BILL ANALYSIS �
AB 2354
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CONCURRENCE IN SENATE AMENDMENTS
AB 2354 (Solorio)
As Amended July 6, 2012
Majority vote
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|ASSEMBLY: |75-0 |(May 17, 2012) |SENATE: |37-0 |(August 13, |
| | | | | |2012) |
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Original Committee Reference: INS.
SUMMARY : Repeals existing law regulating limited lines travel
insurance agents and replaces it with a new system of regulation
consistent with standards adopted by the National Association of
Insurance Commissioners (NAIC).
The Senate amendments increase licensing and disclosure
requirements, expand the enforcement authority of the Department
of Insurance (department), and make numerous clarifying and
technical changes. Specifically this bill :
1)Repeals existing law requiring travel agents and employees of
common carriers to be licensed as limited lines travel
insurance agents (travel insurance agents) to transact
transportation ticket and baggage insurance policies.
2)Repeals the law limiting travel insurance agents to the sale
of transportation ticket and baggage loss policies.
3)Permits a travel insurance agent license to be issued to an
organization transacting travel insurance that is a designee
of an insurer authorized to offer travel insurance.
4)Restricts the functions of travel retailers when transacting
travel insurance to the following:
a) Providing information and printed materials to
prospective customers.
b) Referring specific questions regarding coverage and
benefits to a travel insurance agent.
c) Providing and processing applications forms.
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d) Collecting premiums.
e) Collecting information from the policy holder.
5)Defines travel insurance as insurance coverage for personal
risks associated with travel including:
a) Interruption or cancellation of travel.
b) Loss of baggage or personal effects.
c) Damages to accommodations or rental vehicles.
d) Sickness, accident, disability or death occurring during
travel.
6)Specifies that major medical policies providing comprehensive
medical protection on trips lasting more than six months are
not travel insurance.
7)Defines a "travel retailer" as a business organization engaged
in transacting travel insurance on behalf of a travel
insurance agent.
8)Permits an unlicensed "travel retailer" to transact travel
insurance on behalf of a travel insurance agent if the travel
insurance agent complies with a number requirements including:
a) Providing the travel insurance agent's identifying
information (name, license number, contact information) in
marketing materials and fulfillment packages provided to
customers.
b) Maintaining a register of all travel retailers that
transact travel insurance on its behalf.
c) Designating an employee that is an appropriately
licensed insurance agent who is responsible for ensuring
compliance.
d) Providing fingerprints to the department of the
designated employee and the officers and employees who
direct or control the operations of the travel insurance
agent to perform a criminal background check.
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e) Providing customers with specified disclosures regarding
travel insurance policies.
f) Providing training to the travel retailer's employees
transacting travel insurance regarding the types of
insurance offered, ethical sales practices, and disclosures
to prospective customers.
9)Permits a travel insurance agent to compensate the travel
retailer.
10)Provides the department with enforcement authority that
includes mandatory corrective action plans, fines, and license
revocation.
11) Requires travel insurance agents to pay application and
renewal fees sufficient to defray the costs of the department.
FISCAL EFFECT : None. The bill requires application and renewal
fees to be charged in an amount determined the commissioner as
sufficient to defray the costs incurred to implement the bill.
COMMENTS : According to the author, this bill revises California
law relating to the sale of travel insurance to comply with the
licensing standards adopted by NAIC in 2010. These standards
shift the licensing requirements from individual travel agents
and employees of common carriers (airlines, railroads, bus
lines, etc.) to an intermediary (such as a managing general
agent) who is responsible for overseeing the sale of travel
insurance by travel retailers. The intermediary (limited lines
travel insurance agent) would be appointed by an insurance
company and licensed by the department. The standards were
developed to establish nationally consistent licensing
requirements for travel insurance agents while ensuring consumer
protection. Implementing an approach consistent with the NAIC
model will reduce the burden of regulation on travel retailers
while focusing regulatory scrutiny on those most responsible for
the insurance product.
Analysis Prepared by : Paul Riches / INS. / (916) 319-2086
FN: 0004477
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