California Assembly Bill AB299 Introduced / Bill

 BILL NUMBER: AB 299INTRODUCED BILL TEXT INTRODUCED BY Committee on Insurance (Coto (Chair), Garrick (Vice Chair), Blakeslee, Carter, Feuer, Hayashi, Nava, Niello, and Torres) FEBRUARY 17, 2009 An act to amend Sections 706.7, 730, 735.5, 736, 900.2, 942, 1170, 1182, 1197, and 11580.011 of, and to amend and renumber Section 10123.83 of, the Insurance Code, relating to insurance. LEGISLATIVE COUNSEL'S DIGEST AB 299, as introduced, Committee on Insurance. Insurance. Existing law provides that annually the Insurance Commissioner shall mail to every domestic insurer a report specifying the reciprocal states. This bill would provide that every 4 years the commissioner shall mail to every domestic insurer a report specifying the reciprocal states. Existing law provides that at specified times the commissioner may, and at specified times shall, examine the business and affairs of insurers. In conducting an examination the commissioner shall consider the results of specified data, reports, and criteria. This bill would add other criteria that the commissioner must consider as well as allowing the consideration of any other criteria deemed appropriate by the commissioner. Existing law provides that the commissioner may disclose the content of an examination report, preliminary examination report or results, or any matter relating thereto, to the insurance department of this or any other state or country, or to law enforcement officials of this or any other state or agency of the federal government at any time, or to the National Association of Insurance Commissioners (NAIC), as specified. This bill would add market analysis data to the information that the commissioner may disclose, as specified. Existing law provides that all examinations shall be at the expense of the insurer, organization, or person examined, except that special examinations which are in addition to regular examinations may be at the expense of the state in the discretion of the commissioner. This bill would provide that all analyses performed pursuant to the provisions discussed above authorizing examinations by the commissioner would be at the expense of the insurer, as specified. Existing law provides that all insurers doing business in this state shall have an annual audit by an independent certified public accountant. The audit shall be conducted and the audit report prepared and filed in conformity with the Annual Audited Financial Reports instructions contained in the annual statement instructions as adopted from time to time by the NAIC. Existing law authorizes the commissioner to grant a 30-day extension of the filing date upon a showing of substantial cause. This bill would provide that the annual audit, including required auditor and management reporting, be conducted in conformity with the standards adopted by the NAIC. The bill would instead authorize the commissioner to grant multiple 30-day extensions, as specified. Existing law provides that domestic incorporated insurers may invest in an account or accounts in one or more banks or savings and loan associations to the extent the account or accounts are insured by an agency or instrumentality of the federal government, as specified. This bill would add credit unions to the financial institutions in which domestic incorporated insurers may invest. Existing law provides that excess funds investments shall not be made in a loan to any one borrower, as defined, in an amount exceeding 10% of the capital stock and surplus or 1% of the admitted assets of the lending insurer, whichever amount is greater. This bill would provide that excess fund investments shall not be made in a loan or any other obligation to any one borrower or obligor, as specified. Existing law provides that every policy of automobile liability insurance, as specified, or collision coverage, as specified, shall provide coverage for replacement of a child passenger restraint system (child seat) that was in use by a child during an accident for which liability coverage under the policy is applicable due to the liability of an insured. Existing law provides that upon the filing of a claim for replacement, unless otherwise determined, an insurer shall have an obligation to ask whether a child seat was in use by a child during an accident that is covered by the policy, and must replace the child seat if it was in use by a child during the accident or reimburse the claimant for the cost of purchasing a new child seat. This bill would provide that every policy of automobile liability insurance, as specified, shall provide coverage for replacement of a child seat that was damaged in a covered accident, and that every policy that provides collision coverage, as defined, shall include a child seat within the definition of covered property, as specified. This bill would provide that upon the filing of a claim for replacement, unless otherwise determined, an insurer would have an obligation to ask whether a child seat was in use by a child during an accident or was in the vehicle at the time of a loss that is covered by the policy, and must replace the child seat or reimburse the claimant for the costs of buying a new child seat if it was in use by a child during the accident or if it sustained a covered loss while in the vehicle. This bill would also make changes to obsolete cross-references in insurance provisions. 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 706.7 of the Insurance Code is amended to read: 706.7. As used in this section, the term "reciprocal  State"   state"  means a  State   state  the laws of which prohibit an insurer domiciled therein from insuring the lives or persons of residents of, or property or operations located in, the State of California unless it then holds a valid and subsisting certificate of authority issued by the Insurance Commissioner of this  State. Such   state. This  prohibition may be subject to the exceptions herein set forth. Subject to the exceptions herein set forth, a domestic insurer shall not enter into a contract of insurance upon the life or person of a resident of, or property or operations located in, a reciprocal  State   state  unless it is authorized pursuant to the laws of that  State   state  to transact such insurance therein. The commissioner shall,  annually   every four years  , mail notice to every domestic insurer, specifying the reciprocal  States   states  . The exceptions to the provisions of this section are the following: (a) Contracts entered into where the prospective insurant is personally present in the  State   state  in which the insurer is authorized to transact insurance when he  or she  signs the application. (b) The issuance of certificates under a lawfully transacted group life or group disability policy, where the master policy was entered into in a  State   state  in which the insurer was then authorized to transact insurance. (c) The renewal or continuance in force, with or without modification, of contracts otherwise lawful and which were not originally executed in violation of this section. SEC. 2. Section 730 of the Insurance Code is amended to read: 730. (a) The commissioner, whenever he or she deems necessary or whenever he or she is requested by verified petition, signed by 25 persons interested as shareholders, policyholders, or creditors of any admitted insurer showing that the insurer is insolvent under this code, or upon information that any insurer has violated any provision of Article 7 (commencing with Section 800), shall examine the business and affairs of the insurer. The commissioner shall so examine every domestic insurer before issuing to it a certificate of authority other than a renewal. (b) The commissioner may conduct an examination under this article of any company as often as the commissioner in his or her discretion deems appropriate but shall, at a minimum, conduct an examination of every insurer admitted in this state not less frequently than once every five years. In scheduling and determining the nature, scope, and frequency of the examinations, the commissioner shall consider the results of financial statement analyses and ratios, changes in management or ownership, actuarial opinions, reports of independent certified public accountants,  market analysis results, including consumer complaint analysis, evaluation of ongoing regulatory activities, analysis of data derived from industry surveys or interrogatories,  and other criteria as set forth in the Examiner's Handbook  or in the Market Regulation Handbook  adopted by the National Association of Insurance Commissioners which are in effect when the commissioner exercises discretion under this section. (c) For purposes of completing an examination of any company under this article, the commissioner may examine or investigate any person, or the business of any person, insofar as the examination or investigation is, in the discretion of the commissioner, necessary or material to the examination of the company. (d) In lieu of an examination under this article of any foreign or alien insurer admitted in this state, the commissioner may accept an examination report on the company as prepared by the insurance department of the company's state of domicile or port-of-entry state until January 1, 1994. Thereafter, these reports may only be accepted if (1) the insurance department was at the time of the examination accredited under the National Association of Insurance Commissioner's Financial Regulation Standards and Accreditation Program, or (2) the examination is performed under the supervision of an accredited insurance department or with the participation of one or more examiners who are employed by an accredited state insurance department and who, after a review of the examination work papers and report, state under oath that the examination was performed in a manner consistent with the standards and procedures required by their insurance department. SEC. 3. Section 735.5 of the Insurance Code is amended to read: 735.5. (a) Nothing contained in this article shall be construed to limit the commissioner's authority to use and, if appropriate, to make public, any final or preliminary examination report, any examiner or company workpapers or other documents, or any other information discovered or developed during the course of any examination in the furtherance of any legal or regulatory action which the commissioner may, in his or her discretion, deem appropriate. (b) Nothing contained in this code shall prevent or be construed as prohibiting the commissioner from disclosing the content of an examination report, preliminary examination report or results,  market   analysis data,  or any matter relating thereto, to the insurance department of this or any other state or country, or to law enforcement officials of this or any other state or agency of the federal government at any time, or to the National Association of Insurance Commissioners, provided the recipient of the report or matters relating thereto agrees in writing to hold it confidential and in a manner consistent with this article, unless the prior written consent of the company to which it pertains has been obtained. (c) All working papers, recorded information, documents, and copies thereof produced by, obtained by, or disclosed to the commissioner or any other person in the course of an examination made pursuant to this article shall be given confidential treatment and are not subject to subpoena and shall not be made public by the commissioner or any other person, except to the extent provided in subdivision (a) or (b). SEC. 4. Section 736 of the Insurance Code is amended to read: 736. All examinations  and analyses performed purs   uant to Section 730  shall be at the expense of the insurer, organization  ,  or person examined, except that special examinations which are in addition to regular examinations may be at the expense of the state in the discretion of the commissioner. The costs and expenses of all  such   of those  examinations shall be paid from the support appropriation for the Department of Insurance current at the time of the examination but shall be charged to and collected from the insurer, organization or person examined. If any  such  insurer, organization, or person refuses to pay  such   those  costs and expenses promptly when due, the commissioner may refuse to issue its certificate of authority, certificate of exemption  ,  or license, as the case may be, and may revoke any existing certificate of authority, certificate of exemption  ,  or license. SEC. 5. Section 900.2 of the Insurance Code is amended to read: 900.2. (a) All insurers doing business in this state shall have an annual audit by an independent certified public accountant. The audit  , including required auditor and management reporting,  shall be conducted and the audit report prepared and filed in conformity with the  Annual Audited Financial Reports instructions contained in the annual statement instructions as adopted from time to time   standards adopted  by the National Association of Insurance Commissioners. (b) The commissioner may grant  a  30-day  extension   extensions  of the filing date upon a showing by the insurer and its independent certified public accountant of the reasons for requesting  that   each  extension and the determination by the commissioner of substantial cause for an extension. The request for an extension shall be submitted in writing not less than  20   10  days prior to the due date in sufficient detail to permit the commissioner to make an informed decision on the requested extension. (c) The commissioner may promulgate regulations to further the purposes of this section. SEC. 6. Section 942 of the Insurance Code is amended to read: 942. The commissioner shall permit a deposit of those securities in the State Treasury, subject to the provisions of  Sections 11715 and 11716   Section 11691  , if applicable. The securities deposited with the  State  Treasurer shall be maintained in electronic book entry or certificate form as security for policyholders or policyholders and creditors of the insurer to whom they respectively belong. The state is responsible for the custody and safe return of any money or securities so deposited. The  State Treasurer shall deposit  any such   these  moneys under the provisions of Sections 16370 and 16375 of the Government Code. SEC. 7. Section 1170 of the Insurance Code is amended to read: 1170. Domestic incorporated insurers may invest their assets in the purchase of any of the securities specified in this article, or in loans upon such securities, if  such purchase or loan conforms   those purchases or loans conform  to all the following conditions: (a) Such securities are not in default as to principal or interest at the date of investment. (b) In the case of a purchase, the purchase price does not exceed the market value of the securities at the date of investment. (c) In the case of a loan not governed by the provisions of  section 1176   Section 1194.81  , the amount loaned does not exceed eighty-five per cent of such market value at the date of investment. SEC. 8. Section 1182 of the Insurance Code is amended to read: 1182. Domestic incorporated insurers may invest in an account or accounts in one or more banks  or   ,  savings and loan associations , or credit unions  to the extent the account or accounts are insured by an agency or instrumentality of the federal government. As used in this section, an account may include a certificate of deposit. SEC. 9. Section 1197 of the Insurance Code is amended to read: 1197. Excess funds investments shall not be made in a loan to any one borrower  or obligor  , including all affiliates which shall be treated as one borrower  or obligor  , in an amount exceeding 10 percent of the capital stock and surplus or 1 percent of the admitted assets of the lending insurer, whichever amount is greater. SEC. 10. Section 10123.83 of the Insurance Code, as added by Section 2 of Chapter 839 of the Statutes of 1998, is amended and renumbered to read:  10123.83.   10123.835.  (a) Every individual or group policy of disability insurance that covers hospital, medical, or surgical benefits that is issued, amended, or renewed on or after January 1, 1999, shall be deemed to provide coverage for the screening and diagnosis of prostate cancer, including, but not limited to, prostate-specific antigen testing and digital rectal examinations, when medically necessary and consistent with good professional practice. (b) Nothing in this section shall be construed to require an individual or group policy to cover the surgical and other procedures known as radical prostatectomy, external beam radiation therapy, radiation seed implants, and combined hormonal therapy, or to prevent application of deductible or copayment provisions contained in the policy, nor shall this section be construed to require that coverage under an individual or group policy be extended to any other procedures. (c) This section shall not apply to specified accident, specified disease, hospital indemnity, Medicare supplement, or long-term care health insurance policies. SEC. 11. Section 11580.011 of the Insurance Code is amended to read: 11580.011. (a) As used in this section, "child passenger restraint system" means a system as described in Section 27360 of the Vehicle Code. (b) Every policy of automobile liability insurance, as described in Section 16054 of the Vehicle Code, shall provide liability coverage for replacement of a child passenger restraint system that was  damaged or was  in use by a child during an accident for which liability coverage under the policy is applicable due to the liability of an insured. (c) Every policy of automobile liability insurance that provides uninsured motorist property damage coverage, as described in paragraph (2) of subdivision (a) of Section 11580.26, shall provide coverage for replacement of a child passenger restraint system that was  damaged or was  in use by a child during an accident for which uninsured motorist property damage coverage under the policy is applicable due to the liability of an uninsured motorist. (d) Every policy that provides automobile collision coverage  or   , as described in Section 660, or every policy that provides  automobile physical damage coverage, as described in Section 660, shall include a child passenger restraint system within the definition of covered property, if the child passenger restraint system was in use by a child during an accident  or, if the child passenger restraint system was in the vehicle and it sustained a loss covered by the policy  . (e) Upon the filing of a claim pursuant to a policy described in subdivision (b), (c), or (d), unless otherwise determined, an insurer shall have an obligation to ask whether a child passenger restraint system was in use by a child during an accident  or was in the vehicle at the time of a loss  that is covered by the policy, and an obligation to replace the child passenger restraint system  or reimburse the claimant for the cost of purchasing a new passenger   restraint system  in accordance with this section if it was in use by a child during the accident or  reimburse the claimant for the cost of purchasing a new child passenger restraint system   if it sustained a covered loss while in the vehicle  . (f) An insured, upon acquiring a replacement child passenger restraint system, may surrender the child passenger restraint system that was replaced to the nearest office of the Department of the California Highway Patrol.