BILL ANALYSIS �
AB 690
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 690 (Solorio)
As Amended May 27, 2011
Majority vote
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|ASSEMBLY: |70-0 |(May 12, 2011) |SENATE: |37-0 |(July 11, |
| | | | | |2011) |
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Original Committee Reference: INS.
SUMMARY : Updates the laws governing the sale of insurance in
connection with portable electronic devices and their
accessories and associated services.
The Senate amendments :
1)Require the endorsee of a portable electronics vendor to be 18
years of age or older.
2)Replace the phrase "fire and casualty broker-agents" with the
phrase "property and casualty broker-agents" in the sections
of law that govern the advertising restrictions on portable
electronics insurance agents and endorsees, and the training
requirements of endorsees.
3)Specify that not less than 60 days before a permanent license
will expire, the Insurance Commissioner (IC) may use an
electronic delivery method, including email or other similar
electronic method of delivery, to deliver or email, or to
mail, an application to the licensee to renew the portable
electronics insurance agent license.
EXISTING LAW :
1)Authorizes the IC to issue a communications equipment
insurance agent license that authorizes the licensee to sell
insurance in connection with, and incidental to, the sale of
communications equipment or the sale or provision of service
for communication equipment by a retail vendor.
2)Defines "communications equipment" as handsets, pagers,
personal digital assistants, portable computers, cellular
telephones, batteries, and other devices or their accessories
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used to originate or receive communications signals or
service.
3)Authorizes the charging of application and renewal fees
sufficient to defray the Department of Insurance's (DOI's)
actual costs of processing the applications and renewals for
licensure.
4)Specifies the requirements that must be met by an employee or
franchisee of a communications equipment vendor in order to be
an endorsee authorized to offer insurance products as a
communications equipment insurance agent. These requirements
include:
a) The employee is 18 years of age or older;
b) The communications equipment vender, at the time it
submits its communications equipment agent's license
application, shall establish a list of the names of
endorsees to its communications equipment agent license.
The list must be updated annually, retained for three
years, and made available to the IC for review and
inspection; and,
c) The communications equipment vendor submits to the
IC with its initial license application and annually
thereafter a certification providing specified
information.
5)Requires that the retraining of "endorsees" (i.e., unlicensed
employees of a communications equipment insurance agent) shall
be conducted whenever there is a material change in the
insurance products sold that requires modification of the
training materials, but in no event less frequently than every
two years.
6)Authorizes the IC to impose fines and suspend or revoke the
license of a communications equipment insurance agent.
7)Prohibits a communications equipment insurance agent from
paying any endorsee any compensation, fee, or commission
dependent on the placement of insurance under the agent's
license. However, the law does not prohibit the payment of a
"performance-related incentive" which is defined as money or
other tangible or intangible items of value paid or given to
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any endorsee of the licensee which is not based solely on the
offering or selling of the insurance products issued to cover
the loss, theft, mechanical failure, or malfunction of or
damage to communications equipment.
AS PASSED BY THE ASSEMBLY , this bill:
1)Authorized the IC to issue a portable electronics insurance
agent license that authorizes the licensee and its endorsees
to sell insurance in connection with, and incidental to, the
sale of "portable electronics" or the sale or provision of
accessories or services related to the use of portable
electronics.
2)Defined "endorsee" as an unlicensed employee or authorized
representative of a portable electronics vendor.
3)Defined "portable electronics" as specified electronic devices
that are portable in nature, and their accessories and
services related to the use of the device.
4)Defined "portable electronics insurance" as insurance
providing coverage for the repair or replacement of portable
electronics that may cover portable electronics against loss,
theft, mechanical failure, malfunction, damage, or other
applicable perils. This insurance would not cover certain
service contracts, an insurance policy covering a seller's or
manufacturer's obligations under a warranty, or a homeowner's,
renter's, automobile, commercial multiperil, or similar
insurance.
5)Modified the requirements for an endorsee of a portable
electronics vendor, issued a portable electronics insurance
agent license, to sell portable electronics insurance, as
follows:
a) Eliminated the requirement that the employee be 18
years of age or older;
b) The portable electronics vendor, at the time it
submits its license application, shall establish a list
of all locations in California at which it offers
portable electronics insurance;
c) Removed the requirement of this vendor to update the
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above list annually, but the vendor would be required to
maintain the list and make it available to the IC for
review and inspection upon request; and,
d) The portable electronics vendor, at the time it
submits its license application, would be required to
state the number of locations at which the vendor offers
insurance products under the portable electronics
insurance agent license.
6)Required that the retraining of endorsees shall be conducted
whenever there is a material change in the insurance products
sold that requires modification of the training materials, but
in no event less frequently than every three years.
7)Eliminated the requirement that the manager at each location
of a communications equipment vendor or franchisee be
responsible for the supervision of each additional endorsee at
that location.
8)Required, in connection with the sale of portable electronics
insurance by telephone, that if the insurance cost is included
in the purchase or lease of the portable electronics or
related services, the vendor shall clearly disclose to the
customer that the coverage is included with the purchase of
the portable electronics or related services.
9)Specified that charges for portable electronics insurance may
be billed and collected by a portable electronics insurance
agent licensee, and that licensees may receive compensation
for billing and collection services.
10) Prohibited a portable electronics insurance agent from
paying an endorsee any compensation based primarily on the
number of customers electing coverage under the portable
electronics insurance agent's license. However, there would
be no prohibition on the payment of compensation to an
endorsee of a portable electronics agent for activities under
the agent's license that is incidental to their overall
compensation and does not exceed $15 per customer.
FISCAL EFFECT : According to the Senate Appropriations
Committee, cost for the Department of Insurance would be minor
and absorbable within existing resources.
COMMENTS :
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1)In 2002, the California Legislature enacted AB 2856 (Chavez),
Chapter 437, Statutes of 2002, which created a regulatory
framework for the sale of communications equipment insurance
in California. As enacted, this law provides the Insurance
Commissioner with the authority to issue to retail vendors
selling communications equipment the limited authority to sell
insurance covering communications equipment to its customers.
2)According to the author, since the enactment of existing law,
the wireless industry has changed significantly. There has
been an increase in the types and functionality of the
devices, they are more technologically advanced, and they have
increased in value. This has led to more consumers demanding
insurance options to protect their investment and remain
electronically connected. Thus, it is important that the
state laws be updated to provide consumers with adequate
access to insurance products so that their investments are
appropriately protected.
This bill would update the existing law to allow new devices to
be insured by replacing the term "communication equipment"
with "portable electronics," would specify that employees and
authorized representatives of a licensed vendor of portable
electronics may offer portable electronics insurance, would
specify that portable electronics insurance may be sold at
times other than when purchasing a portable electronics device
or enrolling in a wireless service plan, and would provide
specified consumer disclosures.
Analysis Prepared by : Manny Hernandez / INS. / (916) 319-2086
FN: 0001623