Insurance Commissioner Jones Highlights Important Laws Going Into Effect In New Year
News: 2011 Press Release
Insurance Commissioner Dave Jones today highlighted a number of important bills passed this year that go into effect on January 1, 2012. The new consumer protection laws include nine that were sponsored by the Insurance Commissioner.
"Protecting consumers is job number one at the California Department of Insurance," Commissioner Jones said. "We won a number of very important legislative battles this year, with the Governor signing nine bills we sponsored. These bills will go a long way toward increasing protections for consumers, seniors, and hard-working families. I also want to thank the legislative authors of these important measures for their hard work, as well as the legislators who cast their votes in support and Governor Brown for signing these bills. I look forward to working with them this upcoming year on further consumer protection reforms."
The nine bills sponsored by the Insurance Commissioner that become law January 1st are:
AB 315 (Solorio): Streamlines California's regulatory law on the surplus lines insurance marketplace and surplus lines tax collection activities. It also ensures state law adheres to mandatory changes in the Non-admitted and Reinsurance Reform Act provisions of last year's federal Dodd-Frank Wall Street Reform and Consumer Protection Act in order to avoid preemption by the federal government.
AB 624 (Pérez and Blumenfield): Extends the sunset date to January 1, 2015 on the California Organized Investment Network's (COIN) Tax Credit Program, which was set to expire at the end of this year. The COIN program, in partnership with Community Development Financial Institutions, has invested more than $100 million into underserved communities.
AB 689 (Blumenfield): Establishes landmark consumer protections in the annuities marketplace to protect the public, particularly seniors, from fraudulent activities involving these complex insurance products. It also authorizes the Insurance Commissioner to revoke an insurance agent's license, impose fines, and restore money lost to the consumer when suitability standards are violated.
AB 793 (Eng): Limits insurance agents' and brokers' ability to "cross-sell" reverse equity mortgages and annuities, thereby protecting seniors and others from unscrupulous agents and brokers who seek to steer them inappropriately into both financial products.
AB 1416 (Assembly Insurance Committee): Makes several changes to various Insurance Code sections dealing with agent licensing, training, and previously enacted legislation. It also permits the Insurance Commissioner to remove a life agent's authority to transact variable life insurance contracts upon learning that the agent is no longer registered to transact securities with the U.S. Securities and Exchange Commission or the Financial Industry Regulatory Authority.
SB 51 (Alquist): Requires health insurers and HMOs to put a larger share of the money they collect from consumers into actual medical care instead of overhead and profits. This new law authorizes Commissioner Jones to enforce in California provisions Patient Protection and Affordable Care Act (PPACA), which require HMOs and health insurers to have a medical loss ratio (MLR) of 85 percent for large group health insurance and 80 percent for small group and individual health insurance - meaning that insurers and HMOs have to put 85 percent of what they collect from large employers and 80 percent of what they collect in premium from individuals and small employers into actual medical care versus insurer or HMO overhead and profit.
SB 599 (Kehoe): Requires life insurers to obtain a beneficiary's written declaration as to how he or she wants to receive their benefit payment. Prevents life insurers from taking advantage of beneficiaries by automatically and without consent depositing benefits into a "retained asset account" which allows the insurance company to earn interest that otherwise could be earned by the beneficiary.
SB 621 (Calderon): Protects consumers of life, health, and disability insurance from "discretionary clauses" in their insurance policies, which give the insurer the sole discretion to decide if a beneficiary has become disabled, even if the consumer has a doctor certify that they are disabled. This new law levels the playing field and gives consumers an even chance to prove that they are entitled to disability and other insurance, by making the "discretionary clauses" that insurers have been putting into their insurance policies as void and unenforceable.
SB 684 (Corbett): Protects California's businesses by preventing workers' compensation insurers from unilaterally forcing California businesses to other states like New York or Delaware to resolve disputes, without the California business's consent. It also requires that there be disclosure up front at the time a quote is provided as to where the insurer proposes to resolve disputes and by making explicit that California businesses can decline to agree to being forced to arbitrate or otherwise resolve disputes in other states than California.
These bills go into effect on January 1, 2012, with an exception to SB 684, which applies to workers' compensation policies issued or renewed on or after July 1, 2012.
A number of other key laws supported by the Insurance Commissioner also go into effect at the beginning of next year, including:
AB 151 (Monning): Requires an insurer to make available Medicare supplement benefit plans A, B, C, and F, and benefit plan K or L, or benefit plan M or N.
AB 210 (Hernandez): Requires every group health insurance policy to provide coverage for maternity services for all insureds covered under the policy.
AB 378 (Solorio): Benefits the workers' compensation system by reducing abuse through compound medication prescribing and dispensing thus dealing with a known cost driver and a known area of overbilling in the workers' compensation system.
AB 690 (Solorio): Updates current law regarding the sale of insurance products for portable electronics equipment while still maintaining adequate protections needed for consumer safety.
AB 1024 (Hueso): Authorizes a State Automobile Assigned Risk Plan certified producer to accept and process an application to purchase low-cost auto insurance policies through an Internet Web site. It also requires the plan to coordinate with the Department of Insurance in order to develop a system for receiving and assigning policies issued through such sites. Requires producer contracts, by way of open bidding, to develop and maintain the Web site.
SB 220 (Price): Provides that coverage for dependent children under a group life insurance policy may continue until 26 years of age, regardless of the child's marital status or whether the child is attending an educational institution.
SB 222 (Evans): Requires every individual health insurance policy to provide coverage for maternity services for all insureds covered under that policy.
SB 299 (Evans): Amends existing law that prohibits an employer from refusing to allow a female employee disabled by pregnancy, childbirth, or a related medical condition to take a leave for a reasonable time of up to 4 months before returning to work. Prohibits an employer from refusing to maintain and pay for coverage under a group health plan for an employee who takes that leave. It further provides that the collective bargaining agreement shall govern the continued receipt of health care coverage for state employers.
SB 713 (Calderon): Requires insurers to provide written disclosures to life insurance beneficiaries at the time a claim is made and before a retained asset account is selected or established as the payment. Additionally, it requires an insurer that settles life insurance benefits through a retained asset account to provide the beneficiary with a supplemental contract that clearly discloses the rights of the beneficiary and obligations of the insurer under the contract and to provide a related statement.
SB 757 (Lieu): Provides that a health care service plan or health insurance policy may not discriminate in coverage between spouses or domestic partners of a different sex and spouses or domestic partners of the same sex. Provides that every group health care service plan contract and every group health insurance policy that is marketed, issued, or delivered to a resident is subject to the requirement to provide equal coverage to domestic partners as is provided to spouses, irrespective of an out-of-state employer.
SB 946 (Steinberg): Requires health care service plan contracts and health insurance policies to provide coverage for behavioral health treatment for a pervasive developmental disorder or autism. Provides that no benefits are to be provided that exceed the essential health benefits that will be required under specified federal law. Requires the convening of an autism advisory task force to provide assistance on topics related to behavioral health treatment and recommendations for education and training to secure licensure.
The California Department of Insurance, established in 1868, is the largest consumer protection agency in California. Insurers collect $310 billion in premiums annually in California. Since 2011 the California Department of Insurance received more than 1,000,000 calls from consumers and helped recover over $469 million in claims and premiums. Please visit the Department of Insurance website at www.insurance.ca.gov. Non-media inquiries should be directed to the Consumer Hotline at 800.927.4357. Telecommunications Devices for the Deaf (TDD), please dial 800.482.4833.