BILL ANALYSIS
SENATE COMMITTEE ON BANKING, FINANCE,
AND INSURANCE
Senator Ronald Calderon, Chair
SB 291 (BF&I Committee) Author: Hearing Date: April 1, 2009
As Introduced February 25, 2009
Fiscal: No
Urgency: No
SUMMARY This bill is the Banking, Finance, and Insurance
Committee's omnibus insurance bill. It contains technical and
noncontroversial amendments to existing law relative to
insurance regulations.
DIGEST
Existing law
1. Prohibits domestic insurers or commercially domiciled insurers
from entering into specified transactions unless they have
notified the Insurance Commissioner (IC) of their intent to
enter into the transaction in advance of entering into the
transaction and the commissioner fails to prohibit the
transaction.
2. Defines a fraternal benefit society as an incorporated society
or supreme lodge without capital stock conducted solely for the
benefit of its members and members' beneficiaries and not for
profit. Under existing law, a fraternal benefit society may
issue certificates of insurance providing for the payment of
life and disability insurance benefits.
3. Requires life and disability insurance companies to use
mortality tables approved through bulletins issued by the IC for
purposes of determining actuary values.
4. Requires fraternal benefit societies to use mortality tables
approved by regulation promulgated by the IC for purposes of
determining actuary values.
This bill
SB 291, Page 2
1. Would require insurers to give the IC advanced notification
of its intent to enter into tax sharing agreements.
2. Would authorize fraternal benefit societies to use
mortality tables approved by bulletin (not just through
regulations) issued by the IC for purposes of determining
actuary values.
COMMENTS
1. Purpose of the bill SB 291 would clarify that
transactions requiring notification to the IC includes
notification of tax sharing agreements. Additionally this
bill would allow the use of bulletins instead of
regulations to approve and issue mortality tables.
2. Background. Mortality tables -- Since legislation signed
into law in 1997, the IC has been allowed to approve and
issue mortality tables by bulletin for life and disability
insurance companies. However, this does not apply to
fraternal benefit societies. For fraternal benefit
societies, the IC must still promulgate regulations. The
use of bulletins allows more timely and less costly
issuance of tables. The 1997 legislation inadvertently
left out Fraternal Benefit Societies from issuance of
tables through bulletins. This bill corrects that
oversight.
Tax sharing agreements -- Insurers are required to file
information with the IC regarding affiliated agreements.
Insurance Code Section 1215.4(b) specifically states a
holding company registration statement shall include
consolidated tax allocation agreements. Section 1215.5
specifies that registered insurers are required to notify
the IC regarding management and cost-sharing agreements.
The IC interprets cost-sharing agreements to include tax
allocation agreements. However, because a tax allocation
agreement is not specifically identified in this section,
companies often do not associate them with a form of cost
sharing and fail to make the filing. This concept is not a
substantive change to existing law; it is merely a
technical correction to align the language of the lists in
each of the two sections.
SB 291, Page 3
3. Prior Legislation SB 203 (Lewis) Ch 28, Statutes of 1997
allowed the IC to approve and issue mortality tables by
bulletin as discussed above.
POSITIONS
Support
California Department of Insurance
Oppose
None received
Consultant: Michael Miiller (916) 651-4102