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News: 2012 Press Release
For Release: October 15, 2012
Media Calls Only: 916-492-3566
Insurance Commissioner Dave Jones Applauds Governor Brown For Signing Seven Department Sponsored Bills In 2012
Strong consumer protection measures will go into effect January 1st
Insurance Commissioner Dave Jones today announced that Governor Jerry Brown has signed seven bills that Commissioner Jones and the California Department of Insurance (CDI) sponsored this legislative year.
"The California Department of Insurance is committed to protecting all consumers and the signing of these measures will allow us to continue that mission," said Commissioner Jones. "I am very pleased that the Governor signed seven of our sponsored bills this year that increase safeguards for California's consumers, seniors and hard-working families."
The bills sponsored by Commissioner Jones and CDI that were signed into law are:
- AB 999 (Chapter 627, Statutes of 2012) authored by Assembly Aging and Long-Term Care Committee Chair Mariko Yamada (D-Davis). AB 999 modifies the long-term care (LTC) insurance premium rate development process to protect consumers from excessive premium rate volatility. Despite the adoption of rate stabilization laws designed to control rate increases on LTC insurance policies, Commissioner Jones and CDI continue to see an influx of rate filings seeking significant rate increases on existing policies, ranging from multiple increases of 20 percent to 30 percent to 60 percent. Left unchecked, these rate increases will threaten the ability of California consumers, many of which are on fixed incomes, to maintain the protections they relied upon when initially purchasing these policies. Considered to be one of the strongest long-term care insurance consumer protection measures in the country, AB 999 would allow consumers to review policy language prior to purchase in order to allow a consumer to make a more informed decision, provide greater pooling of claims experience to spread cost impacts more broadly, limit the inclusion of asset i investment yields in premium rates, provide greater flexibility in the rate increase review process, and impose stricter loss ratio requirements to help prevent repeated LTC insurance rate hikes on consumers and seniors that need this product now more than ever.
- AB 1846 (Chapter 859, Statutes of 2012) authored by Assembly Business, Professions, and Consumer Protection Committee Chair Rich Gordon (D-Menlo Park). AB 1846 establishes a new regulatory licensing framework over Consumer Owned and Operated Plans (CO-OPs), a new and unique form of an insurer never before licensed in California, by giving CDI the necessary oversight to regulate these new non-profit health insurer organizations. CO-OPs are designed to foster the creation of consumer-driven, nonprofit health insurance issuers to offer quality health products where they are so critically needed: in the individual and small group markets. In order to encourage the creation of CO-OP health organizations, the federal government has been awarding low-interest start-up and solvency loans to qualified nonprofit entities; to date, more than 20 established CO-OPs located in more than 20 states have been granted more than $1.6 billion in low-interest loans out of a total of $3.8 billion available in federal loan funds. AB 1846 facilitates the fostering of a CO-OP in California to serve consumers both inside and outside of the state's Health Benefit Exchange as well as offer more competition in the healthcare delivery system. With the goal of providing insurance options to nearly one million low-income Californians in need of affordable health care, CO-OPs can serve as one affordable option available to these individuals and families.
- AB 2029 (Chapter 747, Statutes of 2012) authored by Assembly Public Safety Committee Chair Tom Ammiano (D-San Francisco). AB 2029 or the "Bail Fugitive Recovery Persons Act" reinstates specified education, training, documentation, notice, and conduct standards and requirements for all bail fugitive recovery persons in the California Penal Code, an act that had sunset on January 1, 2010. Bail fugitive recovery persons, commonly known as "bounty hunters," earn their living by tracking down bail fugitives. If a person out on bail fails to appear at his or her court date, the bail agent who posted the bond for the accused may contract with a bounty hunter or also serve as a bounty hunter to retrieve the person. CDI currently licenses and regulates bail agents; however, CDI neither has expressed oversight over bounty hunters nor can it mandate education, training, documentation, notice, and conduct standards and requirements on those persons acting as a bounty hunter today, an authority it previously had before the Act sunset more than two years ago. As a result, since the sunset of the Act, CDI has experienced a significant amount of cases in which some bounty hunters have overstepped appropriate, if not legal, boundaries in their apprehension of bail fugitives. By re-instituting CDI's oversight of bounty hunters, AB 2029 helps enhance the professionalism of this line of work, increases the knowledge and experience of bounty hunters working in the field, ensures appropriate coordination with law enforcement, and promotes public safety of consumers, their families and their property.
- AB 2138 (Chapter 444, Statutes of 2012) authored by Assembly Budget Committee Chair Bob Blumenfield (D-Van Nuys). AB 2138 increases the funding available to District Attorneys and to CDI to support necessary workload increases related to investigating and prosecuting health and disability fraud in the state. Health and disability insurance fraud is a critical problem for policyholders, providers, insurers, and California's economy and is increasing in sophistication, complexity, and volume, especially in these tough economic times. California's strained economy has resulted in an increase in insurance fraud schemes and local district attorneys often have fewer resources at their disposal to fight fraud. Additional funding made possible through AB 2138 will provide District Attorneys with the resources they need to increase investigations and prosecutions in the ongoing fight to combat these types of fraud perpetrated against insurers, especially in light of federal health reform implementation in California.
- AB 2303 (Chapter 786, Statutes of 2012) authored by the Assembly Committee on Insurance. AB 2303 remedies issue identified by CDI to clarify and cleanup obsolete and superseded Insurance Code sections, aligns the Insurance Code with various technical aspects of the National Association of Insurance Commissioners (NAIC) model laws, and eliminates several obsolete reporting requirements that no longer serve a purpose, among other necessary provisions. One notable component of AB 2303 is the authority that will allow the Insurance Commissioner to take over an insurer that the U.S. Treasury Secretary determines is insolvent or in danger of becoming insolvent. The Dodd-Frank Wall Street Reform Act of 2010 granted the U.S. Treasury Secretary with the authority to make insolvency-related determinations on specified insurers but retained the act of conserving and liquidating with the states. As one of the first pieces of state-level legislation in the Nation to address this procedural gap, AB 2303 ensures a timely process for initiating the conservation and liquidation process of insurers. In addition, AB 2303 makes several changes in law relating to insurance producer licenses, including the establishment of a license for insurance crop adjusters and the expansion of CDI's pre-licensing and continuing education curriculum board to provide for representation from the insurance adjuster and bail agent industries.
- SB 1216 (Chapter 277, Statutes of 2012) authored by Senator Alan Lowenthal (D-Long Beach). SB 1216 updates California law relating to the regulatory oversight of reinsurers and reinsurance. Specifically, this bill incorporates provisions in the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 to define a professional reinsurer and the credit an insurer may take for a reinsurance transaction on its financial statement. It also implements changes recently adopted by the National Association of Insurance Commissioners (NAIC) to its Reinsurance Model Laws and Regulations. Reinsurance is insurance purchased by an insurer from another insurer for all or a portion of loss that may arise under one or more of the insurer's policies. Since reinsurance involves a transfer of liability, it is often used by insurance companies as a risk management tool. Policyholders are generally unaware of the reinsurance transaction and any direct action they may have on the policy remains with the original insurer. SB 1216 ensures that California aligns with federal law, is current with NAIC Model language, and that the Insurance Commissioner has the needed authority to carry out the new reinsurance regulatory activities.
- SB 1448 (Chapter 282, Statutes of 2012) authored by Senate Insurance Committee Chair Ron Calderon (D-Montebello). SB 1448 incorporates into California law changes the NAIC made to its Insurance Holding Company System Model Law and Regulations. One principal provision in the bill requires that the controlling persons of a holding company system disclose an enterprise risk. "Enterprise risk" is any situation involving one or more affiliates of an insurer that, if not quickly corrected, would adversely affect the financial condition of the insurer. The bill also authorizes the Insurance Commissioner to participate in "supervisory colleges." These colleges are meetings of international regulators for internationally active insurance groups to share financial and operational information. The need for insurance regulators to have greater authority to evaluate the risks that non-insurance entities pose to an insurer in a holding company system was intensified by the Wall Street financial crisis in 2008. SB 1448 ensures that the Insurance Commissioner has the needed authority and regulatory tools to effectively and efficiently evaluate insurer holding company systems.
"I want to thank all of the legislators who authored these important consumer protection measures and Governor Jerry Brown for signing them," said Jones.
These measures will become effective on January 1, 2013.
The California Department of Insurance, established in 1868, is the largest consumer protection agency in California, regulating the $123 billion insurance marketplace. In 2012 the California Department of Insurance received more than 160,000 calls from consumers and helped recover over $64 million in claims and premiums. Please visit the Department of Insurance web site at www.insurance.ca.gov. Non-media inquiries should be directed to the Consumer Hotline at 800.927.HELP. Out-of-state callers, please dial 213.897.8921. Telecommunications Devices for the Deaf (TDD), please dial 800.482.4833.
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