California Sees Enactment of a Series of Insurance-Related Laws
BestWire Services, By Jeff Jeffrey –
January 3, 2012: A series of new laws have gone into effect in California on Jan. 1, and affect a range of insurance lines in the state.
A.B. 315, is designed to bring the state’s surplus lines laws into accordance with the Dodd-Frank Act’s Nonadmitted and Reinsurance Reform Act provision. Under that provision, only the policyholder’s home state will have jurisdiction over surplus lines sales. It also allows the state to keep 100% of taxes on premiums generated by surplus lines insurers domiciled in California. That move largely follows the approach other states have taken, but the California law doesn’t address whether the state plans to join one of the two proposed frameworks for regulating interstate surplus lines sales (Best’s News Service, July 20, 2011).
A.B. 689 requires insurers to establish comprehensive standards to ensure the suitability of annuities senior citizens would purchase, exchange or replace. The standards that must be considered include an annuity purchaser’s age, income, financial objectives and other factors. It also authorizes the insurance commissioner to revoke an insurance agent’s license, impose fines and restore money lost to the consumer when suitability standards are violated (Best’s News Service, Sept. 22, 2011).
A.B. 793 prohibits insurance agents and brokers from participating with, employing, or making referrals to someone involved in selling reverse mortgages with the only purpose of cross-selling unsuitable insurance products such as an annuity (Best’s News Service, Aug. 30, 2011).
S.B. 599 and its companion bill S.B. 713, are part of a legislative package that is designed to require more disclosure by life insurers in how they intend to use retained asset accounts in the settlement process. S.B. 599 includes a provision that allows life insurers to set up an RAA on behalf of a life insurance beneficiary if they are unable to obtain the beneficiary’s written declaration, so long as the company discloses that option to the beneficiary on the payment selection form. That provision was supported by the Association of California Life & Health Insurance Companies (Best’s News Service, Oct. 6, 2011).
S.B. 621 prohibits the insurance commissioner from approving disability insurance policies that contain a discretionary clause (Best’s News Service, Sept. 13, 2011).
S.B. 684 requires workers’ compensation insurers to provide a written disclosure to California employers that it intends to include provisions in contracts to allow disputes to be arbitrated or resolved outside California or under another state’s laws. That bill also requires disputes to be resolved under California law, unless the employer explicitly agrees otherwise. S.B. 684 applies to workers’ compensation policies issued or renewed on or after July 1
(Best’s News Service, Oct. 10, 2011).