BILL ANALYSIS �
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|SENATE RULES COMMITTEE | SB 712|
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THIRD READING
Bill No: SB 712
Author: Senate Insurance Committee
Amended: 5/3/11
Vote: 21
SENATE INSURANCE COMMITTEE : 6-0, 4/13/11
AYES: Calderon, Corbett, Correa, Lieu, Lowenthal, Wyland
NO VOTE RECORDED: Gaines, Anderson, Price
SENATE JUDICIARY COMMITTEE : 5-0, 4/26/11
AYES: Evans, Harman, Blakeslee, Corbett, Leno
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
SUBJECT : Insurance
SOURCE : Department of Insurance
DIGEST : This bill requires every admitted property and
casualty insurer, unless exempt, to annually submit a
Statement of Actuarial Opinion with supporting documents
and an Actuarial Opinion Summary, as specified, and exempts
from public disclosure, required under the California
Public Records Act, all actuarial reports, workpapers, or
opinion summaries submitted in support of the Statement of
Actuarial Opinion, and such records would not be subject to
subpoena or discovery, or be admissible in evidence in any
private party civil action.
ANALYSIS :
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Existing law:
1. Generally requires insurers to provide annual,
quarterly, and supplemental financial statements in
conformity with the standards adopted by the National
Association of Insurance Commissioners.
2. Provides that the commissioner shall examine every
domestic insurer before issuing to it a certificate of
authority, other than renewal, to transact any class of
insurance in California. When scheduling and
determining the nature, scope, and frequency of
examinations, the commissioner shall consider, among
other things, actuarial opinions.
3. Provides that a commissioner may make public any final
or preliminary examination report, any examiner or
company workpapers or other documents, or any other
information discovered or developed during the course of
any examination in the furtherance of any legal or
regulatory action which the commissioner may deem
appropriate. However, all working papers, recorded
information, documents, and copies thereof produced by,
obtained by, or disclosed to the commissioner or any
other person in the course of an examination made shall
be given confidential treatment and are not subject to
subpoena and shall not be made public by the
commissioner or any other person, except as specified.
4. Requires admitted life and disability insurers to submit
annual actuarial opinions or statements, as specified.
5. Exempts from public disclosure any memorandum or
material submitted in support of a life or disability
insurer's actuarial opinion unless (a) the insurer
consents in writing to disclosure; (b) the American
Academy of Actuaries provides a written request and
statement for the materials, which are required for
professional disciplinary proceedings and that the
Academy observes the commissioner's confidentiality
requirements; or (c) the insurer uses the confidential
material as part of its marketing efforts, releases the
material to any government agency other than a state
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insurance department, or releases the material to any
news medium.
6. Provides that the confidential material related to a
life or disability insurer's actuarial opinion shall be
subject to subpoena on the commissioner's consent or
after notice to the commissioner and all other
interested parties and a hearing in which the superior
court determines that the need for the subpoena
outweighs the interests of the insurer or actuary in
preventing disclosure of the material and the public
interest and any ongoing investigation or proceeding
conducted by the commissioner will not be unnecessarily
jeopardized by compliance with the subpoena.
This bill:
1. Requires admitted property and casualty insurers, unless
exempt, to submit an annual Statement of Actuarial
Opinion, with an Actuarial Report and underlying
workpapers, and Actuarial Opinion Summary, as specified.
Admitted insurers not domiciled in California would be
required to submit an Actuarial Opinion Summary upon
request of the commissioner.
2. In the event the admitted property and casualty insurer
fails to provide an acceptable Actuarial Report,
authorizes the commissioner to engage, at the expense of
the insurer, a qualified actuary to review the Actuarial
Opinion and prepare the supporting Actuarial Report.
3. Authorizes the commissioner to adopt regulations related
to the terms and conditions required by the Property and
Casualty Annual Statement Instructions of the National
Association of Insurance Commissioners.
4. Provides that the Statement of Actuarial Opinion shall
be a public record and open to inspection, as specified.
5. Exempts from disclosure required under the California
Public Records Act all admitted property and casualty
insurer Actuarial Reports, workpapers, or Actuarial
Opinion Summaries submitted in support of the Statement
of Actuarial Opinion, and such records would be
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confidential by law and privileged and would not be
subject to subpoena or discovery, or be admissible in
evidence in any private party civil action.
6. Provides that this bill will not limit the
commissioner's authority to release the Actuarial Report
or Actuarial Opinion Summary and supporting documents to
the American Academy of Actuaries' Actuarial Board for
Counseling and Discipline (ABCD) if the documents are
required for the purpose of professional disciplinary
proceedings and the ABCD establishes confidentiality
procedures sufficient to satisfy the commissioner. This
bill also will not limit the commissioner's authority to
use these documents in furtherance of any regulatory or
legal action brought as part of the commissioner's
official duties.
7. Authorizes the commissioner to disclose documents, as
specified, to the insurance department of this or any
other state or country, or to law enforcement officials
of this or any other state or agency of the federal
government at any time, or to the National Association
of Insurance Commissioners, provided the recipient of
the report or matters relating thereto agrees in writing
to hold it confidential and in a manner consistent with
this article, unless the prior written consent of the
company to which it pertains has been obtained.
8. Makes various technical corrections to Insurance Code
statutes.
9. Makes a finding that in order to protect proprietary
information, it is necessary to enact legislation that
the actuarial supporting documents provided pursuant to
this act are kept confidential.
Background
The Department of Insurance participates in an insurance
regulator accreditation program developed by the National
Association of Insurance Commissioners (NAIC). This
accreditation program provides uniformity among the member
state insurance departments as well as consumer
protections. Periodically, NAIC develops uniform insurance
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standards which are included in NAIC's model laws. Each
member of the accreditation program must then adopt the
model laws in order to maintain its accreditation.
Last year, NAIC adopted new requirements under its Property
and Casualty Opinion Model Law which require property and
casualty insurers to annually submit actuarial documents to
their respective state departments of insurance. In order
to maintain its accreditation in the NAIC program,
California must adopt these requirements.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
SUPPORT : (Verified 5/17/11)
Department of Insurance (source)
JJA:mw 5/17/11 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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