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SB 1408 (Committee on Banking, Finance & Insurance), an important measure sponsored by The California Life and Health Insurance Guaranty Association, passed the Assembly this week with a vote of 75-0. .
SB 1408 would update the California Life and Health Insurance Guaranty Association law by incorporating critical elements of the 2009 National Association of Insurance Commissioner’s Life and Health Insurance Guaranty Association Model Act (Model Act) and maintain significant provisions of existing California law that afford Californians greater coverage than the Model Act would provide.
SB 1408 would uphold existing California substantive policy as previously established by the California Legislature and would increase available benefits for policy owners and contract holders. The most significant benefit changes would include.
Increasing Life Insurance Coverage Limits from $250,000 to $300,000
Increasing Annuity Coverage Limits from $100,000 to $250,000
Increasing Structured Settlement Annuity Limits to $250,000
Increasing Interest Payments by reducing rollback rates from minus 6% to minus 2%; and from minus 6% to minus 3%
Doubling the Guaranty Association’s capacity by increasing its annual assessment cap from 1% of qualifying member premiums to 2%.
Other changes contained in the measure include technical revisions designed to eliminate coverage gaps by enabling consistent coverage across state lines, and conformity of the statute in technical ways the manner in which insolvencies are actually handled, and facilitate greater coordination among the individual state guarantee Associations.
Proponents of the bill, the California Life and Health Insurance Guaranty Association, Association of California Life and Health Insurance Companies, and Pacific Life argued that SB 1408 is critical to the consumer for two reasons. First, SB 1408 would increase the maximum benefits for California consumers in the event of an insolvency and close possible coverage gaps. Secondly, would ensure that the California Guaranty Act is consistent with the technical and administrative provisions of other state guarantee funds to facilitiate the timely administration of claims.
SB 1408 now returns to the Senate for concurrence in the Assembly amendments. The bill will be sent to the Governor for signature by the end of the legislative session on August 31st. To view the entire text of the bill, please click here.