BILL ANALYSIS �
AB 2303
Page 1
Date of Hearing: March 28, 2012
ASSEMBLY COMMITTEE ON INSURANCE
Jose Solorio, Chair
AB 2303 (Committee on Insurance) - As Amended: March 15, 2012
SUBJECT : Insurance Omnibus
SUMMARY : Contains clarifying and clean up provisions for the
Insurance Code, establishes licenses for non-resident variable
contract agents and crop insurance adjusters, conforms
California law to federal law as it relates to the
conservation/liquidation of systemically important insurers,
increasing the classroom education requirements for bail agents,
and expands the duties of the Commissioner's curriculum board to
include bail agents and insurance adjusters. Specifically, this
bill :
1)Repeals obsolete statutes relating to mortgage insurance.
2)Requires liquidation notices to include a reference to a
website that provides ongoing information for creditors of the
company being liquidated.
3)Repeals an obsolete requirement relating to auto insurance
cancellation notices.
4)Repeals a requirement for the Department to include
information regarding tort claims against insurers in its
annual report to the Legislature and Governor.
5)Eliminates an existing requirement for insurers to annually
report specified data related to child care liability
policies.
6)Requires insurers to provide data related to child care
liability policies to the Commissioner upon request.
7)Clarifies existing law that requires a non-resident variable
contract agent to be licensed as both a life insurance and
variable contract agent in his or her resident state before
receiving a non-resident license in California.
8)Establishes a $64 fee for the issuance of a non-resident
variable contract authority license.
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9)Repeals obsolete statutes relating to the issuance of
certificates of convenience.
10)Requires the Commissioner's curriculum board to propose
mandatory pre-licensing and continuing education curriculum
for bail agents and insurance adjusters.
11)Clarifies existing law requiring that an applicant for a
non-resident surplus lines broker license may demonstrate
competency by providing evidence of a property and casualty
broker license in his or her resident state.
12)Increases from 12 to 20 the number of pre-licensing classroom
hours required for bail agents.
13)Eliminates the requirement for the Conservation and
Liquidation Office to publish liquidation notices in
newspapers in Alameda, Los Angeles, Sacramento, San Diego, San
Francisco, and Santa Clara for all liquidations and instead
requires that notices be published in newspapers located in
geographic areas pertinent to the insurer being liquidated.
14)Establishes a limited lines license for crop insurance
adjusters with the following requirements:
a. Licensure as an insurance adjuster.
b. Complete training required by the Federal Crop
Insurance Corporation Standard Reinsurance Agreement.
c. Pass the test required by the the Federal Crop
Insurance Corporation Standard Reinsurance Agreement.
15)Prohibits acting as a crop insurance adjuster without a
license.
16)Prohibits contracting with or employing someone to adjust
crop insurance claims unless that person is licensed.
17)Permits the Commissioner to adopt regulations to implement
the crop insurance adjuster license including additional
competency requirements and establishing standards of practice
for crop insurance adjusters.
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18)Conforms statutes related to the conservation and liquidation
process with changes made in the Dodd-Frank Wall Street Reform
and Consumer Protection Act (Dodd-Frank).
19)Corrects a number of erroneous statutory references.
EXISTING LAW
1)Establishes a regulatory scheme for the sale of mortgage
guaranty insurance, which has superseded "mortgage insurance."
2)Establishes the Conservation and Liquidation Office within the
Department of Insurance to conserve and liquidate insolvent
insurers.
3)Requires that insurers provide notice to policy holders prior
to cancelling an auto insurance policy.
4)Requires the Department to provide an annual report to the
Governor and Legislature regarding the Department's
activities.
5)Permits the Commissioner to make data calls from insurers.
6)Requires non-residents engaging in business activity requiring
a producer's license (agent, broker, etc.) to be licensed by
the Department.
7)Establishes "certificates of convenience" processes for some
license categories to provide a temporary license to practice
in certain circumstances.
8)Establishes a curriculum board appointed by the Commissioner
to recommend pre-license and continuing education curriculum
for agents, brokers and other licensees of the Department.
9)Establishes the requirements for a non-resident surplus lines
broker license.
10)Requires applicants for a bail agent license to complete 12
hours of classroom training.
11)Provides for a crop insurance program administered under
federal law.
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FISCAL EFFECT : Unknown
COMMENTS :
1)Purpose. This bill is sponsored by the Department of
Insurance as the 2012 omnibus bill which proposes a range of
cleanup, federal conformity, and non-controversial licensing
changes.
2)Mortgage Insurance Repeal. The bill repeals existing law
establishing "mortgage insurance." These statutes are
obsolete because these policies are now issued under separate
statutory authority for "mortgage guaranty insurance."
3)Crop Insurance Adjusters. This provision establishes a
limited lines crop insurance adjuster license. Federal crop
insurance requirements were recently changed requiring crop
insurance adjusters to have specific knowledge of the crops at
issue in a claim. If a state does not offer a license based
on a crop specific test, then adjusters certified by the
National Crop Insurance Services (NCIS) may adjust claims in
the state without a license. This bill establishes state
licensure based on the NCIS certification process to comply
with the federal requirements.
4)Dodd-Frank Compliance. In 2010 Congress passed Dodd-Frank
which, among other things, creates a process for the
conservation and/or liquidation of "systemically important"
financial companies by the Federal Deposit Insurance
Corporation. Dodd-Frank contains a provision that requires
systemically important insurance companies (or their
affiliates) to be conserved or liquidated under state law. In
California law, this conservation/liquidation process is
performed by the Insurance Commissioner through the
Conservation and Liquidation Office. This bill conforms the
authority of the Commissioner to initiate the
conservation/liquidation process to the requirements of
Dodd-Frank.
REGISTERED SUPPORT / OPPOSITION :
Support
Insurance Commissioner Dave Jones
Golden State Bail Agents Association
AB 2303
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Opposition
None received.
Analysis Prepared by : Paul Riches / INS. / (916) 319-2086