BILL ANALYSIS                                                                                                                                                                                                    �



                                                                  SB 590
                                                                  Page  1

          Date of Hearing:   August 17, 2011

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                Felipe Fuentes, Chair

                   SB 590 (Calderon) - As Amended:  July 12, 2011 

          Policy Committee:                              Insurance      
          Vote:        11 - 0 

          Urgency:     No                   State Mandated Local Program: 
          No     Reimbursable:              

           SUMMARY  

          This bill modifies consumer notification requirements for 
          insurance policies that provide coverage for funeral and burial 
          expenses. Specifically, this bill:

          1)Exempts these policies from 24-hour sales agent notification 
            requirements if a policy has an initial face value of less 
            than $15,000 and provides a 60-day cancellation window. 

          2)Requires funeral and burial expense policy holders to be 
            notified in writing about related consumer protections and 
            specifies the contents of a notice to be mailed to a consumer 
            within 14 days of policy purchase.

          3)Increases the law maximum dollar amount for these exempted 
            policies from $10,000 to $15,000 and specifies that refunds of 
            these policies must be returned to consumers within 30 days of 
            cancellation.  

           FISCAL EFFECT  

          Minor absorbable workload to the California Department of 
          Insurance (CDI) to continue oversight of the life insurance 
          market and policy notifications. 

           COMMENTS  

           1)Rationale  . This bill modifies notifications about a narrow 
            class of life insurance products that provide coverage for 
            funeral and burial expenses of less than $15,000. SB 620, 
            Chapter 547, Statutes of 2003 established a 24-hour 








                                                                  SB 590
                                                                  Page  2

            notification requirement about life insurance policies due to 
            a large volume of complaints CDI had received about seniors 
            being subject to fraud.  None of those complaints were related 
            to the subset of policies addressed in this bill. This bill 
            modifies notification requirements for these policies to 
            increase flexibility while maintaining consumer protections. 

           2)Related Legislation  . SB 397 (Calderon) 2009, SB 739 
            (Calderon), 2007 and AB 609 (Calderon), 2006 were similar to 
            this bill. Those bills were vetoed due to concerns about 
            deviating from current law notice requirements. 

           Analysis Prepared by  :    Julie Salley-Gray / APPR. / (916) 
          319-2081