BILL ANALYSIS �
AB 2084
Page 1
Date of Hearing: April 18, 2012
ASSEMBLY COMMITTEE ON INSURANCE
Jose Solorio, Chair
AB 2084 (Solorio) - As Amended: April 12, 2012
SUBJECT : Blanket insurance
SUMMARY : Expands the list of eligible policyholders who can
purchase blanket insurance. Specifically, this bill :
1)Expands the list of eligible policyholders who can purchase
blanket insurance to include:
a) Any governmental fire department, emergency medical
services company or similar volunteer or governmental
organization, in the event of an accident incurred during
activities related to the functions of these organizations.
b) A sports team, camp or sponsor of a sports team or camp,
providing benefits to participants, campers, or supervisors
for accidents or sickness, provided the sickness first
arises during the activities associated with the
organization.
c) An employer providing accident benefits to any group of
workers, dependents or guests, limited to hazards incident
to the activities or operations of the employer.
d) A common carrier or other owner, operator or lessor of a
means of transportation, providing accident benefits to any
group of persons who may be lessees or passengers or the
carrier.
e) An entertainment production company providing accident
benefits to any group of participants, volunteers, audience
members, contestants, employees or independent contractors
while engaged in the activities of the production company.
f) A bank or other financial institution, bank holding
company, trustee thereof, or agent designated by one of
these organizations, providing accident benefits to
debtors, guarantors, purchasers, credit card holders,
checking account holders, mortgagors or other customers.
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2)Authorizes the Insurance Commissioner (commissioner) to, in
his or her discretion, add other entities that may be eligible
to purchase blanket insurance.
3)Provides that the commissioner's discretion to add additional
eligible purchasers may be exercised on either an individual
risk basis, or on a class of risk basis.
EXISTING LAW :
1)Defines blanket insurance as a form of insurance that provides
coverage for specified circumstances, and insuring a class of
persons by reference to a description of that class, and not
by specifically naming the persons covered.
2)Limits the classes of persons who may be covered by blanket
insurance by specifying who may be a policyholder, and the
scope of coverage that the particular policyholder may
purchase. The existing eligible policyholders include:
a) A volunteer fire department.
b) A college, school or other institution of learning, a
school district, providing benefits to students without
restriction as to activity time or place, and to teachers
or other employees while performing actions incident to
special duties related to extracurricular activities.
c) A camping institution providing benefits to
participants, campers, or supervisors for accidents or
sickness, provided the sickness first arises during the
activities associated with the organization.
d) A newspaper, magazine or other publication, providing
benefits to independent contractors such as carriers,
newsboys, dealers, distributors, wholesalers or others
engaged in the marketing or delivery of the publication.
FISCAL EFFECT : Undetermined.
COMMENTS :
1)Purpose . According to the sponsor, American International
Group (AIG), blanket insurance is a valuable tool to control
risk for a broad array of organizations that carry on group
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activities involving participants or other people not
specifically known to the organization in advance, or, if
known, the identities of the participants are constantly
changing within the class of people participating in the
activities. However, the law has not evolved in many years,
and as a result numerous organizations that would like to
purchase blanket insurance are unable to do so because
California law is outdated. The modernization of the blanket
insurance law will enable California organizations that wish
to purchase this protection for those participating in their
activities to do so.
2)Nonadmitted alternative . Because California law restricts who
may be a purchaser of blanket insurance, admitted (licensed)
insurers are barred from selling this coverage to any
policyholder not specified in the statute. However, any
Californian has the right, under the law governing nonadmitted
or surplus line insurance to buy insurance from unlicensed
companies if an insurance need is not being met by admitted
insurers. As a result, any organization not authorized by
statute must seek this coverage in the nonadmitted market, or
forego the protection. As a general rule, the law and public
policy favor the use of admitted insurers due to the vastly
superior regulatory environment that governs admitted
insurers. According to AIG, its primary competitors in this
market are nonadmitted carriers such as Lloyd's of London.
3)Additional amendments expected . The proposal before the
Committee, as amended April 12, 2012, represents the best
efforts of the proponents to draft language to respond to
discussions between the author, proponents, and the Department
of Insurance (DOI). In light of the timing necessary to
ensure that the proposal would be in print prior to the
hearing, the DOI did not have sufficient time to review the
language and offer suggested changes. The proponents and the
DOI anticipate that additional fine-tuning may be required.
REGISTERED SUPPORT / OPPOSITION :
Support
American International Group
Opposition
AB 2084
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None received.
Analysis Prepared by : Mark Rakich / INS. / (916) 319-2086