BILL NUMBER: SB 711	INTRODUCED
	BILL TEXT


INTRODUCED BY   Committee on Insurance (Senators Calderon (Chair),
Anderson, Corbett, Correa, Gaines, Lowenthal, Price, and Wyland)

                        FEBRUARY 18, 2011

   An act to amend Section 1067.17 of, and to add Section 1067.19 to,
the Insurance Code, and to repeal Section 16 of Chapter 334 of the
Statutes of 2010, relating to insurance.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 711, as introduced, Committee on Insurance. Insurance:
California Life and Health Insurance Guarantee Association Act.
   Existing law, the California Life and Health Insurance Guarantee
Association Act, establishes an association of insurers to pay
benefits and continue coverage pursuant to contractual obligations
under life and health insurance policies and annuity contracts in the
event of the impairment or insolvency of a member insurer that
issued the policies or contracts. Existing uncodified law states that
specified changes made to the act during the 2009-10 Regular Session
of the Legislature do not apply to any member insurer that, before
the effective date of those changes, has been placed under an order
of liquidation with a finding of insolvency.
   This bill would codify that provision.
   The bill would make conforming changes.
   Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 1067.17 of the Insurance Code is amended to
read:
   1067.17.  (a) No person, including an insurer, agent, or affiliate
of an insurer shall make, publish, disseminate, circulate, or place
before the public, or cause directly or indirectly, to be made,
published, disseminated, circulated, or placed before the public, in
any newspaper, magazine, or other publication, or in the form of a
notice, circular, pamphlet, letter, or poster, or over any radio
station or television station, or in any other way, any
advertisement, announcement, or statement, written or oral, which
uses the existence of the California Life and Health Insurance
Guarantee Association for the purpose of sales, solicitation, or
inducement to purchase any form of insurance covered by the
California Life and Health Insurance Guarantee Association Act.
Provided, however, that this section shall not apply to the
California Life and Health Insurance Guarantee Association or any
other entity  which   that  does not sell
or solicit insurance.
   (b) (1) The association shall prepare a summary document
describing the general purposes and current limitations of the
article and complying with subdivision (c). This document shall be
submitted to the commissioner for approval. Sixty days after
receiving approval, no insurer may deliver a policy or contract
described in paragraph (1) of subdivision (b) of Section 1067.02 to a
policyholder or contractholder unless the document is delivered to
the policy or contractholder prior to or at the time of delivery of
the policy or contract  except if subdivision (d) applies
 . The document should also be available upon request by the
policyholder. The distribution, delivery, or contents or
interpretation of this document shall not mean that either the policy
or the contract or the holder thereof would be covered in the event
of the impairment or insolvency of a member insurer. The description
document shall be revised by the association as amendments to the
article may require. Failure to receive this document does not give
the policyholder, contractholder, certificate holder, or insured any
greater rights than those stated in this article. This paragraph
shall remain operative only until paragraph (2) becomes operative.
   (2) Within 180 days of the effective date of the act that amended
this section in the 2009-10 Regular Session, the association shall
prepare a summary document describing the general purposes and
current limitations of the article and complying with subdivision
(c). This document shall be submitted to the commissioner for
approval. At the expiration of the 60th day after the date on which
the commissioner approves the document, an insurer may not deliver a
policy or contract described in paragraph (1) of subdivision (b) of
Section 1067.02 to a policy or contract owner unless the summary
document is delivered to the policy or contract owner at the time of
delivery of the policy or contract. The document shall also be
available upon request by a policy owner. The distribution, delivery,
or contents or interpretation of this document does not guarantee
that either the policy or the contract or the owner of the policy or
contract is covered in the event of the impairment or insolvency of a
member insurer. The description document shall be revised by the
association, as amendments to the article may require. Failure to
receive this document does not give the policy owner, contract owner,
certificate holder, or insured any greater rights than those stated
in this article.
   (c) The document prepared under subdivision (b) shall contain a
clear and conspicuous disclaimer on its face. The commissioner shall
promulgate a rule establishing the form and content of the
disclaimer. The disclaimer shall do all of the following:
   (1) State the name and address of the life and health insurance
guarantee association and insurance department.
   (2) Prominently warn the policy owner or contract owner that the
California Life and Health Insurance Guarantee Association may not
cover the policy or, if coverage is available, it will be subject to
substantial limitations and exclusions and conditioned on continued
residence in the state.
   (3) State that the insurer and its agents are prohibited by law
from using the existence of the California Life and Health Insurance
Guarantee Association for the purpose of sales, solicitation, or
inducement to purchase any form of insurance.
   (4) State that the policy owner or contract owner should not rely
on coverage under the California Life and Health Insurance Guarantee
Association when selecting an insurer.
   (5) Provide other information as directed by the commissioner.
  SEC. 2.  Section 1067.19 is added to the Insurance Code, to read:
   1067.19.  The amendments made to this article by Chapter 334 of
the Statutes of 2010 during the 2009-10 Regular Session of the
Legislature shall not apply to any member insurer that, before the
effective date of those amendments, has been placed under an order of
liquidation with a finding of insolvency.
  SEC. 3.  Section 16 of Chapter 334 of the Statutes of 2010 is
repealed. 
  SEC. 16.    The amendments made to the California
Life and Health Insurance Guarantee Association Act (Article 14.7
(commencing with Section 1067) of Chapter 1 of Part 2 of Division 1
of the Insurance Code) by this act during the 2009-10 Regular Session
of the Legislature shall not apply to any member insurer that,
before the effective date of this act, has been placed under an order
of liquidation with a finding of insolvency.