BILL ANALYSIS �
SENATE INSURANCE COMMITTEE
Senator Ronald Calderon, Chair
AB 2084 (Solorio) Hearing Date: June 27, 2012
As Amended: June 21, 2012
Fiscal: Yes
Urgency: No
VOTES: Asm. Floor(05/30/12)77-0/Pass
Asm. Appr. (05/25/12)17-0/Pass
Asm. Ins. (04/18/12)13-0/Pass
SUMMARY: Would expand the types of blanket insurance that may be
offered by California admitted insurers.
DIGEST
Existing law
1. Provides that blanket insurance is that form of
insurance providing coverage for specified circumstances
and insuring by describing all persons within a class of
persons defined in a policy issued to a master
policyholder, and not by specifically naming the persons
covered;
2. Provides that the permitted types of blanket insurance
are those where the blanket policy is issued to specified
entities, including, but not limited to, a volunteer fire
company providing benefits to members only in the event of
accident incurred while performing actions incident to such
membership and a proprietor or sponsor of an organized
camping institution providing benefits to campers or
persons responsible for their support for death or
dismemberment resulting from accident, or for hospital,
medical, surgical, or nursing expenses resulting from
accident or sickness related to the camper's specified
connection with the camping institution;
AB 2084 (Solorio), Page 2
3. Prohibits a person from transacting any class of
insurance business in this state without first being an
admitted insurer. Under existing law, admission is secured
by procuring a certificate of authority from the Insurance
Commissioner;
4. Authorizes the above-described blanket policies, among
others, to provide that the cost of the insurance coverage
is required to be paid by either the policyholder, or the
individuals insured or their parents or guardians, payable
through the policyholder;
5. Prohibits a blanket policy from being issued until
approved as to substance and form by the commissioner.
This bill
1. Would revise and recast provision related to a volunteer
fire company and an organized camping institution to
instead include:
a. A volunteer or governmental fire department,
emergency medical services company, or similar volunteer
or governmental organization providing benefits to
members or participants only in the event of accident
incurred while performing actions incident to an
activity or operation sponsored or supervised by the
department, company, or organization and
b. A sports team or camp, as specified, providing
benefits to participants, campers, and other specified
persons responsible for their support for death or
dismemberment resulting from accident, or for hospital,
medical, surgical, or nursing expenses resulting from
specified accident or sickness related to the
participants, campers, or other specified person's
connection with the sports team or camp, as specified;
2. Would additionally specify other permitted types of
AB 2084 (Solorio), Page 3
blanket insurance, providing specified benefits, issued to
specified entities that include, but are not limited to,
a. An employer providing accident benefits to any
group of workers, dependents, or guests, limited by
reference to specified hazards incident to activities or
operations of the employer,
b. Any common carrier or any operator, owner, or
lessor of a means of transportation providing accident
benefits to any specified group of persons who may
become lessees or passengers limited by reference to
travel status, and
c. An entertainment production company providing
accident benefits to any group of participants,
volunteers, audience members, contestants, or workers
while engaged in any activity or operation of the
entertainment production company;
1. Would extend existing provision to the newly established
permitted types of blanket insurance described above;
2. Would require an insurer who intends to issue a policy
according to these revised provisions to submit, prior to
issuance, any new language in that policy to the
commissioner for approval;
3. Would authorize the person insured, when the premium is
paid for these types of blanket insurance, to request a
copy of the policy from the insurer;
4. Would also authorize the commissioner to add to the list
of entities that may be eligible to purchase blanket
insurance for any risk or class of risks, relating to
accident benefits, as defined, which may be properly
eligible for blanket insurance;
AB 2084 (Solorio), Page 4
5. Would require the commissioner to issue and post on the
commission's Internet Web site a letter order, as
specified, each time the commissioner exercises his or her
discretion to add an entity to the list of entities
eligible to purchase blanket insurance;
6. Would make additional conforming, nonsubstantive
changes.
COMMENTS
1. Purpose of the bill. To update the group blanket
insurance statute to better reflect current needs for this
type of insurance in the marketplace. It would do so by
adding to the types of groups that can be covered, and by
giving the Insurance Commissioner authority to add
additional risks in his/her discretion.
2. Background. In California, blanket insurance is a form
of group disability insurance that is provided by an
authorized policy holder to cover persons as a described
class (not necessarily by name) and only while engaged in
specified activities covered under the policy.
For example, under this bill, an entertainment organization
could provide accident insurance for participants, audience
members, contestants or volunteers while they are
participating, watching, or assisting in the production of
activities organized by the entertainment organization.
These individuals all run the risk of being injured while
participating, watching or assisting the production. The
blanket insurance policy (either standing alone, or as a
companion to a general liability policy) would keep
production costs down and would provide coverage regardless
of the liability of the organization producing the show.
a. Distinguished form General Liability. Unlike
general liability, which covers the policy holder,
blanket insurance covers the insured, but only for a
specific period defined in the policy. Group blanket
coverage will pay for a covered accident regardless of
liability insurance coverage and in addition to any
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coverage under workers' compensation. It is not
exclusive, but in addition to, those policies. Also,
under some blanket insurance policies, the cost of the
policy may be passed to the insured; in those cases, the
insured may request a copy of the policy.
b. AB 2084 Expands the Number of Eligible Classes.
This proposal updates the statute to expand the types of
legitimate businesses that could obtain a group blanket
insurance policy.
i. The bill would update and expand the scope of
first responder organizations to include governmental
fire departments and emergency service companies (the
statute is currently limited to only volunteer fire
companies) while performing actions incident to an
activity or operation sponsored or supervised by the
policyholder.
ii. It would also broaden the available coverage
for any religious, charitable, recreational,
educational, athletic or civic organization, or branch
thereof to include any activity or activities or
operations on the premises of the policyholder (rather
than just activities supervised or sponsored by the
policyholder).
This bill would add the following classes of blanket
insurance defined by eligible policyholders and
beneficiary classes covering costs related to death or
dismemberment, or for hospital, medical, surgical, or
nursing expenses ("specified costs") when engaged in
defined activities:
i. Sports team operators providing benefits to
sports team participants and employees for specified
costs resulting from an accident;
ii. An employer providing benefits to any group of
workers, dependents, or guests for specified costs
AB 2084 (Solorio), Page 6
resulting from accidents related to specified hazards
incident to activities or operations of the employer;
iii. Common carriers (planes, trains, buses, etc.)
providing benefits to lessees or passengers for
specified costs resulting from an accident based on
their travel status (for example, a policy issue to a
cab company to cover passengers); and
iv. Entertainment production companies providing
benefits to participants, volunteers, contestants,
audience members, or workers resulting from an
accident while engaged in any activity or operation of
the policy holder.
Grants the Insurance Commissioner Discretion to Add
Classes. Additionally, the bill provides the Commissioner
the authority to add additional types of blanket insurance
(but may not change the substance of what is authorized).
The bill would also allow the Commissioner to add other
entities eligible to purchase blanket insurance by issuing
and posting a letter order on the CDI website.
3. Suggested Amendments
a. Amend Page 3, lines 15 to 19 to read:
Such types of insurance which insure more than one person
and which are hereby exempted from subdivision (c) of
Section 10310, subdivision (c) of Section 10320 (but family
expense disability insurance only to the extent therein
provided) , and Section 10401 (but only to the extent in
this chapter provided) are:
b. Amend Page 8, lines 27 to 38 to read:
(f) (1) An insurer that intends to issue a policy of
blanket insurance authorized by the amendments to this
section pursuant to the act adding this subdivision, or
authorized pursuant to section 10270.2.5, using a policy
form previously approved by the commissioner, where the
AB 2084 (Solorio), Page 7
only new language in the policy is the specification of the
policyholder, covered persons, or the hazards or activities
insured, shall submit file that new language to the
commissioner prior to issuance of the policy. Submissions
of documents containing variable text or blanks shall
include complete lists of the variable wording or accurate
descriptions of the material to be inserted in lieu of the
variable wording or in the blanks of these documents.
c. Page 9, amend lines 24 to 30 to read:
(b) (1) The commissioner may issue a letter order, and shall
post the letter order on the Internet Web site of the
Department of Insurance, any time he or she exercises
discretion pursuant to subdivision (a) to add other
entities that may be eligible to purchase blanket
insurance. These letter orders shall not be subject to
Chapter 3.5 (commencing with Section 11340) of Part 1 of
Division 3 of Title 2 of the Government Code.
(2) The Commissioner may withdraw a letter order issued
pursuant to this section in a manner described in Section
10291.5(f) of the Insurance Code. No proceeding under this
subdivision is subject to Chapter 5 (commencing with
Section 11500) of Part 1 of Division 3 of Title 2 of the
Government Code.
4. Summary of Arguments in Support
According to AIG:
a. The statute has not been amended since 1973. Since
that time, the marketplace has evolved, and additional
businesses not specified in the statute have a need for
this type of insurance. For example, Reality TV shows
are a class of California business that would not have
been envisioned when the statue was last amended.
b. The additional classes of risks added in this bill
are found in statues in other states, although states
can vary as to which classes they allow.
AB 2084 (Solorio), Page 8
c. California has one of the more restrictive blanket
eligibility statutes in the country, not just because of
the limited types of groups that are allowed, but also
because California does not have a discretionary
authority provision for its Insurance Commissioner.
Most states have already granted the respective
insurance commissioner the authority to add more
classes.
5. Summary of Arguments in Opposition
None received.
AB 2084 (Solorio), Page 9
POSITIONS
Support
American International Group (AIG)/Sponsor
Opposition
None received.
Consultant: Hugh Slayden, (916) 651-4773