Strong Consumer Protection Bills Sponsored by Insurance Commissioner Dave Jones Move Forward in California State Legislature
News: 2012 Press Release
Insurance Commissioner Dave Jones today announced that a package of consumer protection bills that he and the California Department of Insurance (CDI) are sponsoring is moving successfully through the legislative process.
"Protecting consumers is my number one priority and these bills go a long way toward doing that," said Commissioner Jones. "I want to thank the legislators who are authoring and supporting these important measures for their steadfast commitment and efforts to successfully move them through the legislative process. I look forward to a continued collaboration with them on these critical measures."
- AB 1846, authored by Assembly Member Rich Gordon, passed out of the Assembly Health Committee on a vote of 6 to 3. This bill implements a part of the federal healthcare reform law and would establish a licensing framework for Consumer Operated and Oriented Plans (or CO-OPs) in order to provide CDI with the necessary regulatory oversight over these new non-profit health insurers. CO-OPs will be non-profit, member-run health insurance issuers that will be newly licensed under state law to offer competitive coverage in the individual and small group markets. This bill would further mandate that a CO-OP must adhere to the California Health Benefit Exchange's standards and its selective contracting requirements, including rate negotiations.
- AB 1921, authored by Assembly Member Jerry Hill, passed out of the Assembly Health Committee on a vote of 6 to 3. This bill implements part of the federal healthcare reform law by establishing California's Transitional Reinsurance Program. Each state operating a health benefit exchange may establish a transitional reinsurance fund program from 2014 to 2016 used to pay health insurers and HMOs writing in the individual market that incur large claims by individual policy holders from 2014 to 2016. This bill is designed to address the possibility that some insurers and HMOs will have higher risk policyholders than others.
- AB 2029, authored by Assembly Member Tom Ammiano, received unanimous bipartisan support in the Assembly Public Safety Committee, passed out of the Assembly Appropriations Committee, and is currently awaiting consideration by all members of the Assembly. This bill would re-establish the "Bail Fugitive Recovery Persons Act" to provide important eligibility, notice, and conduct requirements for bail fugitive recovery persons, commonly known as bounty hunters, in order to increase safety for consumers, ensure coordination with law enforcement, and enhance the professionalism of this field of work.
- AB 2138, authored by Assembly Member Bob Blumenfield, unanimously passed out of the Assembly Insurance Committee on a 13 to 0 vote. This bill would increase the current annual assessment of 10 cents per insured paid by health and disability insurers to up to 20 cents in order to increase funding to local district attorneys so that they can investigate and prosecute health and disability insurance fraud throughout 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. This bill will provide much needed resources to fight growing insurance fraud in these areas, especially in light of federal health care reform.
- AB 2152, authored by Assembly Member Mike Eng, passed out of the Assembly Health Committee on a vote of 12 to 4. This bill would further strengthen consumer protections in California's regulation of health insurance by aligning the Insurance Code with sections of the Knox-Keene Act that are potentially more protective and beneficial to consumers, specifically in regards to important disclosure requirements to consumers. For example, the bill would require a health insurer to submit a transition plan to CDI at least 75 days prior to terminating a provider contract so consumers aren't left paying big medical bills because their insurer no longer contracts with their provider; otherwise, without this bill, consumers receiving care at a medical center may not learn that the center is no longer in their network until they return for care or until after they obtain care and receive an expensive out-of-network bill that they are left stuck paying for.
AB 2303, authored by the Assembly Insurance Committee, passed out of the Assembly with unanimous votes in support of it. This bill is CDI's annual omnibus bill to clarify and clean-up California Insurance Code sections as well as repeal obsolete and outdated sections. In addition, this bill would increase the pre-licensing education hours for bail agent applicants from 12 to 20 hours and would establish a limited lines crop insurance adjuster license in order to avoid federal licensing preemption.
- SB 1216, authored by Senator Alan Lowenthal, passed out of the Senate Insurance Committee on a unanimous vote of 8 to 0. This bill would update California's reinsurance laws in response to changes in federal law and revisions in the National Association of Insurance Commissioners (NAIC) Reinsurance Model Law and Regulations. Reinsurance is insurance purchased by an insurer from another insurer and, in today's world, California's reinsurance market has a significant international presence. This bill ensures that the Insurance Commissioner has the needed authority and regulatory tools to oversee the new activities occurring in the business of reinsurance in order to more adequately protect policyholders.
- SB 1431, authored by Senator Kevin de León, passed out of the Senate Health Committee on a vote of 5 to 3. This bill would regulate the sale of stop-loss insurance to small businesses by insurers that are promising these illusory, slimmed-down health benefit plans without the same level of strong consumer protections afforded to small businesses otherwise under federal healthcare reform such as prohibiting the consideration of health status and medical history in the offering of fair coverage.
- SB 1448, authored by Senator Ron Calderon, passed out of the Senate Insurance Committee on a unanimous vote of 8 to 0. This bill would conform California law to recent revisions to the NAIC Holding Company System Regulatory Act. Holding company systems are large and complex and this bill will provide the Insurance Commissioner with much-needed new tools to evaluate the activities of non-insurance entities within a holding company system that could pose a financial risk to the insurance company owned or otherwise financially affiliated with the holding company. An example of the problem this bill helps address can be found with AIG, a large international insurance organization which nearly became insolvent because of its financial relationship through a holding company with another company that was heavily involved in the sale of credit default swaps and other obscure and ultimately valueless financial products. This bill provides new regulatory authority and tools that will provide the Insurance Commissioner with a more thorough understanding of an insurer's financial condition, which means better protection for policyholders.
All of the Commissioner's nine sponsored bills were passed in time to meet Friday, April 27 deadline for bills to be voted out of their policy committees in order to continue to be considered by the Legislature.
Commissioner Jones also remains strongly committed to the following two bills that he sponsored and were introduced last year, which are in their second house and can be acted on later this year:
- AB 52, authored by Assembly Member Mike Feuer, remains on the Senate Floor. This bill would give legal authority to the Insurance Commissioner to reject excessive health insurance rate increases by requiring health plans and insurers to seek approval from state regulators prior to raising health care premiums, copayments, or deductibles. This is the same authority that the Insurance Commissioner currently has for auto, property, and casualty insurance.
- AB 999, authored by Assembly Member Mariko Yamada, remains in the Senate Insurance Committee. This bill would modify the long-term care insurance premium rate process to protect consumers from excessive rate volatility to order to protect the financial stability and well-being of them and their families.
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.