Bill Text: CA AB1072 | 2015-2016 | Regular Session | Amended

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

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Bill Title: Insurance: firefighters' or police officers' benefit and relief associations.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Passed) 2015-10-05 - Chaptered by Secretary of State - Chapter 503, Statutes of 2015. [AB1072 Detail]

Download: California-2015-AB1072-Amended.html

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BILL NUMBER: AB 1072	AMENDED
	BILL TEXT

	AMENDED IN SENATE  JUNE 10, 2015
	AMENDED IN ASSEMBLY  APRIL 28, 2015
	AMENDED IN ASSEMBLY  APRIL 13, 2015

INTRODUCED BY   Assembly Member Daly

                        FEBRUARY 27, 2015

   An act to add and repeal Section 11401.5 of the Insurance Code,
relating to insurance.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 1072, as amended, Daly. Insurance: firefighters' or police
officers' benefit and relief associations.
   Existing law generally provides for the regulation of insurers by
the Department of Insurance pursuant to laws set forth in the
Insurance Code. Existing law authorizes the Insurance Commissioner to
make certain examinations, investigations, and prosecutions and,
upon making a determination of the existence of certain conduct,
conditions, or grounds, to issue orders reasonably necessary to
correct, eliminate, or remedy the conduct, conditions, or grounds.
   Existing law exempts from the requirements set forth in the
Insurance Code firemen's, policemen's, and peace officers' benefit
and relief associations that comply with specified criteria,
including, among other things, a requirement that the membership
consist solely of peace officers, members of police or fire
departments, and emergency medical personnel employed by fire
departments, as specified. Existing law prohibits an association from
operating or doing business in the state without a certificate of
authority.
   This bill would require every association that holds a certificate
of authority  and that issues long-term disability or long-term
care policies or contracts, as specified,  to submit to the
commissioner the opinion, as specified, of a qualified actuary as to
whether the reserves and related actuarial items that support the
policies or contracts issued are based on assumptions that satisfy
contractual provisions, are consistent with prior reported amounts,
and are based on specified actuarial standards and procedures. The
bill would also require an association seeking a certificate of
authority to file an opinion that meets specified requirements and
that establishes that it would have adequate resources to provide
benefits, as specified, as required to satisfy its proposed
contractual obligations. The bill would require the commissioner to
notify the association of the deficiencies in the filing if the
association fails to provide an opinion and supporting memoranda to
the commissioner that meets the requirements of the bill, as
specified.  The bill would require an association that receives
that notice to, commencing 30 days from the notification date,
include specified disclosure language in all contracts that are not
regulated by the department and in certificates evidencing coverage
under those contracts.  The bill would also require the
commissioner, if he or she determines that the laws governing these
associations are inadequate to protect the interests of the members
of the associations, to develop and deliver recommendations to the
Assembly Committee on Insurance and the Senate Committee on Insurance
regarding changes in the law that would better protect the interests
of members of the associations. The provisions of the bill would
remain in effect only until December 31, 2018, and as of that date
 are   would be  repealed.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.


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

  SECTION 1.  Section 11401.5 is added to the Insurance Code, to
read:
   11401.5.  (a) (1) Each association that holds a certificate of
authority pursuant to this chapter  and that issues long-term
disability or long-term care policies or contracts  shall submit
to the commissioner the opinion of a qualified actuary as to whether
the reserves and related actuarial items that support the policies
or contracts issued pursuant to this chapter, including policies and
contracts issued by entities established by these associations that
provide benefits described in this chapter, are based on assumptions
that satisfy contractual provisions, are consistent with prior
reported amounts, and are based on actuarial standards and procedures
established by the American Academy of Actuaries and the Actuarial
Standards Board. An association that holds a certificate of authority
pursuant to this chapter shall file its  initial 
opinion no later than July 1, 2016.  The opinion shall have been
completed no earlier than December 31, 2013.  
   (2) An association is considered to have issued a long-term care
or disability policy or contract if it self-funds all or part of the
resulting obligation. An association that markets long-term policies
or contracts issued by an insurer that is admitted by the department
to offer insurance products in the state is exempt from this
reporting requirement.  
   (2) 
    (3)  An association seeking a certificate of authority
pursuant to this chapter shall file an opinion, to the extent
feasible, that establishes that it would have adequate resources to
provide benefits described in this chapter as required to satisfy its
proposed contractual obligations.
   (b) The opinion required by subdivision (a) shall include an
opinion with supporting memoranda consistent with the same qualified
actuary as to whether the reserves and related actuarial items held
in support of the policies and contracts, when considered in light of
the assets held by the association with respect to the reserves and
related actuarial items, including, but not limited to, the
investment earnings on the assets and the considerations anticipated
to be received and retained under the policies and contracts, and
shall make adequate provision for the association's obligations under
the policies and contracts, including, but not limited to, the
benefits under any expenses associated with the policies and
contracts.
   (c) The opinion required by subdivision (b) shall be governed by
the following provisions:
   (1) It shall include a memorandum, in form and substance
consistent with actuarial standards and procedures 
established by   acceptable to  the American
Academy of Actuaries and the Actuarial Standards Board, in support of
the opinion.
   (2) If the association fails to provide an opinion and supporting
memoranda to the commissioner that meets the requirements of this
section, the commissioner shall notify the association of the
deficiencies in the filing, and shall make a specific request that
identifies the issues that should be addressed in an amended filing.

   (3) (A) An association that receives a notification from the
commissioner pursuant to paragraph (2) shall not indicate in any form
of communication that it is operating under the auspices of, or was
established under, the authority of any provision of this code, the
commissioner, or the department, and shall, commencing 30 days from
the date of the notification from the commissioner, include the
following language in all contracts that are not regulated by the
department, and in certificates evidencing coverage under those
contracts, in capital letters and in a minium of 12-point type: 


   "THE BENEFITS PROVIDED BY THIS CONTRACT ARE NOT SUBJECT TO
REGULATION BY THE CALIFORNIA DEPARTMENT OF INSURANCE, AND THE
CONTRACT IS NOT GUARANTEED BY THE CALIFORNIA INSURANCE GUARANTEE
ASSOCIATION." 

   (B) The requirements of this paragraph shall continue until the
association satisfies the requirements of this section. 
   (d) If the commissioner determines, after a review of the filings
from the associations, that the laws governing these associations are
inadequate to protect the interests of the members of the
associations, he or she shall develop and deliver recommendations to
the Assembly Committee on Insurance and the Senate Committee on
Insurance regarding changes in the law that would better protect the
interests of members of the associations.
   (e) This section shall remain in effect only until December 31,
2018, and as of that date is repealed, unless a later enacted
statute, that is enacted before December 31, 2018, deletes or extends
that date.