BILL ANALYSIS �
AB 1234
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 1234 (Levine)
As Amended July 1, 2014
Majority vote
-----------------------------------------------------------------
|ASSEMBLY: |72-0 |(January 23, |SENATE: |34-0 |(August 19, |
| | |2014) | | |2014) |
-----------------------------------------------------------------
Original Committee Reference: INS.
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.
3)Makes legislative findings regarding the need to preserve the
confidentiality of proprietary information obtained by the
commissioner in the course of implementing the Holding Company
Act.
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.
AB 1234
Page 2
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.
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),
this bill contains a technical and clarifying amendment to
conform California law with the model law adopted by the
National Association of Insurance Commissioners (NAIC). This
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, SB 1448 (Calderon), Chapter 282,
was enacted to conform California law with the NAIC model law
regarding the regulation of insurance holding companies. SB
1448 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 SB 1448
is drawn from the NAIC model law.
3)Limited effect. This 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
AB 1234
Page 3
information is provided to the commissioner, it is not
obtainable from the commissioner.
4)NAIC. The NAIC is the United States (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 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 five 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.
Analysis Prepared by : Paul Riches / INS. / (916) 319-2086
FN: 0004286