BILL ANALYSIS �
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|SENATE RULES COMMITTEE | SB 596|
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THIRD READING
Bill No: SB 596
Author: Price (D)
Amended: 5/2/11
Vote: 21
SENATE INSURANCE COMMITTEE : 8-0, 4/27/11
AYES: Calderon, Gaines, Anderson, Corbett, Lieu,
Lowenthal, Price, Wyland
NO VOTE RECORDED: Correa
SUBJECT : Insurance: disclosure forms
SOURCE : Association of California Insurance Companies
DIGEST : This bill consolidates the notice of the
California Earthquake Authority coverage with the notice of
available discounts for earthquake coverage into a single
mailing, allows the Uniform Residential Property Insurance
Disclosure and the California Residential Property
Insurance Bill of Rights to be placed in the same document,
and revises the contents of the insurance claim related
written notice.
ANALYSIS :
Existing law:
1. Requires that no residential property insurance policy
be issued or delivered in California without an offer of
earthquake insurance coverage availability which is
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required to include specified provisions.
Under current law, the statute currently authorizes this
notice to be expanded to include "additional provisions
not in conflict or in derogation of" the mandatory
offer. (Insurance Code Section 10083(c))
2. Requires that at the time of offering to issue or renew
an earthquake insurance policy, the insurer is to
disclose in writing to the applicant all discounts or
surcharges that are available to the insured. This
notice is required to be in a "freestanding document".
3. Prohibits issuance of any policy of residential property
insurance unless the named insured is provided a copy of
the California Residential Property Insurance
Disclosure.
4. Effective July 1, 2011, requires that every California
Residential Property Insurance Disclosure be accompanied
by a "Residential Property Insurance Bill of Rights"
document.
Comments
Purpose of the bill . According to the author's office, by
permitting the consolidation and streamlining of several
consumer notices currently required by the Insurance Code,
this bill permits increased efficiency. By consolidating
certain disclosure and policyholder notices into a single
mailing, this bill reduces numerous customer communications
that often confuse customers. This bill also decreases the
use of resources such as paper.
This bill allows the California Residential Property
Insurance Disclosure and the California Residential
Property Insurance Bill of Rights to be placed in the same
document. Reducing one sheet of paper in disclosures for
homeowners is estimated to save between five and seven
million sheets of paper annually.
FISCAL EFFECT : Appropriation: No Fiscal Com.: No
Local: No
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SUPPORT : (Verified 5/4/11)
Association of California Insurance Companies (source)
Personal insurance Federation of California
OPPOSITION : (Verified 5/4/11)
Consumer Attorneys of California
ARGUMENTS IN SUPPORT : According to the bill's sponsor,
the Association of California Insurance Companies (ACIC):
"SB 596 improves overall efficiency, and saves precious
natural resources by consolidating certain disclosure and
policy notices into a single mailing. SB 596 will reduce
multiple mailings on the same subject that is both costly
and confusing to customers. This disclosure
consolidation would save the industry an estimated 4.7
million sheets of paper.
"Specifically, the bill consolidates the notice of the
California Earthquake Authority Coverage with the notice
of available discounts for earthquake coverage into a
single mailing. Both disclosures relate to the same
subject, earthquake coverage, but separate mailing are
now statutorily required. This is both a waste of
resources and confusing to consumers. Consolidating the
same exact notices is an efficiently that does nothing to
erode either the information that is disclosed or the
rights of the insureds.
"SB 596 also proposes to consolidate the Residential
Property Disclosure Form, which explains many of the
common features of a homeowner's policy, with the
'Homeowner's Bill of Rights' which discloses the rights
of a homeowner policy holder. Both of these notices
pertain to the homeowner's policy and therefore should be
sent in the same mailing. Again, the disclosures remain
the same but are sent in the same envelope."
The Personal Insurance Federation of California, which is
in support, states:
"SB 596 would improve disclosure and notification
requirements and reduce costs by eliminating separate
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mailing requirements for certain documents. Under current
law, consumers are often confused when presented with
numerous customer communications from their insurance
company - documents that must be mailed separately under
the Insurance Code."
ARGUMENTS IN OPPOSITION : The Consumer Attorneys of
California state: "Consumer Attorneys have traditionally
opposed any legislation that weakens consumer disclosures
or protections. Insurance Code � 790.03 and the Fair Claims
Settlement Practices Regulations clearly define and outline
unfair and deceptive business practices and duties owed to
the policyholder as they relate to handling a claim, the
settlement of a claim and the right to an attorney. There
is a fundamental difference between the insurer sending a
policyholder a copy of the law that governs how a claim
must be processed, and sending a notice to the consumer
that states there is a law that governs. Consumers have
the right to know what their rights are under the law and
what duties are owed to them as a policyholder. Although
the insurance industry has stated that this will represent
a cost-savings benefit to it by reducing printing costs, we
believe that the need for disclosures to be presented to
the consumer far outweigh any cost-savings to the insurer.
Unfortunately, it is our belief that in its current form SB
596 weakens consumer protections."
JJA:mw 5/3/11 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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