BILL ANALYSIS                                                                                                                                                                                                    



                                                                  SB 397
                                                                  Page  1

          Date of Hearing:   August 19, 2009 

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                Kevin De Leon, Chair

                    SB 397 (Calderon) - As Amended:  July 9, 2009 

          Policy Committee:                              InsuranceVote:9-0

          Urgency:     No                   State Mandated Local Program:  
          No     Reimbursable:              

           SUMMARY  

          This bill modifies consumer notification requirements for  
          insurance policies that provide coverage for funeral and burial  
          expenses. Specifically, this bill:

          1)Exempts these policies from 24-hour sales agent notification  
            requirements if a policy has an initial face value of less  
            than $15,000 and provides a 60-day cancellation window. 

          2)Requires funeral and burial expense policy holders to be  
            notified in writing about related consumer protections and  
            specifies the contents of a notice to be mailed to a consumer  
            within 14 days of policy purchase.

          3)Increases the current law maximum dollar amount for these  
            exempted policies from $10,000 to $15,000 and specifies that  
            refunds of these policies must be returned to consumers within  
            30 days of policy cancellation.  

           FISCAL EFFECT  

          Minor absorbable workload to the California Department of  
          Insurance (CDI) to continue oversight of the life insurance  
          market and policy notifications. 

           COMMENTS  

           1)Rationale  . This bill modifies notifications about a narrow  
            class of life insurance products, that provide coverage for  
            funeral and burial expenses of less than $15,000. SB 620,  
            Chapter 547, Statutes of 2003 established a 24-hour  
            notification requirement about life insurance policies due to  








                                                                  SB 397
                                                                  Page  2

            a large volume of complaints CDI had received about seniors  
            being subject to fraud.  None of those complaints were related  
            to the subset of policies addressed in this bill. This bill  
            modifies notification requirements for these policies to  
            increase flexibility while maintaining consumer protections. 

           2)Related Legislation  . SB 739 (Calderon) in 2007 and AB 609  
            (Calderon) in 2006 were both similar to this bill. Both bills  
            were vetoed due to concerns about deviating from current law  
            notice requirements. 


           Analysis Prepared by  :    Mary Ader / APPR. / (916) 319-2081