BILL ANALYSIS �
AB 1234
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Date of Hearing: January 8, 2014
ASSEMBLY COMMITTEE ON INSURANCE
Henry T. Perea, Chair
AB 1234 (Levine) - As Amended: January 6, 2014
SUBJECT : Insurance Holding Company Systems
SUMMARY : Further protects information collected by the Insurance
Commissioner from disclosure. Specifically, this bill :
1) Prohibits the discovery of information provided to the
Insurance Commissioner (commissioner) pursuant to the Insurance
Holding Company System Regulatory Act (Holding Company Act),
that is already exempt from disclosure under the Public Records
Act, in a private civil action.
2) Provides that information collected by the commissioner
pursuant to the Holding Company Act and is exempt from
disclosure under the Public Records Act is not admissible in a
private civil action.
EXISTING LAW
1)Governs the business of insurance and authorizes the
commissioner to provide oversight over the insurance industry.
2)Establishes the Holding Company Act which requires insurers
authorized to do business in this state that are part of an
Insurance Holding Company System (IHCS) to register with the
commissioner.
3)Requires registration forms to include information regarding
the legal and financial relationships between members of the
IHCS.
4)Regulates a range of activities related to an IHCS including:
a) Acquisition of subsidiaries by domestic insurers;
b) Acquisition of domestic insurers by non-insurance
companies;
c) Transactions between registered insurers and their
affiliates.
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d) Transactions between members of an IHCS.
e) Payments of extraordinary dividends or distributions
by registered insurers.
FISCAL EFFECT : Unknown
COMMENTS :
1)Purpose . According to the sponsor (Department of Insurance),
the bill contains a technical and clarifying amendment to
conform California law with the model law adopted by the
National Association of Insurance Commissioners (NAIC). The
bill ensures that confidential information obtained by the
Department of Insurance in the course of enforcing the Holding
Company Act remains confidential. The Holding Company Act
protects consumers by ensuring the solvency of insurers
regulated by the Department of Insurance.
2)Prior Legislation. In 2012, Senate Bill 1448 (Calderon) was
enacted to conform California law with the NAIC model law
regarding the regulation of insurance holding companies. That
bill substantially broadened the commissioner's authority to
obtain otherwise proprietary information from insurers and
provides that confidential information shared with the
commissioner under that authority is not subject to disclosure
under the public records act. The language added by the bill
is drawn from the NAIC model law.
3)Limited Effect . The bill does not preclude a court from
considering a discovery request by a party seeking information
from an insurer, nor does it affect the admissibility of that
information should it be obtained through discovery from the
insurer. Rather, it simply provides that if confidential
information is provided to the commissioner, it is not
obtainable from the commissioner.
4)NAIC . The NAIC is the U.S. standard-setting and regulatory
support organization created by and composed of the chief
insurance regulators from the 50 states, the District of
Columbia and five U.S. territories. The NAIC establishes
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standards and best practices, conducts peer reviews, and
coordinates regulatory oversight by insurance commissioners in
the U.S. NAIC is a key part of the national system of
state-based insurance regulation. The NAIC's primary mission
is to promote uniform practices amongst states in regulating
multi-state insurers. To support this effort, the NAIC
maintains an insurance regulator accreditation program and
develops uniform standards known as Model Laws. The NAIC
performs an on-site accreditation review of each insurance
regulator at least every 5 years. An insurance regulator's
accreditation status is dependent on its adoption of statutes
and regulations that align with the Model Laws adopted by the
NAIC.
REGISTERED SUPPORT / OPPOSITION :
Support
Department of Insurance (sponsor)
Opposition
None received
Analysis Prepared by : Paul Riches / INS. / (916) 319-2086