Legislative Update - Assembly Insurance Committee

The Assembly Insurance Committee heard the following measures this past week:

AB 55 (Gatto): This bill would extend the law that allows a motion picture payroll services company to serve as the employer of motion picture production workers for purposes of tax reporting and benefits. Specifically, this bill would remove the January 1, 2012, sunset date on the law that allows a motion picture payroll services company to serve as the employer of motion picture production workers for purposes of payroll tax reporting and employee benefits pursuant to the unemployment insurance and state disability insurance programs.

This bill passed the committee with a vote of 11-0.

AB 228 (Fuentes): This bill would clarify that employees of the State Compensation Insurance Fund (SCIF) are exempt from work furlough orders.  Specifically, this bill would add "furloughs" to the Insurance Code Section that exempts SCIF employees from "hiring freezes" and "staff cutbacks" that are otherwise required by law.

This bill passed the committee with a vote of 11-0.

AB 335 (Solorio): This bill would require the Administrative Director (AD) of the Division of Workers' Compensation (WC) to adopt, by regulation, new notices and rules governing notices that are provided to employees in the workers' compensation system.

Specifically, this bill would:

Add a requirement that the AD consult with the Commission on  Health and Safety and Workers' Compensation (CHSWC) in connection with the rules governing providing notice to employees about their rights under the workers' compensation laws.

Expand the subjects that benefit notices shall include by adding notice of supplemental job displacement benefits, rights concerning selection of a personal treating physician, requests for comprehensive medical evaluation, and offers of regular, modified, or alternative work.

Require the AD, in consultation with the CHSWC, to prepare, and make readily available, including on the DWC website, a booklet written in plain language that describes the overall workers' compensation claims system, including the rights and obligations of employees and employers at every stage of a claim when a notice is required.

1)     Add a requirement that each notice prescribed by the AD as required by law be in plain language, and include a citation to the place in the booklet that discusses relevant information.

2)     Make a number of conforming changes, such as deletion of specific statutory language that certain notices must contain, that have the effect of implementing the above requirements.

AB 624 (J. Perez): This bill, sponsored by the Department of Insurance, would extend the effective date on the laws that allow tax credits for insurers and other taxpayers that make qualified investments in community development financial institutions that invest in community development.  Specifically, AB 624 would extend from January 1, 2012 until January 1, 2017 the effective date on the laws that allow insurance companies, corporations, and other taxpayers to receive a tax credit equal to 20 percent of the amount of the qualified investment made during the taxable year into a community development financial institution that is certified by the California Organized Investment Network (COIN) of the Department of Insurance.  In addition, the bill would require the Insurance Commissioner (IC) to create and appoint a COIN Advisory Board with the duty to advise on the best methods to increase the level of insurance industry capital in safe and sound investments while providing fair returns to investors and social benefits to underserved communities.  The advisory board would consist of the IC, an executive in the insurance investment community, a licensed attorney practicing insurance law, a member of the State Assembly, a member of the State Senate, a member from a consumer advocacy group, and an affordable housing practitioner.

At the hearing, concerns were raised by a few Republican members about the advisory committee.  Kristin Olsen -- a new addition to the committee and freshman member --commented that she was concerned with the addition of legislators to the advisory committee, stating she thought that there was a potential for conflict of interests.  For example, if she was placed on the committee, she may advocate for the funds to go to her district.  CDI Legislative Director Michael Martinez responded that he believed the new members would provide a new perspective in helping to identify areas of need.  Vice Chairman Curt Hagman also inquired about whether the advisory committee already existed, and if so, why the CDI was putting forth legislation to put this committee in statute.  Martinez responded that the advisory committee had not met since 2007 and he believed this bill would reinvigorate the committee and their goals.  Compensation for the committee members also were brought up.  As of now, none of the members of the committee are compensated other than travel expenses.  The Department committed to looking at the fiscal costs and said they will be absorbable, not come from the General Fund and will be under $10,000.

Technical amendments were taken to the measure.  As amended, AB 624 passed the committee with a vote of 10-0.

AB 690 (Solorio): This bill would update the laws governing the sale of insurance in connection with portable electronic devices and their accessories and associated services.  Specifically, AB 690 would:

1)     Authorize the Insurance Commissioner (IC) to issue a portable electronics insurance agent license that authorizes the licensee and its employees and authorized representatives to sell insurance in connection with, and incidental to, the sale of "portable electronics" or the sale or provision of accessories or services related to the use of portable electronics.

2)     Define "portable electronics" as electronic devices that are portable in nature, and their accessories and services related to the use of the device.

3)     Define "portable electronics insurance" as insurance providing coverage for the repair or replacement of portable electronics that may cover portable electronics against loss, theft, mechanical failure, malfunction, damage, or other applicable perils.  This insurance would not cover certain service contracts, an insurance policy covering a seller's or manufacturer's obligations under a warranty, or a homeowner's, renter's, automobile, commercial multiperil, or similar insurance.

4)     Modify the requirements for an employee or authorized representative of a portable electronics vendor, issued a portable electronics insurance agent license, to sell portable electronics insurance, as follows:

a)  The portable electronics vendor, at the time it submits its license application, shall establish a list of all locations in California at which it offers portable electronics insurance.

b)  Remove the requirement of this vendor to update the above list annually, but the vendor would be required to maintain the list and make it available to the IC for review and inspection upon request.

c)  The portable electronics vendor, at the time it submits its license application, shall state the number of locations at which the vendor offers insurance products under the portable electronics insurance agent license.

5)     Require that the retraining of employees and authorized representatives shall be conducted whenever there is a material change in the insurance products sold that requires modification of the training materials, but in no event less frequently than every two years.

6)     Require, in connection with the sale of portable electronics insurance by telephone, that if the insurance cost is included in the purchase or lease of the portable electronic product or related services, the vendor shall clearly disclose to the customer that the charges for these products includes the charge for the insurance coverage.

7)     Specify that charges for portable electronics insurance may be billed and collected by a portable electronics insurance agent licensee, and that licensees may receive compensation for billing and collection services.

8)     Prohibit a portable electronics insurance agent from paying an employee or authorized representative any compensation, fee, or commission based primarily on the number of customers electing coverage under the portable electronics insurance agent's license.  However, the law would not prohibit the payment of compensation to employees and authorized representatives of a portable electronics agent for activities under the agent's license that is incidental to their overall compensation.

AB 840 (Yamada): This bill would extend eligibility for specified state disability insurance benefits to employees who are not able to work due to their taking care of a grandparent, grandchild, sibling, or parent-in-law.  These benefits are known as family temporary disability insurance, or Paid Family Leave.

This bill was referred to the Assembly Housing and Community Development Committee.