BILL ANALYSIS �
SB 1212
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SENATE THIRD READING
SB 1212 (Ron Calderon)
As Amended August 6, 2012
Majority vote
SENATE VOTE :Vote not relevant
INSURANCE 11-0 APPROPRIATIONS 17-0
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|Ayes:|Solorio, Hagman, |Ayes:|Gatto, Harkey, |
| |Bradford, | |Blumenfield, Bradford, |
| |Charles Calderon, Carter, | |Charles Calderon, Campos, |
| |Feuer, | |Davis, Donnelly, Fuentes, |
| |Beth Gaines, Hayashi, | |Hall, Hill, Cedillo, |
| |Miller, Skinner, | |Mitchell, Nielsen, Norby, |
| |Wieckowski | |Solorio, Wagner |
| | | | |
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SUMMARY : Authorizes insurers to offer to renew motor vehicle
and property-casualty policies electronically. Specifically,
this bill :
1)Authorizes an insurer to comply with statutory notice and
offer to renew requirements for private passenger automobile
insurance by means of electronic communication, if the
policyholder agrees to this electronic communication.
2)Authorizes an insurer to comply with statutory notice and
offer to renew requirements for homeowners' and other property
and liability insurance by means of electronic communication,
if the policyholder agrees to this electronic communication.
3)Provides that, notwithstanding certain restrictions in law,
any provision of law in the Insurance Code that specifically
authorizes use of electronic communication shall govern over
the general provisions, but ensures that the basic consumer
protections of current law applicable to electronic
communications remain in effect.
EXISTING LAW :
1)Requires a motor vehicle insurer to provide a notice of
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renewal of a private passenger automobile insurance policy at
least 20 days prior to the expiration of the policy, and
requires a confirmation notice to be delivered within the same
time period if a verbal offer to renew is rejected by the
policyholder.
2)Requires an insurer that is renewing a policy of property or
other casualty insurance on risks located in California to
deliver a notice of renewal, which must include notice of any
changes in coverage or premium, at least 45 days prior to the
termination of the policy.
3)Establishes a procedure for obtaining valid electronic
signatures on various documents that require a signature, and
authorizes various forms of "e-commerce" communication among
parties to contracts, but excludes the renewal notices
contained in this bill from the documents that may be
delivered to a policyholder in electronic form.
FISCAL EFFECT : According to the Assembly Appropriations
Committee, the California Department of Insurance (CDI) believes
this legislation will result in an increase in consumer
complaints related to renewals and coverage issues due to
electronic renewal notices not being received. CDI estimates
that costs associated with that workload would be approximately
$170,000 per year (Insurance Fund).
COMMENTS :
Purpose . According to the author, and the sponsor the Personal
Insurance Federation of California, policyholders are demanding
that insurers move toward "paperless" transactions, and
frequently react negatively when the insurer responds that it is
not authorized by law to provide certain documents or notices in
an electronic format. This bill identifies two categories where
the insurer's action is in the policyholders' favor - offers to
renew certain policies - and empowers policyholders to mutually
agree with their insurer that the statutory requirements may be
satisfied via electronic communication. According to
proponents, the documents authorized for electronic transmission
by this bill are less sensitive than many documents already
eligible for delivery electronically.
Background . In 1999, the California Legislature passed the
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Uniform Electronic Transactions Act (UETA) which established
uniform standards for conducting business electronically in
California. Since then almost every state has adopted similar
laws to facilitate e-commerce. The UETA requires that a consumer
must agree to have the transaction conducted electronically and
cannot be compelled by the business to conduct the business
electronically. Since 1999, consumers have grown more and more
comfortable conducting business on the internet and through
e-mail, but most of the exclusions contained in the original Act
remain. Currently, according to proponents, the only state
other than California that does not allow electronic delivery of
renewal notices is Arkansas.
Federal law . After California enacted its version of the UETA
in 1999, the federal government enacted Public Law 106-229, the
Electronic Signatures in Global and National Commerce Act, in
June, 2000. The federal Act is in many ways similar to
California law, in that it prohibits requiring a consumer to
agree to use of electronic means to complete the contract,
establishes the requirements that must be met for the electronic
signature to be effective, and creates various obligations and
exceptions. Some insurers have suggested that the federal Act
preempts states' ability to more narrowly limit which
transactions may be limited to non-electronic communication, and
that California law inappropriately attempts to restrict too
many insurance transactions to only non-electronic
communication. Nonetheless, the proponents of this measure are
taking the narrow approach of adding the two additional types of
communication identified by the bill as appropriate for
electronic communication.
Prior legislation . AB 328 (Charles Calderon), Chapter 433,
Statutes 2009, authorized electronic transmission of certain
notices that otherwise would require a mailing, upon agreement
by the policyholder to receive the electronic communication in
lieu of regular mail, including notice of reasons for refusal to
issue a good driver policy pursuant to Proposition 103, notice
of the reasons for cancelling an automobile insurance policy,
notice of the right of a homeowner to purchase earthquake
coverage from or as arranged by the homeowner's insurer, or the
proof of mailing this notice, and the standard residential
property insurance disclosure that sets forth the various types
of homeowners' insurance policies.
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Analysis Prepared by : Mark Rakich / INS. / (916) 319-2086FN:
0005072