BILL NUMBER: AB 2406 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY APRIL 9, 2012
INTRODUCED BY Assembly Member Buchanan
FEBRUARY 24, 2012
An act to amend Section 1861.05 1861.10
of the Insurance Code, relating to insurance.
LEGISLATIVE COUNSEL'S DIGEST
AB 2406, as amended, Buchanan. Insurance: rates.
Existing law, the Insurance Rate Reduction and Reform Act (enacted
by Proposition 103, as approved by the voters at the November 8,
1988, statewide general election), prohibits a rate from being
approved or remaining in effect which is excessive, inadequate,
unfairly discriminatory, or otherwise in violation of the applicable
provisions of law. Under existing law, an insurer who wishes to
change a rate is required to file a complete rate application with
the Insurance Commissioner, for which there may be a hearing as
prescribed. Existing law authorizes any person to initiate or
intervene in any proceeding permitted or established pursuant to
these provisions, to challenge actions of the commissioner, and to
enforce provisions of the act.
This bill would make technical, nonsubstantive changes to those
provisions.
This bill would require the Department of Insurance to post on its
Internet Web site, during the period of eligibility, all requests
for a finding of eligibility to seek compensation and all findings of
eligibility, as defined.
Vote: majority. Appropriation: no. Fiscal committee: no
yes . State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 1861.10 of the
Insurance Code is amended to read:
1861.10. Consumer Participation. (a) Any person may initiate or
intervene in any a proceeding permitted
or established pursuant to this chapter, challenge an
an y action of the commissioner under this
article, and enforce any a provision of
this article.
(b) The commissioner or a court shall award reasonable advocacy
and witness fees and expenses to any a
person who demonstrates that (1) the person represents the interests
of consumers , and , (2) that
he or she has made a substantial contribution to the adoption of
any an order, regulation ,
or decision by the commissioner or a court. Where such
that advocacy occurs in response to a rate
application, the award shall be paid by the applicant.
(c) (1) The commissioner shall require every insurer to enclose
notices in every policy or renewal premium bill informing
policyholders of the opportunity to join an independant,
non-profit independent, nonprofit corporation
which that shall advocate the interests
of insurance consumers in any forum. This organization shall be
established by an interim board of public members designated by the
commissioner and operated by individuals who are democratically
elected from its membership. The corporation shall proportionately
reimburse insurers for any additional costs
incurred by insertion of the enclosure, except no postage shall be
charged for any an enclosure weighing
less than 1/3 of an ounce. (2) The commissioner shall , by
regulation , determine the content of the enclosures and
other procedures necessary for implementation of this provision. The
legislature Legislature shall make no
appropriation for this subdivision.
(d) All requests for a finding of eligibility to seek compensation
and all findings of eligibility, as described in Section 2662.2 of
Title 10 of the California Code of Regulations, shall be published on
the Department of Insurance Internet Web site during the eligibility
period.
SECTION 1. Section 1861.05 of the Insurance
Code is amended to read:
1861.05. Approval of Insurance Rates. (a) A rate shall not be
approved or remain in effect that is excessive, inadequate, unfairly
discriminatory, or otherwise in violation of this chapter. In
considering whether a rate is excessive, inadequate, or unfairly
discriminatory, consideration shall not be given to the degree of
competition, and the commissioner shall consider whether the rate
mathematically reflects the insurance company's investment income.
(b) Every insurer that desires to change any rate shall file a
complete rate application with the commissioner. A complete rate
application shall include all data referred to in Sections 1857.7,
1857.9, and 1864 and other information as the commissioner may
require. The applicant shall have the burden of proving that the
requested rate change is justified and meets the requirements of this
article.
(c) The commissioner shall notify the public of any application by
an insurer for a rate change. The application shall be deemed
approved 60 days after public notice unless (1) a consumer or his or
her representative requests a hearing within 45 days of public notice
and the commissioner grants the hearing, or determines not to grant
the hearing and issues written findings in support of that decision,
or (2) the commissioner on his or her own motion determines to hold a
hearing, or (3) the proposed rate adjustment exceeds 7 percent of
the then applicable rate for personal lines or 15 percent for
commercial lines, in which case the commissioner shall hold a hearing
upon a timely request. In any event, a rate change application shall
be deemed approved 180 days after the rate application is received
by the commissioner (A) unless that application has been disapproved
by a final order of the commissioner subsequent to a hearing, or (B)
extraordinary circumstances exist. For purposes of this section,
"received" means the date delivered to the department.
(d) For purposes of this section, extraordinary circumstances
include the following:
(1) Rate change application hearings commenced during the 180-day
period provided by subdivision (c). If a hearing is commenced during
the 180-day period, the rate change application shall be deemed
approved upon expiration of the 180-day period or 60 days after the
close of the record of the hearing, whichever is later, unless
disapproved prior to that date.
(2) Rate change applications that are not approved or disapproved
within the 180-day period provided by subdivision (c) as a result of
a judicial proceeding directly involving the application and
initiated by the applicant or an intervenor. During the pendency of
the judicial proceedings, the 180-day period is tolled, except that
in no event shall the commissioner have less than 30 days after
conclusion of the judicial proceedings to approve or disapprove the
application. Notwithstanding any other provision of law, nothing
shall preclude the commissioner from disapproving an application
without a hearing if a stay is in effect barring the commissioner
from holding a hearing within the 180-day period.
(3) The hearing has been continued pursuant to Section 11524 of
the Government Code. The 180-day period provided by subdivision (c)
shall be tolled during any period in which a hearing is continued
pursuant to Section 11524 of the Government Code. A continuance
pursuant to Section 11524 of the Government Code shall be decided on
a case by case basis. If the hearing is commenced or continued during
the 180-day period, the rate change application shall be deemed
approved upon the expiration of the 180-day period or 100 days after
the case is submitted, whichever is later, unless disapproved prior
to that date.