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The Assembly Insurance Committee also heard the following measures:
AB 53 (Solorio): This bill would require major California insurers to submit a plan for increasing procurement from women, minority, and disabled veteran business enterprises (WMDVBEs), require these insurers to conduct outreach to these targeted groups and require these insurers to furnish an annual report to the Insurance Commissioner regarding the implementation of their efforts. This bill is modeled after a program implemented by the Public Utilities Commission.
Opponents argued that the program used by the Public Utilities Commission concerning contracting with vendors applies to regulated monopolies, but is not appropriate for insurance companies which are competitive businesses. Insurers are not monopolies, have no guarantee of market share, no guarantee of cost recovery, and no guaranteed rate of return. Most major insurance companies already have procurement processes that promote diversity on a national level and, as national companies, should not be subject to state specific requirements. Also, the insurance industry already participates in several community efforts including the California Organized Investment Network (COIN) that promotes economic development and affordable housing in urban and rural areas of the state, with local and national diversity councils that certify minority and women-owned businesses to insurers, and with numerous charitable donations and volunteer efforts.
Chairman Solorio accepted amendments that removed some of the opponents opposition; however, the amendments were not reviewed by opponents prior to the hearing so their position is still under consideration.
AB 53 passed the committee with a vote of 7-4.
AB 480 (Solorio): This bill would provide that nothing in the Insurance Code shall prevent a captive insurer that meets the requirements of any other California statute, from issuing policies covering risks in this state pursuant to the provisions of that statute. In addition, this bill would limit the authorization, above, to captive insurers licensed in at least one state in the United States.
AB 480 passed the committee with a vote of 12-0.
AB 947 (Solorio): This bill would allow payment of temporary disability (TD) benefits for more than 104 weeks under certain circumstances. The author introduced this bill to address circumstances where medical treatment that is required to cure the injured worker's injuries takes longer, through no fault of the injured worker, than the 104 weeks of TD benefits allowed by law. These are cases involving substantial injuries where the injured worker is simply not able to work during the recovery period.
Employers are opposed to the bill, arguing that the 104 week cap was one of the major reforms that have helped control workers' compensation costs. In most cases, they argued, extending the duration of TD benefits does little to improve medical treatment, but rather causes cases to be delayed, with negative implications for both injured workers and employers.
AB 947 passed the committee with a vote of 8-4.
AB 974 (Portantino): This bill would provide that workers' compensation insurance rates may not include a price differential for policies sold through brokers as opposed to direct sales by the insurer. According to the author, this bill will prevent the State Compensation Insurance Fund (SCIF) from charging business owners who secure their workers' compensation insurance policy from SCIF extra fees if they use a broker to acquire the policy. Specifically, the author objects to the application of the law that allows SCIF to provide a 3% credit to policyholders who buy their policy directly from SCIF without use of an agent or broker.
This bill, opposed by SCIF and American Insurance Association, was held in the committee and will be a two-year bill.
AB 999 (Yamada): This bill would modify the long-term care (LTC) insurance rate development process. According to the author, this bill is intended to modify the long-term care insurance ratemaking process to protect consumers from the excessive rate volatility that has characterized the long-term care insurance market. Despite the "rate-stabilization" efforts enacted in 2000, and implemented in 2002 and 2003, insurers have continued to underestimate the real cost of long-term care insurance, and consumers who purchase policies they expect to pay premiums on for many years before needing the coverage have faced unexpectedly large rate increases. The goal of this bill is to have long-term care rates more accurately reflect the actual costs so that consumers will know what they are buying. The author is concerned that too many consumers become locked into high-priced policies that they purchased with the expectation of lower premiums.
AB 999 passed the committee with a vote of 7-5.
AB 1004 (Hagman): This bill would require the Insurance Commissioner (IC), through the Conservation and Liquidation Office (CLO), to publish with the court with jurisdiction over an insolvent insurer's estate information on a quarterly basis relating to approved claims. This bill, sponsored by ARGO Partners, is intended to allow the sponsor to contact claims recipients in order to offer them the option to sell their claim before it is settled.
Opponents argued that the cost of producing such a list would be substantial. Furthermore, it would put burdensome requirements upon the CLO with respect to privacy issues. In addition, there have been complaints of unscrupulous claims purchasing practices which have resulted in the NAIC developing a working group on the issue. The NAIC is scheduled to release a Model Act at the end of the year and opponents argued that the bill is premature and should wait to see what the NAIC develops relative to this issue.
The author agreed to hold the bill in committee; therefore, AB 1004 is a two-year bill.
AB 1098 (Hagman): This bill would require an insurer, upon the written request by the Department of Insurance, to disclose to the Department that it has denied a registered auto body repair shop from participating in the insurer's direct repair program.
The author states that in order to protect privacy rights the carriers need written documentation from Department. The Personal Insurance Federation of California, in support of the bill, stated that a written request will ensure that the person to whom the carriers release the information has the authority to receive it. A telephone call is not sufficiently protective because there is no ability to verify the caller.
AB 1098 passed the committee with a vote of 12-0.
AB 1363 (Alejo): This bill would subject the Workers' Compensation Insurance Rating Bureau (WCIRB or Bureau) to the Open Meetings and Public Records laws that govern public entities in California.
The Association of California Insurance Companies (ACIC) is opposed to the bill. ACIC argued that the Bureau is a private licensed organization, and not a creature of statute like the California Insurance Guarantee Association or State Compensation Insurance Fund. To the extent the WCIRB is performing public functions as the IC's agent, it is already subject to the IC's directions in terms of open meetings and public records. ACIC asserted that the Bureau is already complying with an open meeting and public record directive from the IC, and in fact has recently expanded its capacity to make information available on-line. ACIC also opposed the implication in the bill that records of the Bureau would be made public without consideration of its copyright protection. Insurers have also expressed the concern that large insurers, which are much less in need of the services of the Bureau, would withdraw rather than have more of their actuarial information made public.
AB 1363 was held in committee and is a two-year bill.
AB 1416 (Committee on Insurance): This bill would repeal Insurance Code provisions that are inconsistent with more recent legislative enactments, makes technical corrections, and update the codes.
AB 1416 passed the committee with a vote of 12-0.
AB 1425 (Committee on Insurance): This bill would require regulations adopted by the Insurance Commissioner (IC) relating to life settlements to be adopted pursuant to the Administrative Procedure Act (APA).
AB 1425 passed the committee with a vote of 12-0.
AB 1426 (Committee on Insurance): This bill would repeal an obsolete reporting requirement by the Insurance Commissioner (IC) regarding credit insurance agents, and repeal the requirement to adopt emergency regulations in connection with implementing the low-cost automobile insurance program.
AB 1426 passed the committee with a vote of 12-0.
AB 1427 (Committee on Insurance): This bill would repeal an obsolete requirement of the Bureau of State Audits to submit a report on workers' compensation, and replace a rarely used word in the Insurance Code with a commonly used word.
AB 1427 passed the committee with a vote of 12-0.