California Senate Bill SB1212 Latest Draft

 BILL NUMBER: SB 1212AMENDED BILL TEXT AMENDED IN ASSEMBLY AUGUST 23, 2012 AMENDED IN ASSEMBLY AUGUST 6, 2012 AMENDED IN ASSEMBLY JUNE 28, 2012 AMENDED IN ASSEMBLY JUNE 21, 2012 AMENDED IN SENATE MARCH 26, 2012 INTRODUCED BY Senator Calderon FEBRUARY 22, 2012 An act to amend Sections 38.5, 663, 678, 678.1, and 10086 of the Insurance Code, relating to insurance. LEGISLATIVE COUNSEL'S DIGEST SB 1212, as amended, Calderon. Insurance: electronic transmission. Existing law authorizes the electronic transmission of any written notice required to be given or mailed to any person by an insurer relating to any insurance on risks or on operations in this state, as specified. This bill would  provide that any provision of the Insurance Code that expressly authorizes electronic transmission shall govern over any other conflicting state law. The bill would also  authorize offers of renewal of automobile, property, or commercial insurance, as well as certain liability insurance, and any offer of coverage or renewal and any disclosure of earthquake coverage, to be provided electronically  with the insured's consent  , 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 38.5 of the Insurance Code is amended to read: 38.5. (a) Any written notice required to be given or mailed to any person by an insurer relating to any insurance on risks or on operations in this state not excepted by Section 1851 from the coverage of Chapter 9 (commencing with Section 1850.4) of Part 2 of Division 1 of this code may, if not excluded by subdivision (b) or (c) of Section 1633.3 of the Civil Code, be provided by electronic transmission pursuant to Title 2.5 (commencing with Section 1633.1) of Part 2 of Division 3 of the Civil Code, if each party has agreed to conduct the transaction by electronic means pursuant to Section 1633.5 of the Civil Code. The affidavit of the person who initiated the electronic transmission, stating the facts of that transmission into an information processing system outside of the control of the sender or of any person that sent the electronic record on behalf of the sender, is prima facie evidence that the notice was transmitted and shall be sufficient proof of notice. Any notice provided by electronic transmission shall be treated as if mailed or given for the purposes of any provision of this code, except as provided by subdivision (g) of Section 1633.15 of the Civil Code. The insurance company shall maintain a system for confirming that any notice or document that is to be provided by electronic means has been sent in a manner consistent with Section 1633.15 of the Civil Code. A valid electronic signature shall be sufficient for any provision of law requiring a written signature. The insurance company shall retain a copy of the confirmation and electronic signature, when either is required, with the policy information so that they are retrievable upon request by the Department of Insurance while the policy is in force and for five years thereafter. (b) Notwithstanding any exclusionary provision described in subdivision (a),  any provision of this code that expressly authorizes electronic transmission shall govern over any other conflicting state law.   the offer of renewal required by Section 663, the offer of renewal required by Section 678, the notice of conditional renewal required by Section 678.1, and the offer of coverage or renewal or any disclosure required by Section 10086 may be provided by electronic transmission if an insurer complies with those sections and with all provisions of subdivision (c).   (c) An insurer shall not provide the documents referenced in subdivision (b) by electronic transmission unless it complies with all of the following:   (1) An insurer, or insurer's representative, has sought and acquired the affirmative consent of the named insured, and the named insured has not withdrawn that consent, prior to providing the document by electronic transmission. Affirmative consent may be sought and acquired verbally, in writing, or electronically. The insurer shall retain a record of the named insured's consent to receive the document electronically with the policy information so that it is retrievable upon request by the Department of Insurance while the policy is in force and for five years thereafter.  (2) An insurer seeking the named insured's affirmative consent to provide the document by electronic transmission shall advise the named insured that opting in to electronic transmission is voluntary, and shall provide a method such as a toll-free telephone number, e-mail address, or Internet Web site address that the named insured can use to confirm the legitimacy of an e-mail from an insurer, report a change in the named insured's e-mail address, or otherwise communicate with an insurer.   (3) An insurer that has received the affirmative consent of the named insured to electronic transmission shall obtain the e-mail address to which the named insured requests delivery of electronic transmissions. The insurer shall inform the named insured if the e-mail or electronic document permitted pursuant to this section is undeliverable when sent to the e-mail address provided by the named insured.   (4) An insurer shall maintain a process or system that can demonstrate that the e-mail or document was sent by electronic transmission to the named insured. If the e-mail is undeliverable electronically, the insurer shall inform the named insured, complying with all provisions of the applicable section of this code. The insurer shall retain information demonstrating that the document was sent by electronic transmission or mail with the policy information so that the information is retrievable upon request by the Department of Insurance while the policy is in force and for five years thereafter.   (5) An insurer shall allow a named insured to opt out of receipt by electronic transmission of the documents referenced in subdivision (b) at any time.   (d) For purposes of this section, an undeliverable e-mail message is a message which indicates there is a permanent fatal error in the delivery of the original message to the named insured.  SEC. 2. Section 663 of the Insurance Code is amended to read: 663. (a) Before policy expiration, an insurer shall deliver to or mail to the named insured, at the address shown on the policy, one of the following: (1) At least 20 days before expiration, a written or verbal offer of renewal of the policy, contingent upon payment of premium as stated in the offer. (2) At least 30 days before expiration, a written notice of nonrenewal of the policy, including the statement required by Section 666. (b) (1) An insurer that delivers a verbal offer to renew that is declined by an insured shall, at least 20 days before expiration of the policy, deliver to or mail to the named insured, at the address shown on the policy, a written confirmation of the offer and rejection. (2) An insurer that attempts to satisfy subdivision (a) with a verbal offer to renew, but is unable to contact the named insured directly at least 20 days before policy expiration, shall, at least 20 days before policy expiration, deliver to or mail to the named insured, at the address shown on the policy, a written offer to renew the policy, contingent upon payment of premium as stated in the offer. (c) In the event that an insurer fails to give the named insured either an offer of renewal or notice of nonrenewal as required by this section, the existing policy, with no change in its terms and conditions, shall remain in effect for 30 days from the date that either the offer to renew or the notice of nonrenewal is delivered or mailed to the named insured. A notice to this effect shall be provided by the insurer to the named insured with the policy or the notice of renewal or nonrenewal. Notwithstanding the failure of an insurer to comply with this section, the policy shall terminate on the effective date of any other replacement or succeeding automobile insurance policy procured by the insured, or his  or her  agent or broker, with respect to any automobile designated in both policies. (d) The insurer shall not be required to notify the named insured, or any other insured, of nonrenewal of the policy if the insurer has mailed or delivered a notice of expiration or cancellation, on or prior to the 30th day preceding expiration of the policy period. (e) Notwithstanding any provision to the contrary, the offer of renewal pursuant to this section may be provided electronically  if the insurer complies with subdivisions (b) and (c) of Section 38.5  . SEC. 3. Section 678 of the Insurance Code is amended to read: 678. (a) At least 45 days prior to policy expiration, an insurer shall deliver to the named insured or mail to the named insured at the address shown in the policy, either of the following: (1) An offer of renewal of the policy contingent upon payment of premium as stated in the offer, stating each of the following: (A) Any reduction of limits or elimination of coverage. (B) The telephone number of the insurer's representatives who handle consumer inquiries or complaints. The telephone number shall be displayed prominently in a font size consistent with the other text of the renewal offer. (2) A notice of nonrenewal of the policy. That notice shall contain each of the following: (A) The reason or reasons for the nonrenewal. (B) The telephone number of the insurer's representatives who handle consumer inquiries or complaints. The telephone number shall be displayed prominently in a font size consistent with the other text of the notice of nonrenewal. (C) A brief statement indicating that if the consumer has contacted the insurer to discuss the nonrenewal and remains unsatisfied, he or she may have the matter reviewed by the department. The statement shall include the telephone number of the unit within the department that responds to consumer inquiries and complaints. (b) In the event an insurer fails to give the named insured either an offer of renewal or notice of nonrenewal as required by this section, the existing policy, with no change in its terms and conditions, shall remain in effect for 45 days from the date that either the offer to renew or the notice of nonrenewal is delivered or mailed to the named insured. A notice to this effect shall be provided by the insurer to the named insured with the policy or the notice of renewal or nonrenewal. (c) Any policy written for a term of less than one year shall be considered as if written for a term of one year. Any policy written for a term longer than one year, or any policy with no fixed expiration date, shall be considered as if written for successive policy periods or terms of one year. (d) This section applies only to policies of insurance specified in Section 675. (e) Notwithstanding any  other law   provision  to the contrary, the offer of renewal  pursuant to this section   described in paragraph (1) of subdivision (a)  may be provided electronically  if the insurer complies with subdivisions   (b) and (c) of Section 38.5  . SEC. 4. Section 678.1 of the Insurance Code is amended to read: 678.1. (a) This section applies only to policies of insurance of commercial insurance that are subject to Sections 675.5 and 676.6. (b) A notice of nonrenewal shall be in writing and shall be delivered or mailed to the producer of record and to the named insured at the mailing address shown on the policy. Subdivision (a) of Section 1013 of the Code of Civil Procedure shall be applicable if the notice is mailed. (c) An insurer, at least 60 days, but not more than 120 days, in advance of the end of the policy period, shall give notice of nonrenewal, and the reasons for the nonrenewal, if the insurer intends not to renew the policy, or to condition renewal upon reduction of limits, elimination of coverages, increase in deductibles, or increase of more than 25 percent in the rate upon which the premium is based. (d) If an insurer fails to give timely notice required by subdivision (c), the policy of insurance shall be continued, with no change in its terms or conditions, for a period of 60 days after the insurer gives the notice. (e) With respect to policies defined in subdivision (b) of Section 676.6, in addition to the bases for conditional renewal set forth in subdivision (c), an insurer may also condition renewal upon requirements relating to the underlying policy or policies. If the requirements are not satisfied as of (1) the expiration date of the policy, or (2) 30 days after mailing or delivery of such notice, whichever is later, the conditional renewal notice shall be treated as an effective notice of nonrenewal, provided the insurer has sent written confirmation to the first named insured and the producer of record that the conditions were not met and that coverage ceased at the expiration date shown in the expiring policy. (f) A notice of nonrenewal shall not be required in any of the following situations. (1) The transfer of, or renewal of, a policy without a change in its terms or conditions or the rate on which the premium is based between insurers that are members of the same insurance group. (2) The policy has been extended for 90 days or less, if the notice required in subdivision (c) has been given prior to the extension. (3) The named insured has obtained replacement coverage or has agreed, in writing, within 60 days of the termination of the policy, to obtain that coverage. (4) The policy is for a period of no more than 60 days and the insured is notified at the time of issuance that it may not be renewed. (5) The named insured requests a change in the terms or conditions or risks covered by the policy within 60 days prior to the end of the policy period. (6) The insurer has made a written offer to the insured, within the time period specified in subdivision (c), to renew the policy under changed terms or conditions or at a changed premium rate. As used herein, "terms or conditions" includes, but is not limited to, a reduction in limits, elimination of coverages, or an increase in deductibles. (g) Notwithstanding any  other law   provision  to the contrary, the  offer of renewal or   notice of  conditional renewal  pursuant to this section   described in   subdivision (c)  may be provided electronically  if the insurer complies with subdivisions (b) and (c) of Section 38.5  . SEC. 5. Section 10086 of the Insurance Code is amended to read: 10086. (a) If an offer of earthquake coverage is accepted, the coverage shall be continued at the applicable rates and conditions for the policy term, provided the policy of residential property insurance is not terminated by the named insured or insurer. (1) At any renewal, an insurer may modify the terms and conditions of an existing policy, rider, or endorsement providing coverage against loss or damage caused by the peril of earthquake if the modified terms and conditions provide the minimum coverages required by Section 10089. (2) An insurer that modifies the terms and conditions of an existing policy, rider, or endorsement shall provide the insured with the renewal notice in a stand-alone disclosure document stating the changes in the terms and conditions of the insured's existing policy, rider, or endorsement. Proof of mailing of the disclosure document by first-class mail to a named insured at the mailing address shown on the policy or application creates a conclusive presumption that the disclosure document was provided. The disclosure shall include the following statement in 14-point boldface type: THE COVERAGE IN THE POLICY WE ARE OFFERING YOU WITH THIS RENEWAL HAS BEEN REDUCED, AND SUBSTANTIALLY DIFFERS FROM THE COVERAGES PROVIDED BY YOUR HOMEOWNERS' POLICY. INSURANCE COMPANIES ARE ALLOWED TO RENEW EARTHQUAKE INSURANCE POLICIES WITH COVERAGE THAT IS REDUCED FROM THE COVERAGE YOU PREVIOUSLY PURCHASED. YOU MAY REQUEST A SAMPLE COPY OF THIS NEW POLICY TO REVIEW PRIOR TO MAKING A DECISION TO ACCEPT THIS RENEWAL, AND WE WILL MAIL OR DELIVER IT TO YOU WITHIN 14 DAYS OF YOUR REQUEST. A REQUEST FOR THE SAMPLE COPY SHALL NOT CHANGE OR EXTEND THE POLICY EXPIRATION DATE SPECIFIED IN THE RENEWAL NOTICE. A SUMMARY OF THE CHANGES IS INCLUDED WITH THIS NOTICE. The commissioner shall approve the form of the summary at the time he or she approves the policy. The summary shall include the information contained in subdivision (a) of Section 10083, and may be included with the renewal notice in standard type. The commissioner may approve substantially similar disclosure forms if necessary to accurately disclose relevant information to the policyholder. The commissioner may also approve disclosure forms substantially similar to the disclosure statement required by Section 10083 if necessary to accurately disclose relevant information to the policyholder. (3) If the earthquake coverage is provided by a policy issued by the California Earthquake Authority, the following disclosure shall be provided in 14-point boldface type: CALIFORNIA EARTHQUAKE AUTHORITY POLICY DISCLOSURE THIS POLICY IS BEING PURCHASED FROM THE CALIFORNIA EARTHQUAKE AUTHORITY ("CEA"). THE COVERAGE IN THIS CEA POLICY SUBSTANTIALLY DIFFERS FROM THE COVERAGES PROVIDED IN YOUR HOMEOWNER'S POLICY. THE CEA IS NOT PART OF OR ASSOCIATED WITH YOUR HOMEOWNER'S INSURANCE COMPANY. IF LOSSES AS A RESULT OF AN EARTHQUAKE OR A SERIES OF EARTHQUAKES EXCEED THE AVAILABLE RESOURCES OF THE CEA, THIS POLICY IS NOT COVERED BY THE CALIFORNIA INSURANCE GUARANTY ASSOCIATION. THEREFORE, THE CALIFORNIA INSURANCE GUARANTY ASSOCIATION WILL NOT PAY YOUR CLAIMS OR PROTECT YOUR ASSETS IF THE CEA BECOMES INSOLVENT AND IS UNABLE TO MAKE PAYMENTS AS PROMISED. IN ADDITION, YOUR CEA POLICY MAY BE SUBJECT TO FUTURE SURCHARGES OF THE POLICY PREMIUM IN CERTAIN CASES WHERE AN EARTHQUAKE OR SERIES OF EARTHQUAKES HAS EXCEEDED AVAILABLE RESOURCES TO PAY CLAIMS. IN THAT CASE, THIS MEANS THAT IN ADDITION TO THE ANNUAL PREMIUM, YOU MAY BE CHARGED UP TO AN ADDITIONAL 20% OF THE PREMIUM. (b) If the offer is not accepted, the insurer or any affiliated insurer shall be required on an every other year basis to offer earthquake coverage in connection with any continuation, renewal, or reinstatement of the policy following any lapse thereof, or with respect to any other policy that extends, changes, supersedes, or replaces the policy of residential property insurance. (c) Nothing in this section shall preclude the named insured from terminating the earthquake coverage at any time. (d) Notwithstanding any  other law   provision  to the contrary, any offer of coverage or renewal or any disclosure pursuant to this section may be provided electronically  if the insurer complies with subdivisions (b) and (c)   of Section 38.5  .