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  JULY 2, 2015
	AMENDED IN SENATE  JUNE 25, 2015
	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 Sections 11401.5 and 11401.6 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 recognize that information submitted by a company pursuant to
those provisions and in the possession or control of the department
as confidential and privileged, exempt from disclosure  by the
commissioner  pursuant to the California Public Records Act, and
not subject to subpoena or discovery  from the commissioner
 or admissible  in   into  evidence in
a private civil  action.   action if obtained
from the commissioner.  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 self-funds all
or part of the benefits to 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 would be repealed.
   Existing constitutional provisions require that a statute that
limits the right of access to the meetings of public bodies or the
writings of public officials and agencies be adopted with findings
demonstrating the interest protected by the limitation and the need
for protecting that interest.
   This bill would make legislative findings to that effect.
   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 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.
   (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 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.
   (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, on or before July 1, 2017, 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) Documents, materials, or other information, including the
opinion with supporting memoranda, submitted pursuant to this section
that are in the possession or control of the Department of Insurance
and that are obtained by, created by, or disclosed to the
commissioner or any other person pursuant to this section, are
recognized by this state as being proprietary and to contain trade
secrets. Those documents, materials, or other information shall be
confidential by law and privileged, shall not be subject to
disclosure  by the commissioner  pursuant to the California
Public Records Act (Chapter 3.5 (commencing with Section 6250) of
Division 7 of Title 1 of the Government Code), and shall not be
subject to subpoena or  discovery,   discovery
from the commissioner  or admissible  in  
into  evidence, in a private civil  action. 
 action if obtained from the commissioner.  The commissioner
shall not otherwise make those documents, materials, or other
information public without the prior written consent of the
association.
   (f) 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.
  SEC. 2.  Section 11401.6 is added to the Insurance Code, to read:
   11401.6.  (a) An association that self-funds all or part of the
benefits provided under this chapter shall include the following
language, or other language approved by the commissioner, 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   minimum  of
12-point type:

   "ALL OR A PORTION OF 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 LIFE AND HEALTH
INSURANCE GUARANTEE ASSOCIATION."

   (b) 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.
  SEC. 3.  The Legislature finds and declares that Section 1 of this
act, which adds Section 11401.5 of the Insurance Code, imposes a
limitation on the public's right of access to the meetings of public
bodies or the writings of public officials and agencies within the
meaning of Section 3 of Article I of the California Constitution.
Pursuant to that constitutional provision, the Legislature makes the
following findings to demonstrate the interest protected by this
limitation and the need for protecting that interest:
   In order to protect proprietary information, it is necessary to
enact legislation that limits the public's right of access to
insurance holding company information that is provided pursuant to
Section 11401.5 of the Insurance Code.