BILL ANALYSIS �
SB 1184
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Date of Hearing: June 20, 2012
ASSEMBLY COMMITTEE ON INSURANCE
Jose Solorio, Chair
SB 1184 (Corbett) - As Amended: April 17, 2012
SENATE VOTE : 36-0
SUBJECT : Senior insurance: Veterans benefits
SUMMARY : Establishes conflict of interest rules for insurance
agents with respect to veterans benefits. Specifically, this
bill :
1)Provides that neither an insurance agent, nor an employee of
the agent, may participate in, or be associated with, the
obtaining of veterans benefits for a veteran, unless the agent
has established and maintains procedural safeguards to ensure
that the agent has no direct financial incentive to refer the
policyholder or applicant to any governmental veterans benefit
program.
EXISTING LAW :
1)Provides that all insurers, agents and brokers who transact
insurance with a person over age 65 owes to the senior a duty
of honesty, good faith and fair dealing.
1)Provides that conduct prior to the completion of an insurance
contract is relevant to whether this duty was satisfied.
FISCAL EFFECT : This bill was referred directly to the Senate
Floor by the Senate Appropriations Committee pursuant to Senate
Rule 28.8.
COMMENTS :
1)Purpose . According to the author, veterans are in need of
protection from bad acting insurance agents who mislead
seniors about the Veterans Aid and Attendance benefits
program.
2)Background . Current federal law prohibits any individual from
charging a fee for helping a veteran file an initial
application for benefits with the U.S. Department of Veterans
SB 1184
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Affairs.
According to California Advocates for Nursing Home Reform
(CANHR), some aggressive marketers selling insurance products
target senior veterans and charge fees to "educate" veterans
or help them prepare claims.
In particular, CANHR points to the Veterans Aid and Attendance
program (Program) designed to provide low-wealth veterans
with financial support to pay for care and allow the veteran
to remain independent. Eligibility is based, in part, on the
applicant's income and net worth. An agent may advise a
senior to "hide" assets in an annuity or trust in order to
qualify for these benefits with intent to sell that product.
By requiring that agents and brokers "maintain procedural
safeguards" designed to avoid a conflict of interest, this
bill adopts a similar approach and language applied to
questionable practices related to reverse mortgages as
addressed in AB 793 (Eng), Statutes of 2011, Chapter 223, and
AB 329 (Feuer), Statutes of 2009, Chapter 236.
3)Support . Supporters broadly argue that certain insurance
agents are profiteering at the expense of both senior veterans
- by charging unreasonable fees, and selling them unreasonable
insurance products - and the Veterans Aid and Attendance
Program itself by enrolling veterans who really should not be
in the Program. By establishing the requirement that there be
no financial entanglements if an insurance agent is assisting
the veteran to enroll in the Program, supporters hope to
eliminate the motive to engage in these practices.
4)Related legislation . SB 1170 (Leno), also before the Assembly
Insurance Committee, proposes a number of specific rules to
govern the same behavior that this bill seeks to govern. The
provisions of the two bills are compatible.
REGISTERED SUPPORT / OPPOSITION :
Support
California Advocates for Nursing Home Reform (CANHR) (Sponsor)\
AARP
AFSMCE
American Legion, Department of California
SB 1184
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AMVEETS-Department of California
California Association of County Veterans Officers
Consumer Attorneys of California
Department of Insurance
Vietnam Veterans-California State Council
Opposition
None received.
Analysis Prepared by : Mark Rakich / INS. / (916) 319-2086