Legislative Update - Assembly Insurance Committee



SB 131 (Gaines): This bill would clarify the allocation of Department of Insurance reporting requirements under the surplus lines law when multiple brokers are involved in a single surplus lines transaction by permitting delegation of the responsibility by mutual agreement among the brokers as a recognized option.



This bill was passed as amended with a vote of 11-0.



SB 220 (Price):
This bill increases the age that a dependent child is eligible to be added to certain life insurance policies of the parent. Specifically, this bill would increase from age 20 to age 25 the age at which dependent children who are not still in school are eligible to be included as an insured on a parent's employee group life insurance policy. It would increase from age 24 to age 25 the age at which dependent children who are in school are eligible to be included as an insured on a parent's employee group life insurance policy. Also it would make conforming changes to the provision of law that allows children older than 21 who are physically or mentally disabled to be included as an insured on the parent's policy by increasing that age to 26.



This bill was on consent with vote of 11-0.



SB 457 (Calderon): This bill would require the Workers' Compensation Appeals Board (board) to determine, on the basis of liens filed, reimbursement for benefits paid or services provided by a health care service plan, a group disability policy, a hospital service contract, or a self-insured employee welfare benefit plan, notwithstanding the Official Medical Fee Schedule (OFMS), when an award is made for reimbursement for self-procured medical costs for the effects of an injury or illness arising out of and in the course of employment.  This bill would state that its provisions are not to be deemed as modifying in any way the rights of any health care provider to file and prosecute a lien.



This bill was passed with a vote of 10-0.



SB 599 (Kehoe):
This bill would require life insurers to provide beneficiaries with settlement options on the life insurance benefit claim form.  This bill would authorize a retained asset account to be the default method of settlement payment provided that the claim form provides a prominent disclosure, as specified, that the retained-asset account will be the default payment mechanism if no other option is selected by the beneficiary.  This bill would require that a life insurer who recommends to a policyholder or beneficiary that the beneficiary receive life insurance proceeds in the form of a retained-asset account or any arrangement other than a lump-sum payment provide in writing to the policyholder or beneficiary the terms of each settlement option.  This bill would provide definitions for "lump-sum payment" and "retained-asset account," as specified.  This bill also would authorize the Insurance Commissioner to adopt regulations specifying reasonable requirements for the form agreements and written disclosures required under this bill.



This bill was passed with a vote of 11-0.



SB 621 (Calderon):
This bill invalidates any provision in a life insurance or disability insurance policy that provides discretionary authority to the insurer to determine eligibility for benefits or coverages.  Specifically, this bill:

         

          1)Provides that if any life insurance or disability insurance policy reserves discretionary authority to the insurer or agent to determine eligibility for benefits or coverage, or provides standards of interpretation that are inconsistent with the laws of this state, then that provision is void and unenforceable.


          2)Defines "discretionary authority" to be a policy provision that has the effect of conferring discretion on an insurer or other administrator to determine entitlement to benefits or to interpret policy language that could lead to a deferential standard of review by a reviewing court.


          3)Specifies this bill applies to both group and individual insurance products.


          4)Authorizes the Insurance Commissioner (IC) to adopt regulations to implement this bill.


          5)Specifies that the authority provided by this bill is self-executing.  If a life insurance or disability insurance policy, contract, certificate, or agreement contains a provision rendered void and unenforceable by this bill, then the parties to the policy, contract, certificate, or agreement and the courts shall treat the provision as void and unenforceable.


This bill was passed with a vote of 10-0.

SB 711 (Committee on Insurance): Extends the time for bonds to be issued on behalf of the California Insurance Guarantee Association (CIGA) to pay claims of insolvent workers compensation insurers, and codifies an insurance law regarding the California Life and Health Insurance Guarantee Association (CLHIGA).  Specifically, this bill:


          1)Extends from January 1, 2013, until January 1, 2023, the time for bonds to be issued to pay for workers' compensation claims of insolvent workers' compensation insurers.  The bonds may be issued when the California Insurance Guarantee Association requests the bond issuance by the California Infrastructure and Economic Development Bank.


          2)Codifies the provision of law that specifies that amendments made to the California Life and Health Insurance Guarantee Association Act made by Chapter 334 of the Statutes of 2010 (SB 1408 - Committee on Banking, Finance, and Insurance) shall not apply to any member insurer that, prior to the effective date of those amendments, has been placed under an order of liquidation with a finding of insolvency.


          3)Deletes a reference to a nonexistent subdivision of a section of the Insurance Code governing the conduct of insurance companies subject to the California Life and Health Insurance Guarantee Association Act.


This bill passed with a vote of 11-0.

SB 712 (Committee on Insurance): This bill would require every admitted property and casualty insurer, unless exempt, to annually submit a Statement of Actuarial Opinion with supporting documents and an Actuarial Opinion Summary, as specified.  This bill would exempt from public disclosure required under the California Public Records Act all actuarial reports, workpapers, or opinion summaries submitted in support of the Statement of Actuarial Opinion, and such records would not be subject to subpoena or discovery, or be admissible in evidence in any private party civil action. This bill also would make technical corrections to various Insurance Code statutes.



This bill was on consent with a vote of 11-0.



SB 713 (Calderon):
This bill would establish the Life Insurance Proceeds Disclosure Act of 2011, which would require life insurers to provide disclosures regarding death settlement payment options, including retained asset accounts, to policyholders and beneficiaries, as specified.  This bill would require the insurer to provide to the beneficiary a supplemental contract disclosing the rights of the beneficiary and obligations of the insurer if the beneficiary chooses death settlement payment to be placed into a retained asset account.



This bill was passed with a vote of 11-0.



SB 715 (Calderon):
Would require adoption of more stringent procedures to assess suitability of proposed annuity sales for customers, including requiring insurers to establish a system to supervise the suitability of annuity sale recommendations. In addition, would establish mandatory standards, procedures and processes, for insurers and producers, for assessing suitability and monitoring annuity sales recommendations made to consumers so that the insurance needs and financial objectives of consumers at the time of the transaction are appropriately addressed.



This bill was passed as amended with a vote of 10-0.



SB 863 (Lieu):
Adopts reforms to the lien procedures in the workers' compensation system.  Specifically, this bill:


          1)Requires lien claimants to file their liens in writing with the Workers' Compensation Appeals Board (WCAB), accompanied by a statement or itemized voucher supporting the lien and justifying the right to reimbursement.


          2)Requires the lien claimant to provide notice to all interested parties.


          3)Prohibits filing a lien after three years from the date the services were provided for services provided prior to July 1, 2012, and 18 months from the date the services were provided for services provided on or after July 1, 2012.


          4)Provides that the limitation periods noted above apply to any lien filed on or after the effective date of the bill, regardless of the date the services were provided.


          5)Clarifies that liens in favor of the Employment Development Department (EDD) are payable from amounts owed as temporary or permanent disability, and states that this clarification is declaratory of existing law.


          6)Provides that a health insurer, a health care service plan, a self-funded employee welfare benefit plan, or a publicly funded program providing medical benefits on a nonindustrial basis may file a lien within six months of discovering that the injury or condition was industrial in nature, but in no case later than five years after the services were provided.


This bill was passed with a vote of 11-0.



SB 923 (de Léon):
would require the Administrative Director (AD) of the Division of Workers' Compensation, by July 1, 2012, to adopt an Official Medical Fee Schedule (OMFS) for physician services based on the resource-based relative value scale (RBRVS).  This bill would require the AD, on or after January 1, 2013, and no less frequently than biennially, to revise the OMFS.  This bill would delete obsolete provisions relating to the adoption of a medical fee schedule for inpatient facility fees for burn cases.



This bill was passed with a vote of 8-3.