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CA Department of Insurance

Insurance Commissioner Dave Jones Applauds Governor For Signing AB 1846

News: 2012 Press Release

For Release: October 1, 2012
Media Calls Only: 916-492-3566
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Insurance Commissioner Dave Jones Applauds Governor For Signing AB 1846
Bill Will Establish the Consumer Operated and Oriented Plans (CO-OP) Licensing Framework

Insurance Commissioner Dave Jones today announced that Governor Jerry Brown has signed AB 1846, authored by Assembly Business, Professions, and Consumer Protection Committee Chair Richard Gordon (D-Menlo Park). AB 1846 is sponsored by Commissioner Jones and the California Department of Insurance (CDI). The bill will establish a licensing framework for CO-OPs, or Consumer Operated and Oriented Plans, thus providing CDI with the necessary regulatory oversight over these new non-profit health insurer organizations.

"I am pleased that Governor Brown has signed this important legislation to establish the CO-OP licensing framework," said Commissioner Jones. "This legislation will enable California to offer more affordable, quality insurance products in the Health Benefits Exchange, thus providing consumers with competitive, lower premiums, allowing them to keep more of their hard earned dollars."

The CO-OP program is 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. To encourage the creation of CO-OP health insurers, 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.

Specifically, AB 1846 will:

  • Authorize CDI to issue a certificate of authority to CO-OPs.
  • Specify that a CO-OP issued a license or a certificate of authority is subject to all other provisions of law relating to health insurance or health care service plans.
  • Prohibit a CO-OP from converting or selling a for-profit or non-consumer-operated entity after receiving a solvency loan.
  • Require a CO-OP to comply with specified governance standards and would authorize the Insurance Commissioner to revoke a   CO-OP insurer's certificate of authority for violating those standards.

"I believe one of the most pressing issues facing Californians is the lack of available options for obtaining affordable health coverage," Jones said. "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. I would like to thank Assembly Member Richard Gordon for authoring this legislation and Governor Jerry Brown for signing it."

The measure will become effective on January 1, 2013.

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 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.

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