in
advance of the end of the policy period.
FISCAL EFFECT : None.
COMMENTS :
1)Background. The author states that existing law was enacted
because professional liability insurers, who were required by
law to give reasons for nonrenewing a policy, were being sued
for defamation for those statements. Moreover, auto insurers
have had immunity for providing statements in the nonrenewal
notices since 1969 (see Section 667 of the Insurance Code),
but professional liability carriers did not. This bill
extends the sunset on the immunity from the limited liability
for professional liability insurers.
2)Previous legislation. In 2005, the Legislature and Governor
approved AB 1123 (Wyland, Chapter 327, Statutes of 2005) which
added the existing provision of law that provides immunity
from liability for insurers who issue professional liability
insurance to health care providers for statements made in a
notice of nonrenewal. There is no immunity if the statement
is shown to be made in bad faith.
3)Argument in support. The California Association of Liability
Insurers (CAPLI), which supports this bill, states that the
section of law (Insurance Code Section 679) that covers
property and other commercial insurance (including liability
insurers) provides that insurers and agents are not liable for
any statement made in the cancellation of a policy, unless the
statement was made in bad faith with malice. That section of
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law, however, does not address the nonrenewal of a policy. As
a result, medical liability insurers were threatened with and
occasionally sued for defamation or libel arising from
compliance with the requirement to give a written notice and
reasons for nonrenewal. CAPLI adds that AB 1123 of 2005
created the immunity from liability for insurers that issue
professional liability policies to health care providers,
protecting nonrenewal notices unless made in bad faith.
REGISTERED SUPPORT / OPPOSITION :
Support
California Association of Professional Liability Insurers
(CAPLI) (Co-Sponsor)
NORCAL Mutual Insurance Company (Co-Sponsor)
Civil Justice Association of California
Opposition
None received.
Analysis Prepared by : Manny Hernandez / INS. / (916) 319-2086