Fourteen New Insurance Laws Aimed to Protect Consumers
News: 2012 Press Release
SACRAMENTO - Fourteen pieces of legislation sponsored or publicly supported by Insurance Commissioner Dave Jones and the California Department of Insurance (CDI) and signed by Governor Jerry Brown create new consumer protections or strengthen existing statutes. From preparing for federal healthcare reform and eliminating rate volatility in existing long-term care insurance policies to working to ensure more affordable healthcare insurance products for consumers and providing more funding for district attorneys to prosecuting healthcare and disability fraud to aligning state regulation with federal law, Commissioner Jones continues to remain strongly focused on meaningful reforms geared to protect consumers and small businesses.
California continues to prepare for the implementation of the federal Affordable Care Act. CDI, as the regulator of the health insurance industry, has a significant role in the implementation of the law and is working hard with state and federal agencies to ensure that recent legislative reforms expand coverage and protect consumers and hard-working families. AB 1846 (Gordon) establishes a new regulatory licensing framework for consumer owned and operated plans (CO-OPs), which are designed to foster the creation of consumer-driven, nonprofit health insurance organizations, which have never before been licensed in California. "CO-OPs are designed to provide affordable, high quality health products in the individual and small group market where we have a shortage of options for many uninsured as well as low-income consumers," said Commissioner Jones. "With low interest loans from the federal government and appropriate regulation, CO-OPs could lead to increasing the affordable options for consumers both inside and outside the Health Benefit Exchange. *(SP)
AB 1761 (Pérez) prohibits individuals or entities from representing, constituting, or otherwise providing services on behalf of the California Health Benefit Exchange (Exchange) without initially obtaining a valid agreement with the Exchange to engage in those activities. By requiring a valid, in-force agreement between the Exchange and any person or entity wanting to act on its behalf, this new law will protect consumers and help uphold the integrity of the Exchange. *(SU)
According to data from the California Healthcare Foundation, the number of California residents age 65 and older is projected to triple in the coming decades and, within that population, the group 85 and over will experience the largest increase. This demographic shift means an increasing need for expensive long-term medical care services. Many consumers have turned to long-term care (LTC) insurance to help them plan for the care they may need as they get older. "Despite the adoption of laws to control rate increases for existing LTC policies, we continue to see an influx of rate filings seeking significant rate increases on existing policies," said Commissioner Jones. "Consumers on fixed income cannot afford these unpredictable and ongoing rated increases." AB 999 (Yamada) modifies the process for LTC rate development to protect consumers from excessive premium rate volatility, and is considered one of the strongest LTC consumer protection measures in the nation. *(SP)
Enforcement and Oversight
Increased funding is available for district attorneys in collaboration with CDI enforcement personnel, to support investigation and prosecution of health and disability insurance fraud through AB 2138 (Blumenfield). "Insurance fraud is a multi-billion dollar criminal enterprise that every consumer pays for through higher premiums," said Commissioner Jones. "Anything we can do to support our local law enforcement partners in putting a stop to fraud is a step toward protecting all consumers." *(SP)
CDI licenses and regulates bail bond agents in California and AB 2029 (Ammiano) reinstates a previous law that sunset in 2010. The Bail Fugitive Recovery Persons Act gives authority back to CDI to mandate and enforce uniform education, notice, and conduct requirements of bounty hunters whether they are bail bond agents or private individuals working as bounty hunters in the field. Strongly supported by statewide and local law enforcement organizations, civil rights groups, and crime victims associations throughout the legislative process, AB 2029 is widely seen as a fair and balanced approach to bring much-needed reform to the bounty hunter profession. *(SP)
Financial Oversight and Regulation
Two new laws- SB 1216 (Lowenthal) *(SP) and SB 1448 (Calderon) *(SP) - ensure CDI has the regulatory authority to protect consumers in response to changes brought by the globalization of the insurance business and insurer use of reinsurance. Reinsurance is insurance purchased by an insurer from another insurer for all or a portion of a loss that may arise under one or more of the insurer's policies. Among the changes enacted by SB 1216 is a framework for a California-based insurer ceding business to a non-U.S. based reinsurer. "The economic crash of 2008 and the great recession that followed have had devastating effects on families and businesses throughout California and the nation," said Commissioner Jones. A key concern brought to light by the financial crisis relative to insurance was the need for regulators to have greater authority to evaluate the risks a non-insurance entity posed on an insurer in a holding company system. "SB 1448 updates California's Insurance Holding Company System Regulatory Act so the financial status of an insurer in a holding company system can be adequately assessed," said Commissioner Jones.
AB 2303 (Assembly Committee on Insurance) makes numerous necessary changes in California insurance law. Notably, the bill provides the insurance commissioner the authority to take over an insurer that the U.S. Treasury Secretary determines is insolvent or in danger of becoming insolvent. Timeliness in initiating the conservation and liquidation process is critical to protecting California's insurance consumers. *(SP)
"Protecting seniors and insurance consumers from unscrupulous agents, fraud and identity theft is behind a number of measures I sponsored or supported in the last legislative session," said Commissioner Jones. "I will continue to pursue any avenue available to stop dishonest agents and brokers and ensure consumers are protected." SB 1170 (Leno) expands on existing restrictions on misleading advertising tactics directed at seniors and senior veterans and would enhance the notification requirements in order for an agent or broker to meet with a senior in his or her home for the purpose of selling an insurance product. Given the continued problem with some agents and brokers misleading senior veterans to buy insurance products such as annuities and estate planning documents under the guise of qualifying them for veterans' benefits, the additional safeguards provided in this measure will go a long way to better protect vulnerable seniors and senior veterans from financial abuse and exploitation. *(SU)
In another measure designed to stop unscrupulous insurance agents and brokers who act improperly by assisting senior veterans to qualify for veterans' aid programs for a fee when these services are readily available at no charge for those who qualify, Commissioner Jones supported SB 1184 (Corbett). This measure prohibits insurance agents and brokers from participating in, being associated with, or employing a party that participates or associates with obtaining senior veterans' benefits with the sole purpose of financial gain. *(SU)
Motorists will now be able to use mobile technology to provide proof of insurance, rather than carrying personal written information in their vehicle. AB 1708 (Gatto) makes use of mobile technology to help protect consumers from the unauthorized access to their personal information carried in their cars. *(SU)
AB 1747 (Feuer) requires a needed cautionary notification of a "pending lapse notice" be sent by a life insurer to the policyholder within 30 days of nonpayment as well as require a life insurer to allow a policyholder to name one or more persons to receive a copy of the pending lapse notice or termination of a policy for nonpayment of premium. Individuals can easily lose the critical protection of life insurance if just one premium is accidentally missed, even if they have been paying premiums on time for many years. *(SU)
AB 2354 (Solorio) authorizes the insurance commissioner to issue a limited lines travel insurance agent license to an organization engaged in transacting travel insurance and through travel retailers, thereby helping protect consumers while ensuring continued strong regulatory oversight of this limited lines product. AB 2354 requires adherence to strict guidelines relating to heightened transparency, stronger consumer protections, and additional training or be subject to disciplinary action by the insurance commissioner. *(SU)
Small Business Empowerment
AB 53 (Solorio) requires California admitted insurers with California premiums of $100 million or more to submit a report to CDI on its minority, women, and disabled veteran-owned business enterprises procurement efforts, including the insurer's current outreach, promotion, and communication efforts. Similar to efforts that Commissioner Jones has taken to reinvigorate CDI's Community Investment Opportunity Network program since his first day in office, he believes additional efforts that provide further opportunity for the creation of community partnerships between the insurance industry and California's talented minority, women and disabled veteran-owned businesses is a win for small businesses, insurance companies, and California's economy. *(SU)
All measures become effective on January 1, 2013.
*Media Note: *(SP) notes a bill sponsored by Commissioner Jones and CDI, while *(SU) notes a bill that Commissioner Jones and CDI publicly supported.
The California Department of Insurance, established in 1868, is the largest consumer protection agency in California. Insurers collect $288 billion in premiums annually in California. In 2015 the California Department of Insurance received more than 155,000 calls from consumers and helped recover over $84 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 or 213.897.8921. Telecommunications Devices for the Deaf (TDD), please dial 800.482.4833.