Bill Text: CA SB1451 | 2011-2012 | Regular Session | Amended

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

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Bill Title: Insurance.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Engrossed - Dead) 2012-06-27 - From committee with author's amendments. Read second time and amended. Re-referred to Com. on INS. [SB1451 Detail]

Download: California-2011-SB1451-Amended.html

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BILL NUMBER: SB 1451	AMENDED
	BILL TEXT

	AMENDED IN SENATE  MAY 10, 2012
	AMENDED IN SENATE  MAY 2, 2012

INTRODUCED BY   Senator Calderon

                        FEBRUARY 24, 2012

   An act to amend Sections 11162 and 11163 of, and to add Section
11163.5 to, the Insurance Code, relating to insurance.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 1451, as amended, Calderon. Insurance: fraternal benefit
societies: loans.
   Existing law governs the organization of fraternal benefit
societies, which, among other characteristics, are nonprofit,
incorporated societies, orders, or supreme lodges, without capital
stock, conducted solely for the benefit of members and their
beneficiaries, have a representative form of government, and make
provision for the payment of benefits. Existing law authorizes these
entities to provide all forms of life and disability insurance,
except as specified. Existing law makes it a felony for any officer,
director, agent, or employee of any fraternal benefit society to
borrow funds of the society, to become endorser or surety for loans
by the society to others, or to be obligor for moneys borrowed or
loaned by the society. Existing law also makes it a felony for an
officer, trustee, agent, or employee of a fraternal benefit society
to ask, receive, or consent or agree to receive anything of value for
procuring or endeavoring to procure a loan to any person from the
trust funds of, or funds belonging to, a fraternal benefit society.
   This bill would except from these prohibitions, loans made by a
fraternal benefit society to a member of the society under certain
conditions and loans made to a life licensee, as defined, appointed
by the fraternal benefit society, under specified conditions,
including that the loan is not made to an officer or director of the
society, that the loan is secured  and contains a repayment
provision  in accordance with  insurance  
the  industry  practices   custom and
practice of life insurers  for  that loan  
loans to life licensees  , and that no officer, director,
agent, or employee of the society, other than the life licensee,
receives consideration due to the making of the loan.  The bill
would provide that the loan is to enable the licensee to, among other
things, lease an office and pay for other expenses related to
selling the society's certificates. The bill would also specify that
the loan may be based on a good faith estimate of expenses or
reimbursements, but may not cover expenses incurred or estimated to
be incurred after 180 days from the date the licensee is appointed,
as specified. 
   Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.


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

  SECTION 1.  Section 11162 of the Insurance Code is amended to read:

   11162.  Except as provided in Section 11163.5, it is a felony,
punishable by imprisonment pursuant to subdivision (h) of Section
1170 of the Penal Code, for any officer, director, agent or employee
of any fraternal benefit society to, directly or indirectly, for
himself or as partner or agent of others:
   (a) Borrow any of the funds of such society.
   (b) Become endorser or surety for loans by the society to others.
   (c) In any manner be obligor for moneys borrowed or loaned by such
society.
  SEC. 2.  Section 11163 of the Insurance Code is amended to read:
   11163.  Except as provided in Section 11163.5, it is a felony,
punishable by imprisonment pursuant to subdivision (h) of Section
1170 of the Penal Code, for any officer, trustee, agent or employee
of a fraternal benefit society to ask, receive, or consent or agree
to receive anything of value for procuring or endeavoring to procure
a loan to any person from the trust funds of, or funds belonging to,
a fraternal benefit society.
  SEC. 3.  Section 11163.5 is added to the Insurance Code, to read:
   11163.5.  Sections 11162 and 11163 shall not prohibit the
following:
   (a) A loan by a fraternal benefit society to a member made under
the provisions of a certificate form available to members of the
society in the ordinary course of the society's business.
   (b) A loan to a life licensee, as defined in Section 1626,
appointed by the fraternal benefit society pursuant to Section 1704,
if all of the following apply:
   (1) The loan is not made, directly or indirectly, to an officer or
director of the society.
   (2) The loan is secured  and contains a repayment provision
 in accordance with  insurance   the 
industry  practices   custom and practice of
life insurers  for  these  loans  to life
licensees  .
   (3) No officer, director, agent, or employee of the society, other
than the life licensee, receives any consideration due to the making
of the loan.
   (4) The loan is  for the purpose of enabling 
 to enable  the licensee to lease an office, lease or
purchase office equipment or supplies, or pay for other expenses
related to selling the society's certificates  for not more
than six months  .  The amount of the loan may be based
on a good faith estimate of expenses, reimbursement of  
expenses, or a combination of these methods. The loan may not cover
expenses incurred or estimated to be incurred after 180 days from the
date the licensee is appointed pursuant to Section 1704.