California Legislators to Consider Insurance Bills During Final Weeks of Session

by Hinshaw & Culbertson LLP

Members of the California Assembly will return to Sacramento from their summer recess on August 5. State Senators will return to the Capitol on August 12. This year’s legislative session will end on September 13.

During the last weeks of this year’s session, legislators will vote on insurance-related bills that have advanced to the final stages of passage. Here are summaries of noteworthy bills:

Assembly Bills

AB 32 would increase the annual aggregate amount of qualified investments eligible for the Community Development Financial Institution tax credit from $10 million to $50 million.  Insurers are able to obtain a credit against the insurance gross premium tax for qualifying investments. AB 32 has passed the Assembly and is scheduled to be heard by the Senate Governance & Finance Committee on August 14.

AB 584 would require domestic insurance companies to regularly conduct an Own Risk and Solvency Assessment (ORSA) consistent with the NAIC’s ORSA Guidance Manual. Insurers would be required to submit an ORSA Summary Report annually to the Insurance Commissioner. AB 584 provides that the Report is not subject to public disclosure. An insurer that has an annual direct written premium of less than $500 million would be exempt from the bill’s requirements, however the Insurance Commissioner would have the authority to require an exempt insurer to conduct an ORSA based on specified criteria. AB 584 has passed the Assembly and is scheduled to be heard by the Senate Appropriations Committee on August 12.

AB 612 would require local agencies that use red light cameras at intersections to establish yellow light intervals that are one second longer than the yellow light intervals which are normally in place. AB 612 has passed the Assembly and is pending before the Senate Transportation & Housing Committee.

AB 1113 would make changes to the provisional driver’s licensing program which applies to individuals between 16 and 18 years old. AB 1113 would require a person to hold an instructional driver’s permit for a minimum of nine months prior to applying for a provisional driver’s license (current law sets a minimum of six months), would prohibit a provisional licensee from driving between the hours of 10 p.m. and 5 a.m., with exceptions (current law sets the hours at 11 p.m. to 5 a.m.), and would prohibit a provisional licensee from transporting passengers who are under 21 years of age, with exceptions (current law applies the prohibition to passengers under 20 years of age). AB 1113 would prohibit the Department of Motor Vehicles from issuing a provisional license if the applicant has been convicted of a driving offense in the prior six months. AB 1113 has passed the Assembly and is scheduled to be heard by the Senate Appropriations Committee on August 12.

AB 1236 would authorize a licensed contractor organized as a limited liability company to obtain statutorily required liability insurance coverage from an eligible surplus line insurer. AB 1236 has passed the Assembly and the Senate; the bill is back on the Assembly floor, waiting for concurrence in amendments which were adopted in the Senate.

AB 1309 would limit access to the California workers’ compensation system for professional athletes who are employed by out-of-state teams. AB 1309 also would establish a special statute of limitations for workers’ compensation cumulative injury claims involving professional athletes. AB 1309 has passed the Assembly and is pending before the Senate Rules Committee.

AB 1371 would require the driver of a vehicle to provide a three-feet distance between the vehicle and a bicycle when passing. AB 1371 has passed the Assembly and is scheduled to be heard by the Senate Appropriations Committee on August 12.   

AB 1391 is the Department of Insurance’s omnibus bill which addresses a number of issues. Among other things, AB 1391 would repeal Insurance Code provisions which exempt risk retention groups from the Business Transacted with Producer Controlled Insurer Act, would modify statutory provisions relating to insurer risk-based capital reports to conform to NAIC model language, would amend statutory provisions relating to the exam waiver for licensees moving to California to conform to the NAIC Producer Licensing Model Act, and would specify in statute a three-hour ethics component for inclusion in the 24-hours of continuing education which agents and brokers must complete every two years. AB 1391 has passed the Assembly and is scheduled to be heard by the Senate Appropriations Committee on August 12.

Senate Bills

SB 36 would require the Department of Insurance to include on its website a dedicated web page that includes workers’ compensation data, statistics, and reports covering both insurers and self-insurers, including, but not limited to, claims loss data, expenses and financial reports. SB 36 has passed the Senate and is scheduled to be heard by the Assembly Insurance Committee on August 7.

SB 251 would allow an insurer to offer its automobile, homeowners, earthquake, commercial and workers’ compensation insurance policyholders the option to receive renewal notices electronically. SB 251 has passed the Senate and is scheduled to be heard by the Assembly Judiciary Committee on August 13.

SB 476 would eliminate the sunset dates for the Auto Consumer Assessment, the Organized Automobile Fraud Activity Interdiction Assessment, and the Life and Annuity Consumer Protection Fund. The bill also would lower the maximum assessment for the Auto Consumer Assessment from $0.30 per vehicle to $0.25 per vehicle and would expand the application of Life and Annuity Consumer Protection Fund to include life insurance and annuity products valued at less than $15,000. SB 476 has passed the Senate and is pending before the Assembly Appropriations Committee.


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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