BILL ANALYSIS
SB 1405
Page 1
Date of Hearing: June 23, 2010
ASSEMBLY COMMITTEE ON INSURANCE
Jose Solorio, Chair
SB 1405 (Committee on Banking, Finance and Insurance) - As
Introduced: February 19, 2010
SENATE VOTE : 33-0
SUBJECT : Life insurance: premium refunds
SUMMARY : Requires insurers to refund premiums and fees within
30 days of the cancellation of an individual life insurance
policy of less than $10,000. Specifically, this bill :
1)Requires all premiums and policy fees paid in connection with
the purchase of an individual life insurance policy with a
face value of less than $10,000 to be refunded to the owner
within 30 days from the date that the insurer is notified of
the cancellation of the policy.
EXISTING LAW :
1)Requires life insurers selling individual life insurance
policies of less than $10,000 to place a notice stating that
the policy may be cancelled by delivering or mailing it to the
insurer or agent not less than 10 days nor more than 30 days
of the delivery or receipt of the policy. The time allowed
within that time range is at the discretion of the insurer.
2)Requires all premiums and policy fees paid in connection with
an individual life insurance policy with a face value of less
than $10,000 to be refunded to the owner, but does not specify
a time deadline to make these refunds.
3)Requires all premiums and policy fees paid in connection with
an individual life insurance policy with a face value of
$10,000 or more to be refunded to the owner within 30 days
from the date the insurer is notified of the cancellation of
the policy.
FISCAL EFFECT : None.
COMMENTS :
SB 1405
Page 2
1)Purpose. The purpose of this bill is to apply the same 30-day
deadline to refund premiums and policy fees paid on individual
life insurance policies of less than $10,000 when cancelled
during the notification period, as presently applies to
individual life insurance policies with a face value of
$10,000 or more.
2)Background. This is a committee bill of the Senate Banking,
Finance and Insurance Committee. It has been drafted as a
"clean-up" measure to a provision contained in last year's SB
397 (Calderon) which was vetoed for an unrelated reason.
3)Clarification recommended. One provision of this bill states
that it applies to policies of individual life insurance of
less than $10,000 delivered or issued on and after July 1,
1974. Another provision, however, states that this bill
applies to all policies issued, amended, or delivered on and
after January 1, 1981, but prior to January 1, 1990 . These
provisions need to be reconciled, and it is recommended that
the bill be clarified to state that it applies to all
individual life insurance policies issued, amended, renewed,
or delivered on and after January 1, 2011. The following
suggested amendments would accomplish this purpose:
On page 2, lines 17 and 18, strike out "1981, but prior to
January 1, 1990" and insert "2011". On page 2, line 19,
strike out "1981" and insert "2011".
REGISTERED SUPPORT / OPPOSITION :
Support
None received.
Opposition
None received.
Analysis Prepared by : Manny Hernandez / INS. / (916) 319-2086