BILL ANALYSIS                                                                                                                                                                                                    �



                                                                  SB 715
                                                                  Page  1

          Date of Hearing:   August 25, 2011

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                Felipe Fuentes, Chair

                   SB 715 (Calderon) - As Amended:  June 28, 2011 

          Policy Committee:                              InsuranceVote:10 
          - 0 

          Urgency:     No                   State Mandated Local Program: 
          No     Reimbursable:              

           SUMMARY  

          This bill requires that insurance producers and insurers selling 
          annuities have reasonable grounds to believe the products they 
          are recommending are suitable for consumers. Specifically, this 
          bill: 

          1)States the bill's purpose is to require insurers to establish 
            a system to supervise recommendations and to set forth 
            standards and procedures for the recommendations of annuity 
            products to consumers so the needs and financial objectives of 
            consumers are appropriately addressed.

          2)Requires insurer producers to complete a one-time eight-hour 
            annuity training course approved by the Insurance Commissioner 
            (IC), and to satisfactorily complete four continuing education 
            credits prior to license renewal every two years.

          3)Specifies that insurers are responsible for compliance with 
            this bill.

          4)Requires the Insurance Commissioner (IC) to adopt reasonable 
            rules and regulations as necessary to administer this bill. 

           FISCAL EFFECT  

          Minor and absorbable costs, likely less than $50,000 per year, 
          for on-going training of Department of Insurance (DOI) staff.

           COMMENTS  

           1)Purpose and Background  . The purpose of this bill is to adopt 








                                                                  SB 715
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            in California the NAIC 2010 Suitability in Annuity 
            Transactions Model Act.  Adoption of this type of legislation 
            is encouraged by the federal Dodd-Frank Wall Street Reform and 
            Consumer Protection Act of 2010.

            Under Title IX of the federal Dodd-Frank Wall Street Act 
            Reform and Consumer Protection Act of 2010, a state adoption 
            of suitability requirements that meet or exceed NAIC's 
            Suitability in Annuity Transactions Model requirements is 
            required for a state to participate in a program of grants to 
            support enhanced protections of seniors against misleading 
            marketing practices.  Additionally, under that federal act, 
            California's adoption of the NAIC Suitability in Annuity 
            Transactions Model Act is necessary for this state's continued 
            jurisdiction over indexed securities.
           
          2)Related Legislation .  This bill is substantially similar to AB 
            689 (Blumenfield), which is sponsored by DOI. That bill is 
            currently pending on the Senate Floor.  

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