California Legislature Passes Insurance-Related Bills Prior to Ending 2012 Session

by Hinshaw & Culbertson LLP
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The California Legislature’s regular 2012 session ended on August 31. In the last days of the session, legislators passed hundreds of bills, including several insurance-related measures. Here are noteworthy insurance-related bills that were passed by the Legislature and sent to Governor Jerry Brown. The governor has until September 30, 2012, to act on these bills.

Senate Bills

SB 863 is the sweeping 160-page workers’ compensation bill that was passed in the last hours of the legislative session. SB 863 would increase aggregate permanent disability benefits by approximately $740 million per year, phased in over a two-year period. The bill would change several aspects of the workers’ compensation system. Among other things, SB 863 would create an independent medical review process for resolving medical care disputes, establish an independent bill review process for resolving medical billing disagreements, adopt a statute of limitations for workers’ compensation liens, and restrict the reasons that can be used to avoid obtaining treatment within a medical provider network.

SB 1216 would conform California law to the revision to the NAIC Credit for Reinsurance Model Law that was adopted in 2011. Among other things, SB 1216 would establish criteria that the insurance commissioner is to use in certifying reinsurers; reinsurance provided by certified reinsurers would be an asset or credit against the liabilities of a ceding insurer.

SB 1298 would establish conditions for the operation of autonomous vehicles on public roadways. The bill defines “autonomous vehicle” as a vehicle equipped with technology that has the capability to drive a vehicle without the active physical control or monitoring by a human operator.

SB 1448 would conform California law to the revision to the NAIC Insurance Holding Company System Regulatory Model Act that was adopted in 2010. Among other things, SB 1448 would require the board of directors of an insurer that is part of a holding company system to file a statement affirming that the board is responsible for overseeing corporate governance and internal controls, and SB 1448 would authorize the insurance commissioner to evaluate the enterprise risk related to an insurer that is part of a holding company.

SB 1449 would permit the approval of life insurance and annuity products that include the waiver of premium during periods of disability and the waiver of surrender charges if the insured encounters specified medical conditions, disability, or unemployment.

SB 1513 would expand the investment options available to the State Compensation Insurance Fund.   

Assembly Bills

AB 53 would require each admitted insurer with written California premiums of $100 million or more to submit a report to the insurance commissioner on its minority, women, and disabled veteran-owned business procurement efforts. The first report would be due July 1, 2013. An insurer would be required to update its report biennially. AB 53 includes a January 1, 2019 sunset date.

AB 1454 would allow doctors of audiology to be appointed as qualified medical evaluators by the administrative director of the Division of Workers’ Compensation.

AB 1687 would authorize the Workers’ Compensation Appeals Board to award attorney’s fees to an applicant who prevails in a dispute that arises in the course of the medical utilization review process.

AB 1708 would authorize auto insurers to provide proof of insurance coverage in an electronic format that may be displayed on a mobile electronic device. Proof of insurance in this format would be allowed to be presented to a peace officer.

AB 1875 would limit the civil deposition of any person to one day of seven hours. The bill specifies exceptions to this limit.

AB 2152 would require a health plan that intends to terminate its contract with a provider group or a general acute care hospital to notify the Department of Managed Care at least 30 days prior to the termination of the contract. AB 2152 also would require a health insurer that intends to terminate its contract with a provider group or a general acute care hospital to provide services at alternative rates of payment to notify the Department of Insurance at least 30 days prior to the termination of the contract. AB 2152 would require health insurance policies to include additional notices and disclosures.

AB 2160 would require the California insurance commissioner to treat a domestic insurer’s investment in a company that has business operations in Iran as a non-admitted asset. We recently blogged on the passage of AB 2160 here.

AB 2298 would prohibit an insurer that issues or renews a private passenger auto insurance policy to a peace officer or a firefighter from increasing the premium for the policy because the peace officer or firefighter was involved in an accident while operating his or her private passenger auto in the performance of his or her duty at the request or direction of his or her employer. AB 2298 provides that in the event of a loss or injury that occurs as a result of an accident during any time period when the private passenger auto is operated by the peace officer or firefighter and is used by him or her at the request or direction of the employer in the performance of the employee’s duty, the auto’s owner shall have no liability.

AB 2303 is the Department of Insurance’s omnibus bill which addresses a variety of matters, including applications for non-resident surplus lines broker licenses, pre-licensing requirements for bail agents, the creation of a limited lines license for crop insurance adjusters, and changes to the conservation and liquidation process. AB 2303 would abolish the advisory committee on automobile insurance fraud within the Fraud Division of the Department of Insurance. AB 2303 also would repeal the provision that excludes policies that have been effect less than 60 days from the statute which governs the cancellation of private passenger auto insurance policies.

AB 2354 would revise the licensing requirements for travel insurance agents.

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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