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Commissioner-sponsored life insurance bill signed by Governor to protect California consumers

News: 2018 Press Release

For Release: September 19, 2018
Media Calls Only: 916-492-3566
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Commissioner-sponsored life insurance bill signed by Governor to protect California consumers

SACRAMENTO, Calif. — Insurance Commissioner Dave Jones announced today that a bill he sponsored was signed by Governor Jerry Brown. Assembly Bill 2634, authored by Assembly Member Ed Chau (D-Arcadia), will give consumers more time to react to cost increases in their Flexible Premium Life Insurance policy.

"AB 2634 provides consumers with better and more complete information about the effect of insurer cost increases which in turn can result in premium increases in their life insurance policies", said Insurance Commissioner Dave Jones. "Allowing consumers, especially seniors, more time to make informed decisions about their policies and any premium increase will help them avoid a reduction in policy values or a possible lapse of the policy. I thank the Governor for signing this bill and Assemblymember Chau for championing it in the Legislature."

The Legislature heard from consumers who had personally been affected by extremely high "cost of insurance" increases that led to the loss of their policy, which they had been paying premium on for years. These consumers, along with many others, received little or no notice from their insurers when their policy charges doubled, tripled or quadrupled almost overnight. In one case the increase was 672%. Unfortunately, these stories are not unique. The California Department of Insurance has received thousands of complaints on this topic, mainly from distressed seniors, relating to the significant increases in the insurers costs which in turn are charged against the policy and erode the policy value and/or result in increased premiums.

Under current law, insurers are required to provide each policy owner with an annual report on the status of the policy. However, the annual report does not tell the policy owner when increases in costs and expenses are about to occur. These increases often, over time, completely consume the cash value of the life insurance policy, eventually rendering it worthless. As a result, consumers are unable to make informed decisions about their policies, which often require substantial payments on very short notice to keep them from lapsing.

AB 2634 requires an insurer to provide at least 90 days notice before any increase in the cost of insurance applies to consumers. The bill also requires the insurer to generally provide an illustration showing the impact on the policy values and necessary premium payments before and after the increase.


Led by Insurance Commissioner Ricardo Lara, the California Department of Insurance is the consumer protection agency for the nation's largest insurance marketplace and safeguards all of the state’s consumers by fairly regulating the insurance industry. Under the Commissioner’s direction, the Department uses its authority to protect Californians from insurance rates that are excessive, inadequate, or unfairly discriminatory, oversee insurer solvency to pay claims, set standards for agents and broker licensing, perform market conduct reviews of insurance companies, resolve consumer complaints, and investigate and prosecute insurance fraud. Consumers are urged to call 1-800-927-4357 with any questions or contact us at via webform or online chat. Non-media inquiries should be directed to the Consumer Hotline at 800-927-4357. Teletypewriter (TTY), please dial 800-482-4833.

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