Important Consumer Insurance Bill Signed

Governor Arnold Schwarzenegger signed SB 1408 (Committee on Banking, Finance & Insurance) into law this past week.  This bill is an urgency measure and takes effect immediately.
 
SB 1408 updates 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 then the Model Act would provide.  In addition, SB 1408 upholds 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 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 Guarantee 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 so that insolvencies are actually handled, and facilitate greater coordination among the individual state guarantee Associations.
 
SB 1408 was supported by the California Life and Health Insurance Guaranty Association, Association of California Life and Health Insurance Companies, and Pacific Life Insurance Company.