BILL ANALYSIS �
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THIRD READING
Bill No: AB 2354
Author: Solorio (D)
Amended: 7/6/12 in Senate
Vote: 21
SENATE INSURANCE COMMITTEE : 8-0, 6/13/12
AYES: Calderon, Gaines, Anderson, Corbett, Correa, Lieu,
Lowenthal, Wyland
NO VOTE RECORDED: Price
SENATE APPROPRIATIONS COMMITTEE : 7-0, 7/2/12
AYES: Kehoe, Walters, Alquist, Dutton, Lieu, Price,
Steinberg
ASSEMBLY FLOOR : 75-0, 5/17/12 (Consent) - See last page
for vote
SUBJECT : Travel insurance
SOURCE : Author
DIGEST : This bill updates the definition of travel
insurance and shifts the licensing and regulatory
compliance responsibilities from travel retailers to
limited lines travel insurance agents.
Senate Floor Amendments of 7/6/12 clarify that an applicant
for initial licensure or renewal as a limited travel lines
insurance agent must pay a fee calculated according to the
applicant's share of the total reasonable costs incurred by
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the Department of Insurance related to the implementation
of the provisions of this bill.
ANALYSIS :
Existing law:
1. Authorizes the issuance of limited licenses as travel
insurance agents for employees of railroads, steamships,
airlines, and other organizations engaged in
transporting persons as common carriers and to
individuals or employees of persons engaged in selling
transportation on those common carriers.
2. Requires that a limited license to sell travel insurance
be applied for and renewed in the same manner as is
provided for a licensee to act as a property
broker-agent or a casualty broker-agent, and that an
applicant pay a filing fee, except that an applicant for
a limited license as a travel insurance agent need not
pass a qualifying examination.
This bill:
1. Revise and recasts the provisions related to travel
insurance by, among other things, changing the
definition of travel insurance to delete references to
transportation ticket policies in disability insurance
policies and include interruption or cancellation of a
trip or event, loss of baggage or personal effects,
damages to accommodations or rental vehicles, and
sickness, accident, disability, or death occurring
during travel.
2. Authorizes the Insurance Commissioner to issue a limited
lines travel insurance agent license to any organization
engaged in transacting travel insurance, through travel
retailers, as those terms are defined, and defines a
limited lines travel insurance agent to mean an insurer
designee that is licensed to transact travel insurance.
3. Requires the licensed limited lines travel insurance
agent and a travel retailer to follow administrative and
disclosure requirements such as including the agent's
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identification information on and making certain
disclosures to the consumer in the marketing materials
and fulfillment packages, and requiring the agent to
establish and maintain a register noting each travel
retailer that transacts travel insurance.
4. Deletes provisions requiring a limited license as
provided for a licensee to act as a property or casualty
broker-agent and incidental regulations, and instead
requires that the applicant for a limited lines travel
insurance agent license file with the Insurance
Commissioner a written application for licensure, signed
by the applicant or an officer of the applicant, in the
form prescribed by the Commissioner, a certificate by
the insurer on a form prescribed by the Commissioner
stating, among other things, that the insurer has
satisfied itself that the applicant is trustworthy and
competent to act as its limited lines travel insurance
agent, and an application fee and a renewal fee in an
amount determined by the commissioner as sufficient to
defray the reasonable costs incurred by the Department
of Insurance to implement the provisions of this bill.
5. Authorizes the Commissioner to take disciplinary action
against a limited lines travel insurance agent for a
violation of the bill by a travel retailer or a travel
retailer's employee.
6. Makes conforming changes and deletes obsolete
provisions.
Background
Travel insurance . Travel insurance protects against
interruption or cancellation of a trip; loss of baggage or
personal effects; damage to accommodations or rental
vehicles (not including damage waiver contracts); and
sickness, accident, disability, or death occurring during
travel. Frequently, travel insurance is offered through
travel retailers.
Existing law provides that limited licenses to sell travel
insurance may be issued to employees of common carriers and
to individuals or employees of persons engaged in selling
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transportation on such common carriers (a travel retailer).
This allows a travel retailer to transact travel insurance
to their customers, although travel retailers are not
agents of travel insurance companies. The travel retailer
retains the responsibility for regulatory compliance,
license fees, etc. that comes with the limited license.
The following summarizes how the American Association of
Travel Agents (ASTA) describes the typical travel insurance
transaction:
The agent informs a client during the reservation and
booking process that travel insurance is available for
purchase and calls attention to the possibility that the
client may become ill or experience some other event
after the booking and before or during travel. The agent
tenders a brochure, or links to online information, that
is provided by the actual insurer. The client then
decides whether he or she wants to pay the fee, and if
so, pays the insurance vendor directly. In some cases,
the travel agency might accept the payment and forward it
to the insurance company. In either case the insurance
company is the provider of the insurance policy and is
the source of any binding explanation of the coverages,
amounts, etc.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee, potential
revenue loss of approximately $62,000 annually (Special
Fund) resulting from a loss of about 1,950 licensees. This
bill requires each licensee to submit a license and/or
renewal fee in an amount determined the commissioner as
sufficient to defray the increased reasonable costs
incurred by the Department of Insurance from implementing
this bill.
Currently, the fee for a one-year travel agent license is
$22 which will need to be increased to approximately $3,100
for a two-year license in order to sufficiently replace the
loss in revenue.
SUPPORT : (Verified 8/6/12)
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American Society of Travel Agents
Away To Travel
California Coalition of Travel Organizations
California Department of Insurance
California Travel Association
Jason Coleman, Inc.
Plaza Travel
Surf City Cruise and Travel
Travelex Insurance Services
US Travel Insurance Association, Inc.
Your Travel Center
ASSEMBLY FLOOR : 75-0, 5/17/12
AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Beall,
Bill Berryhill, Block, Blumenfield, Bonilla, Bradford,
Brownley, Buchanan, Butler, Charles Calderon, Campos,
Carter, Cedillo, Chesbro, Conway, Cook, Davis, Dickinson,
Donnelly, Eng, Feuer, Fong, Fuentes, Furutani, Beth
Gaines, Galgiani, Garrick, Gatto, Gordon, Gorell, Grove,
Hagman, Halderman, Hall, Harkey, Hayashi, Roger
Hern�ndez, Hill, Huber, Hueso, Huffman, Jeffries, Jones,
Knight, Lara, Logue, Ma, Mansoor, Mendoza, Miller,
Mitchell, Monning, Morrell, Nestande, Nielsen, Norby,
Olsen, Pan, V. Manuel P�rez, Portantino, Silva, Smyth,
Solorio, Swanson, Torres, Valadao, Wagner, Wieckowski,
Williams, John A. P�rez
NO VOTE RECORDED: Fletcher, Bonnie Lowenthal, Perea,
Skinner, Yamada
JJA:m 8/6/12 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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