BILL ANALYSIS �
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|SENATE RULES COMMITTEE | SB 1164|
|Office of Senate Floor Analyses | |
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CONSENT
Bill No: SB 1164
Author: Emmerson (R)
Amended: 3/26/12
Vote: 21
SENATE JUDICIARY COMMITTEE : 5-0, 5/1/12
AYES: Evans, Harman, Blakeslee, Corbett, Leno
SUBJECT : Professional liability insurers: immunity
SOURCE : California Association of Professional
Liability Insurers
DIGEST : This bill extends the sunset date from January
1, 2013 to January 1, 2016 of limited liability immunity
for professional liability insurers issuing non-renewal
notice statements, which specify the reason for the
nonrenewal, sent to a healthcare provider policyholder.
ANALYSIS : Existing law requires a professional liability
insurer who intends not to renew a policy, or to condition
a policy renewal as specified, to give written notice of
the nonrenewal and the reasons for the nonrenewal at least
60 days, but not more than 120 days, in advance of the end
of the policy period. (Insurance Code (INS) Section 678.1)
Existing law, until January 1, 2013, provides that there is
no liability on the part of, and no cause of action of any
nature shall arise against, a professional liability
insurer, who provides insurance to health care providers,
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for any statement made in any of the following:
a written notice of nonrenewal, or any other oral or
written communication specifying the reasons for
nonrenewal of a policy issued to a health care provider;
any communication providing information pertaining to
the nonrenewal; or
evidence submitted at any court proceeding or informal
inquiry in which the nonrenewal is an issue. (INS
Section 678.3)
Existing law, until January 1, 2013, provides that the
above immunity from liability extends to statements made by
a professional liability insurer's authorized
representatives, agents, or employees or any licensed
authorized insurance agent or broker and does not extend to
statements shown to have been made in bad faith. (Id.)
This bill extends the sunset date of these provisions to
January 1, 2016.
FISCAL EFFECT : Appropriation: No Fiscal Com.: No
Local: No
SUPPORT : (Verified 5/2/12)
California Association of Professional Liability Insurers
(source)
ARGUMENTS IN SUPPORT : The author writes: "Over the
years, the California Insurance Code has been amended to
require an insurer to give written notice of a policy
cancellation (Insurance Code Section 677.2) and nonrenewal
(Section 678.1). The written notice must contain the
reasons for the cancellation or nonrenewal. Unfortunately,
there were a number of lawsuits filed against insurers
alleging slander or defamation arising from compliance with
the above statutory requirement. In 1968, Insurance Code
Section 667 was added to provide an immunity for notices of
cancellation of auto policies, and in 1969 the section was
amended to cover nonrenewal as well. Insurance Code
Section 679 (which covers property and other commercial
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insurers) provides that insurers or their agents are not
liable for any statement made in the cancellation of a
policy, unless the statement was made in bad faith with
malice in fact. Unlike Section 667, however, Section 679
does not specifically address the nonrenewal of a policy.
Because Section 679 was not amended to parallel the . . .
statute covering auto policies, professional liability
insurers continued to be threatened with and occasionally
sued for defamation or libel arising from compliance with
the requirement to give a written notice and reasons for
nonrenewal. This bill would extend the life of Section
678.3, which was enacted to rectify this problem."
The California Association of Professional Liability
Insurers, the sponsor of this bill, expresses its desire
for an extension of the sunset by asserting that the
immunity provided by AB 1123 (Wyland), Chapter 327,
Statutes of 2005, to insurers who issue professional
liability policies to health care providers "promotes more
candor in communications made to the insured and should
continue to be preserved."
RJG:kc 5/3/12 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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