California-2015-AB1072-Chaptered

BILL NUMBER: AB 1072	CHAPTERED
	BILL TEXT

	CHAPTER  503
	FILED WITH SECRETARY OF STATE  OCTOBER 5, 2015
	APPROVED BY GOVERNOR  OCTOBER 5, 2015
	PASSED THE SENATE  SEPTEMBER 1, 2015
	PASSED THE ASSEMBLY  SEPTEMBER 2, 2015
	AMENDED IN SENATE  AUGUST 19, 2015
	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, 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 expected to be adequate to satisfy contractual
provisions, are based on reasonable assumptions, and are based on
specified actuarial standards. 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 proprietary and containing trade secrets. The bill would require
that information to be 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 into evidence in a private civil 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 necessary to 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.


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 expected to be
adequate to satisfy contractual provisions, are based on reasonable
assumptions, and are based on actuarial standards of practice
published 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
supporting memoranda from 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 and any
administrative and operating expenses associated with the policies
and contracts.
   (c) The opinion required by subdivision (a) shall be governed by
the following provisions:
   (1) It shall include supporting memoranda consistent with
actuarial standards of practice published by the American Academy of
Actuaries and the Actuarial Standards Board.
   (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.
The requests shall be consistent with actuarial standards of practice
published by the American Academy of Actuaries and the Actuarial
Standards Board.
   (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
necessary to 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 from the commissioner or admissible into
evidence, in a private civil 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 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.