Bill Text: CA AB1053 | 2013-2014 | Regular Session | Introduced

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Sacramento Metropolitan Fire District: return of improperly collected money.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Passed) 2014-05-29 - Chaptered by Secretary of State - Chapter 17, Statutes of 2014. [AB1053 Detail]

Download: California-2013-AB1053-Introduced.html

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BILL NUMBER: AB 1053	INTRODUCED
	BILL TEXT


INTRODUCED BY   Assembly Member Cooley

                        FEBRUARY 22, 2013

   An act to amend Section 1764.1 of the Insurance Code, relating to
insurance.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 1053, as introduced, Cooley. Insurance: nonadmitted insurer:
surplus line brokers: disclosure.
   (1) Existing law requires every nonadmitted insurer and every
surplus line broker, as applicable, to obtain, at the time of
accepting an application for an insurance policy, other than a
renewal of that policy, the signature of the applicant on a
disclosure, as specified. An industrial insured is not required to
receive the disclosure except on confirmation of insurance. An
industrial insured is defined as, among other things, having 25 or
more employees on average during the prior 12 months and having
aggregate annual premiums for insurance for all risks other than
workers' compensation and health coverage totaling no less than
$25,000. A violation of this requirement is a crime punishable by
imprisonment in the state prison, or in a county jail for not
exceeding one year or by a fine of not more than $10,000, or by both.

   This bill would change the definition of industrial insured by
increasing the industrial insured's aggregate annual premiums for
insurance for all risks other than workers' compensation and health
coverage to no less than $50,000. Because this bill would change the
definition of a crime, it is a state-mandated local program.
   (2) The California Constitution requires the state to reimburse
local agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
   This bill would provide that no reimbursement is required by this
act for a specified reason.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 1764.1 of the Insurance Code is amended to
read:
   1764.1.  (a) (1) Every nonadmitted insurer, in the case of
insurance to be purchased by a home state insured pursuant to Section
1760, and surplus line broker, in the case of any insurance with a
nonadmitted carrier for a home state insured to be transacted by the
surplus line broker, shall be responsible to ensure that, at the time
of accepting an application for an insurance policy, other than a
renewal of that policy, issued by a nonadmitted insurer, the
signature of the applicant on the disclosure statement set forth in
subdivision (b) is obtained. In fulfillment of this responsibility,
the nonadmitted insurer and the surplus line broker may rely, if it
is reasonable under all the circumstances to do so, on the disclosure
statement received from a licensee involved in the transaction as
prima facie evidence that the disclosure statement and appropriate
signature from the applicant have been obtained. The surplus line
broker shall maintain a copy of the signed disclosure statement in
his or her records for a period of at least five years. These records
shall be made available to the commissioner and the insured upon
request. This disclosure shall be signed by the applicant, and is not
subject to a limited power of attorney agreement between the
applicant and an agent or broker or a surplus line broker. The
disclosure statement shall be in boldface 16-point type on a
freestanding document. In addition, every policy issued by a
nonadmitted insurer and every certificate evidencing the placement of
insurance shall contain, or have affixed to it by the insurer or
surplus line broker, the disclosure statement set forth in
subdivision (b) in boldface 16-point type on the front page of the
policy.
   (2) In a case in which the applicant has not received and
completed the signed disclosure form required by this section, he or
she may cancel the insurance so placed. The cancellation shall be on
a pro rata basis as to premium, and the applicant shall be entitled
to the return of any broker's fees charged for the placement.
   (b) The following notice shall be provided to home state insureds
and home state insured applicants for insurance as provided by
subdivision (a), and shall be printed in English and in the language
principally used by the surplus line broker and nonadmitted insurer
to advertise, solicit, or negotiate the sale and purchase of surplus
line insurance. The surplus line broker and nonadmitted insurer shall
use the appropriate bracketed language for application and issued
policy disclosures:
      "NOTICE:

   1. THE INSURANCE POLICY THAT YOU  HAVE PURCHASED] ARE APPLYING
TO PURCHASE] IS BEING ISSUED BY AN INSURER THAT IS NOT LICENSED BY
THE STATE OF CALIFORNIA. THESE COMPANIES ARE CALLED "NONADMITTED" OR
"SURPLUS LINE" INSURERS.
   2. THE INSURER IS NOT SUBJECT TO THE FINANCIAL SOLVENCY REGULATION
AND ENFORCEMENT THAT APPLY TO CALIFORNIA LICENSED INSURERS.
   3. THE INSURER DOES NOT PARTICIPATE IN ANY OF THE INSURANCE
GUARANTEE FUNDS CREATED BY CALIFORNIA LAW. THEREFORE, THESE FUNDS
WILL NOT PAY YOUR CLAIMS OR PROTECT YOUR ASSETS IF THE INSURER
BECOMES INSOLVENT AND IS UNABLE TO MAKE PAYMENTS AS PROMISED.
   4. THE INSURER SHOULD BE LICENSED EITHER AS A FOREIGN INSURER IN
ANOTHER STATE IN THE UNITED STATES OR AS A NON-UNITED STATES (ALIEN)
INSURER. YOU SHOULD ASK QUESTIONS OF YOUR INSURANCE AGENT, BROKER, OR
"SURPLUS LINE" BROKER OR CONTACT THE CALIFORNIA DEPARTMENT OF
INSURANCE AT THE FOLLOWING TOLL-FREE TELEPHONE NUMBER ____. ASK
WHETHER OR NOT THE INSURER IS LICENSED AS A FOREIGN OR NON-UNITED
STATES (ALIEN) INSURER AND FOR ADDITIONAL INFORMATION ABOUT THE
INSURER. YOU MAY ALSO CONTACT THE NAIC'S INTERNET WEB SITE AT
WWW.NAIC.ORG.
   5. FOREIGN INSURERS SHOULD BE LICENSED BY A STATE IN THE UNITED
STATES AND YOU MAY CONTACT THAT STATE'S DEPARTMENT OF INSURANCE TO
OBTAIN MORE INFORMATION ABOUT THAT INSURER.
   6. FOR NON-UNITED STATES (ALIEN) INSURERS, THE INSURER SHOULD BE
LICENSED BY A COUNTRY OUTSIDE OF THE UNITED STATES AND SHOULD BE ON
THE NAIC'S INTERNATIONAL INSURERS DEPARTMENT (IID) LISTING OF
APPROVED NONADMITTED NON-UNITED STATES INSURERS. ASK YOUR AGENT,
BROKER, OR "SURPLUS LINE" BROKER TO OBTAIN MORE INFORMATION ABOUT
THAT INSURER.
   7. CALIFORNIA MAINTAINS A LIST OF APPROVED SURPLUS LINE INSURERS.
ASK YOUR AGENT OR BROKER IF THE INSURER IS ON THAT LIST, OR VIEW THAT
LIST AT THE INTERNET WEB SITE OF THE CALIFORNIA DEPARTMENT OF
INSURANCE: WWW.INSURANCE.CA.GOV.
   8. IF YOU, AS THE APPLICANT, REQUIRED THAT THE INSURANCE POLICY
YOU HAVE PURCHASED BE BOUND IMMEDIATELY, EITHER BECAUSE EXISTING
COVERAGE WAS GOING TO LAPSE WITHIN TWO BUSINESS DAYS OR BECAUSE YOU
WERE REQUIRED TO HAVE COVERAGE WITHIN TWO BUSINESS DAYS, AND YOU DID
NOT RECEIVE THIS DISCLOSURE FORM AND A REQUEST FOR YOUR SIGNATURE
UNTIL AFTER COVERAGE BECAME EFFECTIVE, YOU HAVE THE RIGHT TO CANCEL
THIS POLICY WITHIN FIVE DAYS OF RECEIVING THIS DISCLOSURE. IF YOU
CANCEL COVERAGE, THE PREMIUM WILL BE PRORATED AND ANY BROKER'S FEE
CHARGED FOR THIS INSURANCE WILL BE RETURNED TO YOU."

   (c) When a contract is issued to an industrial insured, neither
the nonadmitted insurer nor the surplus line broker is required to
provide the notice required in this section except on the
confirmation of insurance, the certificate of placement, or the
policy, whichever is first provided to the insured, nor is the
insurer or surplus line broker required to obtain the insured's
signature. The producer shall ensure that the notice affixed to the
confirmation of insurance, certificate of placement, or the policy is
provided to the insured. The producer shall insert the current
toll-free telephone number of the Department of Insurance as provided
in paragraph 4 of the notice.
   (1) An industrial insured is an insured that does both of the
following:
   (A) Employs at least 25 employees on average during the prior 12
months.
   (B) Has aggregate annual premiums for insurance for all risks
other than workers' compensation and health coverage totaling no less
than  twenty-five thousand dollars ($25,000)  
fifty thousand dollars ($50,000)  or obtains insurance through
the services of a full-time employee acting as an insurance manager
or a continuously retained insurance consultant. A "continuously
retained insurance consultant" does not include  : (i) an
agent or broker through whom the insurance is being placed, (ii) a
subagent or subproducer involved in the transaction, or (iii) an
agent or broker that is a business organization employing or
contracting with a person mentioned in clauses (i) and (ii).
  any of the following:  
   (i) An agent or broker through whom the insurance is being placed.
 
   (ii) A subagent or subproducer involved in the transaction. 

   (iii) An agent or broker that is a business organization employing
or contracting with a person mentioned in clauses (i) and (ii).

   (2) The surplus line broker shall be responsible for ensuring that
the applicant is an industrial insured. A surplus line broker who
reasonably relies on information provided in good faith by the
applicant, whether directly or through the producer, shall be deemed
to be in compliance with this requirement.
   (d) For purposes of compliance with the requirement of subdivision
(a) that the signature of the applicant be obtained, the following
shall apply:
   (1) If the insurance transaction is not conducted at an in-person,
face-to-face meeting, the applicant's signature on the disclosure
form may be transmitted by the applicant to the agent or broker via
facsimile or comparable electronic transmittal.
   (2) In the case of commercial lines coverage, or personal
insurance coverage subject to Section 675 and any umbrella coverage
associated therewith, where an applicant requires that insurance
coverage be bound immediately, either because existing coverage will
lapse within two business days of the time the insurance is bound or
because the applicant is required to have coverage in place within
two business days, and the applicant cannot meet in person with the
agent or broker to sign the disclosure form, the agent or broker may
obtain the signature of the applicant within five days of binding
coverage, provided that the applicant may cancel the insurance so
placed within five days of receiving the disclosure form from the
agent or broker. The cancellation shall be on a pro rata basis, and
the applicant shall be entitled to the rescission or return of any
broker's fees charged for the placement. When a policy is canceled,
the broker shall inform the applicant that the broker's fee must be
returned and that the premium must be prorated.
   (e) Notwithstanding subdivision (a), this section shall not apply
to insurance issued or delivered in this state by a nonadmitted
Mexican insurer by and through a surplus line broker affording
coverage exclusively in the Republic of Mexico on property located
temporarily or permanently in, or operations conducted temporarily or
permanently within, the Republic of Mexico.
  SEC. 2.  No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of the
Government Code, or changes the definition of a crime within the
meaning of Section 6 of Article XIII B of the California
Constitution.