BILL ANALYSIS
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|SENATE RULES COMMITTEE | SB 291|
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CONSENT
Bill No: SB 291
Author: Senate Banking, Finance and Insurance Committee
Amended: As introduced
Vote: 21
SENATE BANKING, FINANCE & INS. COMMITTEE : 9-0, 4/1/09
AYES: Calderon, Runner, Correa, Cox, Florez, Kehoe, Liu,
Lowenthal, Padilla
NO VOTE RECORDED: Harman
SUBJECT : Insurance regulations
SOURCE : Author
DIGEST : This bill is the Senate Banking, Finance, and
Insurance Committee's omnibus insurance bill. It contains
technical and noncontroversial amendments to existing law
relative to insurance regulations. Specifically, this bill
clarifies that transactions requiring notification to the
Insurance Commissioner include notification of tax sharing
agreements, and allows the use of bulletins instead of
regulations to approve and issue mortality tables.
ANALYSIS :
Existing law:
1. Prohibits domestic insurers or commercially domiciled
insurers from entering into specified transactions
unless they have notified the Insurance Commissioner
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(IC) of their intent to enter into the transaction in
advance of entering into the transaction and the IC
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:
1. Requires insurers to give the IC advanced notification
of its intent to enter into tax sharing agreements.
2. Authorizes fraternal benefit societies to use mortality
tables approved by bulletin (not just through
regulations) issued by the IC for purposes of
determining actuary values.
Background
Mortality tables . Since 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
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information with the IC regarding affiliated agreements.
Section 1215.4(b) of the Insurance Code 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.
FISCAL EFFECT : Appropriation: No Fiscal Com.: No
Local: No
SUPPORT : (Verified 4/2/09)
Department of Insurance
JJA:mw 4/2/09 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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