BILL ANALYSIS �
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|SENATE RULES COMMITTEE | AB 2301|
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CONSENT
Bill No: AB 2301
Author: Assembly Insurance Committee
Amended: 4/9/12 in Assembly
Vote: 21
SENATE INSURANCE COMMITTEE : 8-0, 6/13/12
AYES: Calderon, Gaines, Anderson, Corbett, Correa, Lieu,
Lowenthal, Wyland
NO VOTE RECORDED: Price
ASSEMBLY FLOOR : 73-0, 5/10/12 (Consent) - See last page
for vote
SUBJECT : California Insurance Guarantee Association:
covered claims
SOURCE : Author
DIGEST : This bill conforms California statutes governing
insolvent insurers to existing practices in cases involving
multi-state insurer insolvencies.
ANALYSIS :
Existing law:
1. Establishes a detailed system to handle insurer
insolvencies, with the Insurance Commissioner serving as
court-appointed liquidator.
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2. Makes the Insurance Commissioner in an insurer's state
of domicile the primary liquidator of an insolvent
insurer, even if that insurer has business in more than
one state.
3. Establishes the California Insurance Guarantee
Association (CIGA) to pay "covered claims" to California
policyholders and claimants, even if the insolvent
insurer is domiciled in another state.
4. Includes, within the definition of "covered claim," the
requirement that a California claimant file the claim
with the California Insurance Commissioner.
This bill:
1. Provides that, in order for a claim against an insolvent
insurer to be a "covered" claim for purposes of CIGA,
the claim must be presented to the liquidator in the
state of domicile of the insolvent insurer.
2. Makes other technical and nonsubstantive changes to the
CIGA statute.
Background
CIGA and covered claims . CIGA provides a mechanism for the
payment of "covered claims" against insolvent member
insurers. (Insurance Code Sections 1063-1063.77.) CIGA is
triggered when a member insurer admitted to transact
business in California is found by a court of competent
jurisdiction to be insolvent and ordered into liquidation.
The current definition of "covered claims" includes those
claims presented to a liquidator in California (in
practice, the California Insurance Commissioner) or CIGA,
even if the claim should initially be filed with a
liquidator outside of California (when the insolvent
insurer is domiciled in another state).
This bill corrects that definition by including claims
presented to the liquidator in the state of domicile rather
than California specifically.
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Technical clean-up . This bill also resolves several
technical issues that were addressed during the 2009-10
Session in the 2009 code maintenance bill, AB 1164 (Tran),
Chapter 140, Statutes of 2009, but subsequently chaptered
out by AB 2781 (Assembly Insurance Committee), Chapter 140,
Statutes of 2010.
FISCAL EFFECT : Appropriation: No Fiscal Com.: No
Local: No
SUPPORT : (Verified 6/13/12)
California Insurance Guarantee Association
Department of Insurance
ARGUMENTS IN SUPPORT : The Department of Insurance states
that this bill eliminates unnecessary bureaucratic steps
for California policyholders filing a claim against an
insolvent non-California domiciled insurer when they are
already dealing with a stressful situation and provides
CIGA with the statutory clarity to process these
policyholder claims as timely as possible.
ASSEMBLY FLOOR : 73-0, 5/10/12
AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Beall,
Bill Berryhill, Block, Blumenfield, Bonilla, Bradford,
Brownley, Buchanan, Butler, Charles Calderon, Campos,
Carter, Cedillo, Chesbro, Conway, Davis, Dickinson,
Donnelly, Eng, Feuer, Fong, Fuentes, Beth Gaines,
Galgiani, Garrick, Gatto, Gordon, Gorell, Grove, Hagman,
Halderman, Hall, Harkey, Hayashi, Roger Hern�ndez, Hill,
Huber, Hueso, Huffman, Jones, Knight, Lara, Logue, Bonnie
Lowenthal, Ma, Mansoor, Mendoza, Miller, Mitchell,
Monning, Morrell, Nestande, Nielsen, Pan, Perea,
Portantino, Silva, Skinner, Smyth, Solorio, Swanson,
Torres, Valadao, Wagner, Wieckowski, Williams, Yamada,
John A. P�rez
NO VOTE RECORDED: Cook, Fletcher, Furutani, Jeffries,
Norby, Olsen, V. Manuel P�rez
JJA:m 6/14/12 Senate Floor Analyses
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SUPPORT/OPPOSITION: SEE ABOVE
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