New law improves oversight of corporate governance of insurance companies to reduce insolvencies
News: 2015 Press Release
SACRAMENTO, Calif. - Assembly Bill 553, authored by Assembly Member Tom Daly, was signed into law by Governor Brown today. Sponsored by Insurance Commissioner Dave Jones, AB 553 establishes new oversight tools to reduce the number of insolvencies of insurance companies and bring U.S. standards for regulating insurance companies in compliance with established international standards.
"As the largest insurance market in the country, California is again leading the way in improving the regulation of insurance companies," said Commissioner Jones. "AB 553 includes an urgency clause so California can have these new consumer protection tools in place as soon as possible. I'd like to thank Assembly Member Daly for authoring this important bill."
Supported by insurance industry stakeholders, AB 553 improves oversight of the corporate governance of insurers by aligning state law with new and improved standards developed by the National Association of Insurance Commissioners (NAIC) in two key areas:
·Improved oversight of the corporate governance policies and practices of insurance companies;including their board management structure, code of conduct, and risk-management processes. New disclosures and filings will assist the Commissioner in determining the overall financial and corporate capacity of companies to conduct business in California, and identify troubled companies quickly enough to avoid insurance company insolvencies that would jeopardize consumers.
·Preserved national system of state-based insurance regulation by clarifying the role of state insurance departments as group-wide supervisors over multi-national insurance groups, as part of the Insurance Holding Company System Regulator Act.
The primary purpose of AB 553 is to make sure California insurance regulatory laws conform with national and international insurance regulatory laws and to provide the California Department of Insurance with additional resources for fulfilling its mission of overseeing the solvency of insurance companies.
The amendment to the Holding Company System Regulatory Act will clarify the roles of a group-wide supervisor between the states and the international insurance community.
AB 553 was approved by the Assembly and Senate unanimously. The bill takes effect immediately.
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.