California Assembly Bill AB2295 Introduced / Bill

 BILL NUMBER: AB 2295INTRODUCED BILL TEXT INTRODUCED BY Assembly Member De La Torre FEBRUARY 18, 2010 An act to amend Sections 815 and 816 of the Insurance Code, relating to insurance. LEGISLATIVE COUNSEL'S DIGEST AB 2295, as introduced, De La Torre. Insurance. Existing law provides for the regulation of insurers by the Department of Insurance and prohibits an insurer from paying a person given discretion as to the settlement of claims under an insurance policy a compensation that is contingent on the amount of the settlement of those claims, except as otherwise provided. This bill would make technical, nonsubstantive changes to those provisions. 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 815 of the Insurance Code is amended to read: 815.  No   An  insurer shall  not  pay  any   a  representative given discretion as to the settlement or adjustment of claims under life or disability policies, whether in direct negotiation with the claimant or in supervision of the person negotiating, a compensation  which   that is  in any way  is  contingent upon the amount of settlement of  such   those  claims. SEC. 2. Section 816 of the Insurance Code is amended to read: 816.  No   An  insurer shall  not  pay  any   a  person given discretion as to settlement of claims under  any   a  policy of insurance, or surety bond, whether in direct negotiation with the claimant or in supervision of the person negotiating, a compensation  which   that is  in any way  is  contingent upon the amount of settlement of  such   those  claims, except as  in this section  otherwise expressly provided  in this section  . This section shall apply equally to a single claim, a number of specified claims, an aggregate of claims during a specified period of time or an aggregate of claims under  any   a  contract, agreement  ,  or arrangement. This section shall not affect the interpretation or provisions of Section 815. The word "person" as used in this section includes, but is not limited to: employees, agents, brokers, representatives, general agents, managing general agents, surplus line brokers, insureds, coinsureds, adjusters  ,  and independent contractors  ,  but does not include attorneys in fact or other exclusive managers of an insurer. This section does not apply to: (a) Compensation of a producer, managing general agent, surplus line broker  ,  or general agent under  any   an  arrangement, agreement  ,  or contract whereby the producer or general agent is not granted discretion in the actual adjustment or settlement of any or all individual claims settled for an amount exceeding five hundred dollars ($500). (b) A producer, managing general agent, surplus line broker  ,  or general agent who is compensated by a contingent commission arrangement based wholly or partly on underwriting results, unless the arrangement guarantees an agreed return to the insurer  which   that  may exceed the underwriting profit actually earned by the insurer on business written through the producer, managing general agent, surplus line broker  ,  or general agent. (c) Contracts of reinsurance between insurers. (d) An arrangement, schedule of charges, agreement  ,  or contract, express or implied, for the adjustment of claims under which the compensation for the services of the person making the adjustment (exclusive of reimbursement for actual expenses) consistently increases, in reasonable brackets, as the amount paid in settlement of a claim increases. An insurer  which   that  in any other jurisdiction is making payments  which   that  would be in violation of this section if made in respect to insurance business done in this state shall not be admitted to this state until it presents evidence satisfactory to the commissioner that it will not make  such   those  payments in this state and that it will within one year after admission to this state cease to make  any such   those  payments in any other jurisdiction and, within the same period, terminate any contract or arrangement under which  such   those  payments are to be paid. Failure to so cease  such   those  payments and to so terminate  such   those  contracts and arrangements within  such period of one year   that one-year period  shall constitute grounds for revocation of the insurer's certificate of authority.