Amended in Assembly January 6, 2014

California Legislature—2013–14 Regular Session

Assembly Bill No. 1234

Introduced by Assembly Member Levine

February 22, 2013

An act to amend Section begin delete 10234.93 end delete begin insert 1215.8 end insert of the Insurance Code, relating to insurance.

LEGISLATIVE COUNSEL’S DIGEST

AB 1234, as amended, Levine. Insurance: begin delete long term care insurance. end delete begin insert registration statements end insert begin insert . end insert

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Existing law governs the business of insurance and authorizes the Insurance Commissioner to provide oversight over the insurance industry, including conducting investigations and bringing enforcement actions.

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Existing law requires each insurer that is authorized to do business in this state and that is a member of an insurance holding company system to register with the commissioner and to file a registration statement containing specified information, including the capital structure and general financial condition of the insurer and specified transactions between the insurer and its affiliates.

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Existing law makes the information reported to the commissioner in the registration statement and information disclosed in the course of an examination or investigation of the registration statement exempt from subpoena or public disclosure, except as specified.

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This bill would provide that information reported to the commissioner in the registration statement and information disclosed in the course of an examination or investigation of the registration statement is not subject to discovery or admissible into evidence in any private civil action.

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Existing law provides for the regulation of insurers by the Department of Insurance, including insurers issuing policies of long-term care insurance. Existing law regulates the marketing or solicitation of long-term care insurance policies and, in that regard, requires specified disclosures to prospective applicants or enrollees. Existing law requires an insurer of long-term care insurance to clearly post on its Internet Web site and provide written notice at the time of solicitation that a specimen individual policy form or group master policy and certificate form for each policy form offered by the insurer is available upon request and to provide that form within 15 calendar days upon request.

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This bill would additionally require an insurer to clearly post on its Internet Web site, and include on its policy application, information about an Internet Web site provided by the Department of Health Care Services, known as www.rureadyca.org.

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Vote: majority. Appropriation: no. Fiscal committee: no. State-mandated local program: no.

The people of the State of California do enact as follows:

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begin insert SECTION 1. end insert   

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begin insert Section 1215.8 of the end insert begin insert Insurance Code end insert begin insert is amended
to read: end insert

1215.8.  

(a) All information, documents, and copies thereof
obtained by or disclosed to the commissioner or any other person
in the course of an examination or investigation made pursuant to
Sections 1215.4 and 1215.5, and all information reported pursuant
to Section 1215.4, shall be kept confidential, shall not be subject
to disclosure pursuant to the California Public Records Act
(Chapter 3.5 (commencing with Section 6250) of Division 7 of
Title 1 of the Government Code), begin delete and end delete shall not be subject to
subpoena begin insert , and shall not be subject to discovery or admissible into
evidence in any private civil action end insert . This information shall not be
made public by the commissioner or any other person except to
insurance departments of other states without the prior written
consent of the insurance company to which it pertains, unless the
commissioner, after giving the insurer and its affiliates who would
be affected thereby notice and opportunity to be heard, determines
that the interests of policyholders, shareholders, or the public will
be served by the publication thereof, in which event he or she may
publish all or any part thereof in a manner as he or she may deem
appropriate.

(b) In order to assist in the performance of the commissioner’s
duties, the commissioner:

(1) May, upon request, be required to share documents,
materials, or other information, including the confidential and
privileged documents, materials, or information subject to
subdivision (a), with other state, federal, and international
regulatory agencies, with the NAIC and its affiliates and
subsidiaries, and with state, federal, and international law
enforcement authorities, including members of any supervisory
college described in Section 1215.7; provided that the recipient
agrees in writing to maintain the confidentiality and privileged
status of the documents, materials, or other information, and has
verified in writing the legal authority to maintain confidentiality.

(2) Notwithstanding paragraph (1), the commissioner may only
share confidential and privileged documents, materials, or
information reported pursuant to subdivision (m) of Section 1215.4
with commissioners of states having statutes or regulations
substantially similar to subdivision (a) and who have agreed in
writing not to disclose the information.

(3) May receive documents, materials, or information, including
otherwise confidential and privileged documents, materials, or
information, from the NAIC and its affiliates and subsidiaries and
from regulatory and law enforcement officials of other foreign or
domestic jurisdictions, and shall maintain as confidential or
privileged any documents, materials, or information received with
notice or the understanding that it is confidential or privileged
under the laws of the jurisdiction that is the source of the
documents, materials, or information.

(4) May enter into written agreements with the NAIC governing
sharing and use of information provided pursuant to this
subdivision consistent with this subdivision that shall do the
following:

(A) Specify procedures and protocols regarding the
confidentiality and security of information shared with the NAIC
and its affiliates and subsidiaries pursuant to this subdivision,
including procedures and protocols for sharing by the NAIC with
other state, federal, or international regulators.

(B) Specify that ownership of information shared with the NAIC
and its affiliates and subsidiaries pursuant to this subdivision
remains with the commissioner and the NAIC’s use of the
information is subject to the direction of the commissioner.

(C) Require prompt notice to be given to an insurer whose
confidential information in the possession of the NAIC pursuant
to this subdivision is subject to a request or subpoena to the NAIC
for disclosure or production.

(D) Require the NAIC and its affiliates and subsidiaries to
consent to intervention by an insurer in any judicial or
administrative action in which the NAIC and its affiliates and
subsidiaries may be required to disclose confidential information
about the insurer shared with the NAIC and its affiliates and
subsidiaries pursuant to this subdivision.

(c) The sharing of information by the commissioner pursuant
to this subdivision shall not constitute a delegation of regulatory
authority or rulemaking, and the commissioner is solely responsible
for the administration, execution, and enforcement of the provisions
of this article.

(d) No waiver of any applicable privilege or claim of
confidentiality in the documents, materials, or information shall
occur as a result of disclosure to the commissioner under this
section or as a result of sharing as authorized in subdivision (c).

(e) Documents, materials, or other information filed in the
possession or control of the NAIC pursuant to this subdivision
shall be confidential by law and privileged, shall not be subject to
subpoena, and shall not be subject to discovery or admissible in
evidence in any private civil action.

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SECTION 1.  

Section 10234.93 of the Insurance Code is
amended to read:

10234.93.  

(a) Every insurer of long-term care in California
shall:

(1) Establish marketing procedures to assure that any comparison
of policies by its agents or other producers will be fair and accurate.

(2) Establish marketing procedures to assure excessive insurance
is not sold or issued.

(3) Submit to the commissioner within six months of the
effective date of this act, a list of all agents or other insurer
representatives authorized to solicit individual consumers for the
sale of long-term care insurance. These submissions shall be
updated at least semiannually.

(4) Provide the following training and require that each agent
or other insurer representative authorized to solicit individual
consumers for the sale of long-term care insurance shall
satisfactorily complete the following training requirements that,
for resident licensees, shall count toward the licensee’s continuing
education requirement, but may still result in completing more
than the minimum number of continuing education hours set forth
in this section:

(A) For licensees issued a license after January 1, 1992, eight
hours of training in each of the first four 12-month periods
beginning from the date of original license issuance and thereafter
eight hours of training prior to each license renewal.

(B) For licensees issued a license before January 1, 1992, eight
hours of training prior to each license renewal.

(C) For nonresident licensees that are not otherwise subject to
the continuing education requirements set forth in Section 1749.3,
the evidence of training required by this section shall be filed with
and approved by the commissioner as provided in subdivision (g)
of Section 1749.4.

Licensees shall complete the initial training requirements of this
section prior to being authorized to solicit individual consumers
for the sale of long-term care insurance.

The training required by this section shall consist of topics related
to long-term care services and long-term care insurance, including,
but not limited to, California regulations and requirements,
available long-term care services and facilities, changes or
improvements in services or facilities, and alternatives to the
purchase of private long-term care insurance. On or before July
1, 1998, the following additional training topics shall be required:
differences in eligibility for benefits and tax treatment between
policies intended to be federally qualified and those not intended
to be federally qualified, the effect of inflation in eroding the value
of benefits and the importance of inflation protection, and NAIC
consumer suitability standards and guidelines.

(5) Display prominently on page one of the policy or certificate
and the outline of coverage: “Notice to buyer: This policy may not
cover all of the costs associated with long-term care incurred by
the buyer during the period of coverage. The buyer is advised to
review carefully all policy limitations.”

(6) Inquire and otherwise make every reasonable effort to
identify whether a prospective applicant or enrollee for long-term
care insurance already has accident and sickness or long-term care
insurance and the types and amounts of any such insurance.

(7) Every insurer or entity marketing long-term care insurance
shall establish auditable procedures for verifying compliance with
this subdivision.

(8) Every insurer shall provide to a prospective applicant, at the
time of solicitation, written notice that the Health Insurance
Counseling and Advocacy Program (HICAP) provides health
insurance counseling to senior California residents free of charge.
Every agent shall provide the name, address, and telephone number
of the local HICAP program and the statewide HICAP number,
1-800-434-0222.

(9) Provide a copy of the long-term care insurance shoppers
guide developed by the California Department of Aging to each
prospective applicant prior to the presentation of an application or
enrollment form for insurance.

(10) Clearly post on its Internet Web site and provide written
notice at the time of solicitation that a specimen individual policy
form or group master policy and certificate form for each policy
form offered in this state is available to a prospective applicant
upon request. The individual specimen policy form or group master
policy and certificate form shall be provided to a requesting party
within 15 calendar days or receipt of a request.

(11) Clearly post on its Internet Web site, and include on its
policy application, information about an Internet Web site provided
by the Department of Health Care Services, known as
www.rureadyca.org.

(b) In addition to other unfair trade practices, including those
identified in this code, the following acts and practices are
prohibited:

(1) Twisting. Knowingly making any misleading representation
or incomplete or fraudulent comparison of any insurance policies
or insurers for the purpose of inducing, or tending to induce, any
person to lapse, forfeit, surrender, terminate, retain, pledge, assign,
borrow on, or convert any insurance policy or to take out a policy
of insurance with another insurer.

(2) High pressure tactics. Employing any method of marketing
having the effect of or tending to induce the purchase of insurance
through force, fright, threat, whether explicit or implied, or undue
pressure to purchase or recommend the purchase of insurance.

(3) Cold lead advertising. Making use directly or indirectly of
any method of marketing which fails to disclose in a conspicuous
manner that a purpose of the method of marketing is solicitation
of insurance and that contact will be made by an insurance agent
or insurance company.

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