California Assembly Bill AB2884 Amended / Bill

 BILL NUMBER: AB 2884AMENDED BILL TEXT AMENDED IN ASSEMBLY MARCH 30, 2016 INTRODUCED BY Committee on Insurance (Assembly Members Daly (Chair), Bigelow, Calderon,  Chu,  Cooley,  Cooper,  Dababneh, Frazier, Gatto, Gonzalez, and Rodriguez)) FEBRUARY 25, 2016 An act to amend  Section 1726 of   Sections 660, 789, 1669, 1681, 1726, 1749.6, 1807.5, 10168.6, 10234.6, 10234.95, 11520.5, and 11691 of, and to repeal and add Section 1682 of,  the Insurance Code, relating to insurance. LEGISLATIVE COUNSEL'S DIGEST AB 2884, as amended, Committee on Insurance. Insurance: licensees: Internet: disclosures.  (1) Existing law defines "policy," to mean, among others, an automobile liability, automobile physical damage, or automobile collision policy insuring a single individual or individuals residing in the same household, as the named insured, and under which the insured vehicles designated under are of specified types including a motor vehicle, as specified, and any other 4-wheel motor vehicle with a load capacity of 1,500 pounds or less, for the purposes of various requirements for a notice of cancellation of a policy. Existing law further provides that the requirements for a notice of cancellation of a policy do not apply to any policy issued under an automobile assigned risk plan, any policy insuring more than 4 vehicles, and to any policy covering, among other things, garage, automobile sales agency, or public parking place operation hazards.   This bill would, among other things, remove the exemption for any policy insuring more than 4 automobiles.   (2) Existing law prohibits a person from soliciting, negotiating, or effecting contracts of insurance, or acting in the capacity of various types of insurance agents, unless the person holds a valid license from the Insurance Commissioner authorizing the person to act in that capacity. Existing law authorizes the commissioner to deny an application for a license for various reasons including if the applicant committed a felony or a misdemeanor as shown by a plea of guilty or nolo contendere. Existing law also requires an applicant to pass the qualifying examination for the license prior to receiving a permanent license and allows the applicant to retake the qualifying examination subject to reasonable time limits limiting when a person who has failed the examination may retake.   This bill would add that the commissioner may deny an application for a license if the applicant has been convicted of a felony or misdemeanor, as specified. The bill would also prohibit a person who has failed any license qualification examination 10 times within the previous 12-month period from enrolling in any further license qualification examinations for a period of 12 months.   Existing   (3)     Existing  law requires a person who is licensed in this state as an insurance agent or broker, advertises insurance on the Internet, and transacts insurance in this state, to identify certain information on the Internet, regardless of whether the insurance agent or broker maintains his or her Internet presence or if the presence is maintained on his or her behalf. The required information includes, but is not limited to, his or her name as it appears on his or her license, and any fictitious name approved by the  Insurance Commissioner.   commissioner.  This bill would instead require that the person provide his or her name as filed with the commissioner that has not been disapproved pursuant to the provisions regarding the use of fictitious names.  (4) Existing law automatically terminates the license of a person failing to meet various requirements and who has not been granted an extension of time within which to comply by the commissioner until the person demonstrates that he or she has complied with all of the requirements, as specified.   This bill would add the failure by an insurance adjuster and a public insurance adjuster to complete continuing education requirements to the list of requirements for which the failure to complete will result in an automatic termination of the license.   (5) Existing law prohibits an insurer from executing an undertaking of bail except by and through a person holding a bail license, as provided. Existing law also prohibits the commissioner from suspending or revoking any license, issued as specified, without first granting a hearing, as specified.   This bill would prohibit the commissioner from denying a license to an applicant without first granting a hearing, as specified.   (6) Existing law provides that for the purpose of determining certain benefits, that in the case of annuity contracts under which an election may be made to have annuity payments commence at optional maturity dates, the maturity date shall be deemed to be the latest date for which election is permitted by the contract.   This bill would add that in the case of annuity contracts under which the fixed maturity date is later than the later of the anniversary of the contract next following the annuitant's 70th birthday or the 10th anniversary of the contract, the maturity date shall be deemed to be the later of the anniversary of the contract next following the annuitant's 70th birthday or the 10th anniversary of the contract.   (7) Existing law requires the commissioner to annually prepare a consumer rate guide for long-term care insurance and to include specified information, including a history of the rates of all policies issued in California for the current year and for the 4 preceding years.   This bill would require the history of the rates of all policies issued in California to be listed for the 9 preceding years.   (8) Existing law requires an insurer, in order to be admitted in this state to transact specified workers' compensation transactions, among other things, to deposit cash instruments or approved interest-bearing securities or approved stocks readily convertible into cash, investment certificates, or share accounts issued by a savings and loan association doing business in this state and insured by the Federal Deposit Insurance Corporation, certificates of deposit, or savings deposits in a bank licensed to do business in this state that is either domiciled in and with its principal place of business in this state or that is a national banking association with a trust office located in this state.   This bill would instead include a bank licensed to do business in this state, or a trust company, licensed to do business and located in this state that is either domiciled in and with its principal place of business in this state or that is a national banking association with a trust office located in this state.  Vote: majority. Appropriation: no. Fiscal committee:  no   yes  . State-mandated local program: no. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:  SECTION 1.   Section 660 of the   Insurance Code   is amended to read:  660. As used in this chapter: (a) "Policy" means an automobile liability, automobile physical damage, or automobile collision policy, or any combination thereof, delivered or issued for delivery in this state, insuring a single individual or individuals residing in the same household, as named insured, and under which the insured vehicles therein designated are of the following types only: (1) A motor vehicle of the private passenger or station wagon type that is not used as a public or livery conveyance for passengers, nor rented to others; or (2) Any other four-wheel motor vehicle with a load capacity of 1,500 pounds or less; provided, however, that this chapter shall not apply  (i) to any   to either of the following:   (A)     Any  policy issued under an automobile assigned risk  plan, or (ii) to any policy insuring more than four automobiles, or (iii) to any   plan.   (B)     Any  policy covering garage, automobile sales agency, repair shop, service station, or public parking place operation  hazards; or   haz   ards.  (3) A motorcycle. (b) "Automobile liability coverage" includes only coverage of bodily injury and property damage liability, medical payments, and uninsured motorists coverage. (c) "Automobile physical damage coverage" includes all coverage of loss or damage to an automobile insured under the policy except loss or damage resulting from collision or upset. (d) "Automobile collision coverage" includes all coverage of loss or damage to an automobile insured under the policy resulting from collision or upset. (e) "Renewal" or "to renew" means to continue coverage with either the insurer which issued the policy or an affiliated insurer, as defined in Section 1215, for an additional policy period upon expiration of the current policy period of a policy, provided that if coverage is continued with an affiliated insurer, it shall be the same or broader coverage as provided by the present insurer, and the insured shall be notified in writing at least 20 days prior to expiration of the current policy period of all of the  following: (1) that   following:   (1)     That  the insurer has determined that it will not offer renewal of the policy with the present  insurer, (2) That   insurer.   (2)     That  it is offering replacement in an affiliated  insurer, and (3) That   insurer.   (3)     That  the insured may obtain in writing the reasons for the change in insurers if he or she requests in writing not later than one month following the expiration of the policy period the reason or reasons for the change in insurers. Any policy with a policy period or term of six months or less, whether or not made continuous for successive terms upon the payment of additional premiums, shall for the purpose of this chapter be considered as if written for a policy period or term of six months. Any policy written for a term longer than one year, or any policy with no fixed expiration date, shall for the purpose of this chapter, be considered as if written for successive policy periods or terms of one year. (f) "Nonpayment of premium" means failure of the named insured to discharge when due any of his obligations in connection with the payment of premiums on a policy, or any installment of such premium, whether the premium is payable directly to the insurer or its agent or indirectly under any premium finance plan or extension of credit. (g) "Cancellation" means termination of coverage by an insurer (other than termination at the request of the insured) during a policy period. (h) "Nonrenewal" means a notice by the insurer to the named insured that the insurer is unwilling to renew a policy. (i) "Expiration" means termination of coverage by reason of the policy having reached the end of the term for which it was issued or the end of the period for which a premium has been paid.  SEC. 2.   Section 789 of the   Insurance Code   is amended to read:  789. (a) The commissioner shall have the administrative authority to assess penalties against insurers, brokers, agents, and other entities engaged in the transaction of insurance or any other person or entity for violations of this article. (b) Upon a showing of a violation of this article in any civil action, a court may also assess the penalties prescribed in this  chapter.   article.  (c) Whenever the commissioner has reasonable cause to believe or determines after a public hearing that any insurer, agent, broker, or other person or entity engaged in the transaction of insurance, has violated this article the commissioner shall make and serve upon the insurer, broker, agent, or other person or entity a notice of hearing. The notice shall state the commissioner's intent to assess the administrative penalties, the time and place of the hearing, and the conduct, condition or ground upon which the commissioner is holding the hearing, and assessing the penalties. The hearing shall occur within 30 days after the notice is served. Within 30 days after the hearing the commissioner shall issue an order specifying the amount of the penalties to be paid. The penalties resulting from the hearing shall be paid to the Insurance Fund. (d) The powers vested in the commissioner by this section shall be in addition to any and all powers and remedies vested in the commissioner by law. (e) Actions for injunctive relief, penalties specified in Section 789.3, damages, restitution, and all other remedies in law, may be brought in superior court by the Attorney General, district attorney, or city attorney on behalf of the people of California. The court shall award reasonable attorney's fees and court costs to the prevailing plaintiff who establishes a violation of this article.  SEC. 3.   Section 1669 of the   Insurance Code   is amended to read:  1669. The commissioner may, without hearing, deny an application if the applicant  has:   has done one or more of the following:   (a) Committed a felony as shown by a plea of guilty or nolo contendere, or by a final judgment of conviction thereof;   (b) Committed a misdemeanor denounced by this code or by other laws regulating insurance as shown by a plea of guilty or nolo contendere, or by a final judgment of conviction thereof;   (a) (1) Been convicted of a felony.   (2) Been convicted of a misdemeanor denounced by this code or by other laws regulating insurance.   (3) A judgment, plea, or verdict of guilty or a conviction following a plea of nolo contendere is deemed to be a conviction within the meaning of this subdivision.   (c)   (b)  Had a previous application for a professional, occupational, or vocational license denied for cause by any licensing authority, within five years of the date of the filing of the application to be acted upon, on grounds that should preclude the granting of a license by the commissioner under this  chapter; or   chapter.   (d)   (c)  Had a previously issued professional, occupational, or vocational license suspended or revoked for cause by any licensing authority, within five years of the date of the filing of the application to be acted upon, on grounds that should preclude the granting of a license by the commissioner under this chapter. In the event the commissioner issues an order based on a plea that does not at any time result in a judgment of conviction, the commissioner shall vacate the order upon petition by the applicant.  SEC. 4.   Section 1681 of the   Insurance Code   is amended to read:  1681. If an applicant fails the qualifying examination, he  or she  may, subject to the provisions of  this article and such rules and regulations as may be promulgated hereunder, retake such qualifying examination within the period prescribed in Section 1670 during which he must qualify for the license sought.   Section 1682, retake a qualifying examination.   SEC. 5.   Section 1682 of the  Insurance Code   is repealed.   1682. The commissioner may, in accordance with the procedure set forth in Chapter 4 of Part I of Division 3 of Title 2 of the Government Code, promulgate rules setting reasonable time limits within which a person who has twice failed an examination or failed to fulfill examination requirements may not take further examinations.   SEC. 6.   Section 1682 is added to the   Insurance Code   , to read:   1682. (a) A person who has failed any license qualification examination 10 times within the previous 12-month period shall not be permitted to enroll in any further license qualification examinations for a period of 12 months, beginning from the date of the 10th license qualification examination failure. (b) For the purpose of this section, "license qualification examination" includes examinations for all types of licenses issued by the commissioner pursuant to this chapter, Chapter 7 (commencing with Section 1800) and Chapter 8 (commencing with Section 1831), and Chapter 1 (commencing with Section 14000) and Chapter 2 (commencing with Section 15000) of Division 5.   SECTION 1.   SEC. 7.  Section 1726 of the Insurance Code is amended to read: 1726. (a) A person who is licensed in this state as an insurance agent or broker, advertises insurance on the Internet, and transacts insurance in this state, shall identify all of the following information on the Internet, regardless of whether the insurance agent or broker maintains his or her Internet presence or if the presence is maintained on his or her behalf: (1) His or her name as filed with the commissioner that has not been disapproved pursuant to Section 1724.5. (2) The state of his or her domicile and principal place of business. (3) His or her license number. (b) A person shall be deemed to be transacting insurance in this state when the person advertises on the Internet, regardless of whether the insurance agent or broker maintains his or her Internet presence or if it is maintained on his or her behalf, and does any of the following: (1) Provides an insurance premium quote to a California resident. (2) Accepts an application for coverage from a California resident. (3) Communicates with a California resident regarding one or more terms of an agreement to provide insurance or an insurance policy.  SEC. 8.   Section 1749.6 of the   Insurance Code   is amended to read:  1749.6. Any person failing to meet the requirements imposed by Section  1749.3 or   1749.3,  1749.31,  14090.1, or 15059.1  and who has not been granted an extension of time within which to comply by the commissioner shall have his or her license automatically terminated until the time that the person demonstrates to the satisfaction of the commissioner that he or she has complied with all of the requirements of this article and all other laws applicable thereto.  Where   If  a person cannot perform the requirements of this article due to a disability or inactivity due to special circumstances, the commissioner shall provide a procedure for the person to place his or her license on inactive status until the time that the person demonstrates to the satisfaction of the commissioner that he or she has complied with or made up all of the requirements of this article for the period of disability or inactivity.  SEC. 9.   Section 1807.5 of the   Insurance Code   is amended to read:  1807.5. Except as provided in Sections 1669 and 1738, the commissioner shall not  suspend   deny, suspend,  or revoke any license, issued under this article, without first granting a hearing, upon reasonable notice to the  applicant,   applicant or licensee,  except that he may temporarily suspend a license for a period not exceeding 15 days pending the hearing. Where a hearing is held under this section the proceedings shall be conducted in accordance with Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code, and the commissioner shall have all the powers granted pursuant to that chapter.  SEC. 10.   Section 10168.6 of the   Insurance Code   is amended to read:  10168.6. For the purpose of determining the benefits calculated under Sections 10168.4 and 10168.5,  in   the following apply:   (a)     In  the case of annuity contracts under which  an   the fixed maturity date is later than   the later of the anniversary of the contract next following the annuitant's 70th birthday or the 10th anniversary of the contract, the maturity date shall be deemed to be the later of the anniversary of the contract next following the annuitant's 70th birthday or the 10th anniversary of the contract.   (b)     In the case of annuity contracts under which an  election may be made to have annuity payments commence at optional maturity dates, the maturity date shall be deemed to be the latest date for which election shall be permitted by the contract, but shall not be deemed to be later than the anniversary of the contract next following the annuitant's seventieth birthday or the tenth anniversary of the contract, whichever is later.  SEC. 11.   Section 10234.6 of the   Insurance Code   is amended to read:  10234.6. (a) The commissioner shall, by June 1 of each year, jointly design the format and content of a consumer rate guide for long-term care insurance with a working group that includes representatives of the Health Insurance Counseling and Advocacy Program, the insurance industry, and insurance agents. The commissioner shall annually prepare the consumer rate guide for long-term care insurance that shall include, but not be limited to, the following information: (1) A comparison of the different types of long-term care insurance and coverages available to California consumers and a specimen outline of coverage for each product currently marketed by each insurer listed in the rate guide. (2) A premium history of each insurer that writes long-term care policies for all the types of long-term care insurance and coverages issued by the insurer in California. (b) The consumer rate guide to be prepared by the commissioner shall consist of two parts: a history of the rates for all policies issued in California for the current year and for  four   nine  preceding years, and a comparison of the policies, benefits, and sample premiums for all policies currently being issued for delivery in California. (1) For the rate history portion of the rate guide required by this section, the department shall collect, and each insurer shall provide to the department, all of the following information for each long-term care policy, including all policies, whether issued by the insurer or purchased or acquired from another insurer, issued in California for the current year and for  four   nine  preceding years: (A) Company name. (B) Policy type. (C) Policy form identification. (D) Dates sold. (E) Date acquired (if applicable). (F) Premium rate increases requested. (G) Premium rate increases approved. (H) Dates of premium rate increase approvals. (I) Any other information requested by the department. (2) For the policy comparison portion of the rate guide required by this section, the department shall collect, and each insurer shall provide to the department, the information needed to complete the following form, along with any other information requested by the department, for each long-term care policy currently issued for delivery in California, including all policies, whether issued by the insurer or purchased or acquired from another insurer:  GRAPHIC INSERT HERE: SEE PRINTED VERSION OF THE BILL] If an insurer does not offer a policy for sale that fits the criteria set forth in the sample premium portion of the policy comparison section of the rate guide, the department shall include in that section of the form for that policy a statement explaining that a policy fitting that criteria is not offered by the insurer and that the consumer may seek, from an agent, sample premium information for the insurer's policy that most closely resembles the policy in the sample. The department shall use the format set forth in this section for the policy comparison portion of the rate guide, unless the working group convened pursuant to subdivision (a) designs an alternative format and agrees that it should be used instead. In compiling the policy comparison portion of the rate guide, the department shall separate the group policies from the individual policies available for sale so that group policies for all insurers appear together in the guide and individual policies for all insurers appear together in the guide. The policy comparison portion of the rate guide shall contain a cross-reference for each policy form listed indicating the page in the rate guide where rate information on the policy form can be found. (c) The department shall publish, on the department's Internet Web site, a premium history of each insurer that writes long-term care policies for all the types of long-term care insurance and coverages issued by the insurer in each state. Each insurer shall provide to the department all of the information listed in paragraph (1) of subdivision (b) for each long-term care policy, including all policies, whether issued by the insurer or purchased or acquired from another insurer, issued in the United States for the current year and for the nine preceding years. (d) Insurers shall provide the information required pursuant to subdivisions (b) and (c) no later than July 31 of each year, commencing in 2000. (e) The consumer rate guide shall be published no later than December 1 of each year commencing in 2000, and shall be distributed using all of the following methods: (1) Through Health Insurance Counseling and Advocacy Program (HICAP) offices. (2) By telephone using the department's consumer toll-free telephone number. (3) On the department's Internet Web site. (4) A notice in the Long-Term Care Insurance Personal Worksheet required by Section 10234.95. (f) Notwithstanding any other provision of law, the data submitted by insurers to the department pursuant to this section are public records, and shall be open to inspection by members of the public pursuant to the procedures of the California Public Records Act. However, a trade secret, as defined in subdivision (d) of Section 3426.1 of the Civil Code, is not subject to this subdivision.  SEC. 12.  Section 10234.95 of the   Insurance Code   is amended to read:  10234.95. (a) Every insurer or other entity marketing long-term care insurance shall: (1) Develop and use suitability standards to determine whether the purchase or replacement of long-term care insurance is appropriate for the needs of the applicant. (2) Train its agents in the use of its suitability standards. (3) Maintain a copy of its suitability standards and make them available for inspection upon request by the commissioner. (b) The agent and insurer shall develop procedures that take into consideration, when determining whether the applicant meets the standards developed by the insurer, the following: (1) The ability to pay for the proposed coverage and other pertinent financial information related to the purchase of the coverage. (2) The applicant's goals or needs with respect to long-term care and the advantages and disadvantages of insurance to meet these goals or needs. (3) The value, benefits, and costs of the applicant's existing insurance, if any, when compared to the values, benefits, and costs of the recommended purchase or replacement. (c) (1) The issuer, and where an agent is involved, the agent, shall make reasonable efforts to obtain the information set out in subdivision (b). The efforts shall include presentation to the applicant, at or prior to application, of the "Long-Term Care Insurance Personal Worksheet," contained in the Long-Term Care Insurance Model Regulations of the National Association of Insurance Commissioners. The personal worksheet used by the insurer shall contain, at a minimum, the information in the NAIC worksheet in not less than 12-point type. The insurer may request the applicant to provide additional information to comply with its suitability standards. (2) In the premium section of the personal worksheet, the insurer shall disclose all rate increases and rate increase requests for all policies, whether issued by the insurer or purchased or acquired from another insurer, in the United States  on or after January 1, 1990.   for the current year and for nine preceding years.  (3) The premium section shall include a statement that reads as follows: "A rate guide is available that compares the policies sold by different insurers, the benefits provided in those policies, and sample premiums. The rate guide also provides a history of the rate increases, if any, for the policies issued by different insurers in each state in which they do business,  since January 1, 1990.   for the current year and for the nine preceding years.  You can obtain a copy of this rate guide by calling the Department of Insurance's consumer toll-free telephone number (1-800-927-HELP), by calling the Health Insurance Counseling and Advocacy Program (HICAP) toll-free telephone number (1-800-434-0222), or by accessing the Department of Insurance's Internet  web   Web  site (www.insurance.ca.gov)." If the personal worksheet is approved prior to the availability of the rate guide, the worksheet shall indicate that the rate guide will be available beginning December 1, 2000. (4) A copy of the issuer's personal worksheet shall be filed and approved by the commissioner. A new personal worksheet shall be filed and approved by the commissioner each time a rate is increased in California and each time a new policy is filed for approval by the commissioner. The new personal worksheet shall disclose the amount of the rate increase in California and all prior rate increases  for the nine preceding years  in California as well as all prior rate increases and rate increase requests or filings in any other  state.   state for the nine preceding years.  The new personal worksheet shall be used by the insurer within 60 days of approval by the commissioner in place of the previously approved personal worksheet. (d) A completed personal worksheet shall be returned to the issuer prior to the issuer's consideration of the applicant for coverage, except the personal worksheet need not be returned for sale of employer group long-term care insurance to employees and their spouses and dependents. (e) The sale or dissemination outside the company or agency by the issuer or agent of information obtained through the personal worksheet is prohibited. (f) The issuer shall use the suitability standards it has developed pursuant to this section in determining whether issuing long-term care insurance coverage to an applicant is appropriate. (g) Agents shall use the suitability standards developed by the insurer in marketing long-term care insurance. (h) If the issuer determines that the applicant does not meet its financial suitability standards, or if the applicant has declined to provide the information, the issuer may reject the application. Alternatively, the issuers shall send the applicant a letter similar to the "Long-Term Care Insurance Suitability Letter" contained in the Long-Term Care Model Regulations of the National Association of Insurance Commissioners. However, if the applicant has declined to provide financial information, the issuer may use some other method to verify the applicant's intent. Either the applicant's returned letter or a record of the alternative method of verification shall be made part of the applicant's file. (i) The insurer shall report annually to the commissioner the total number of applications received from residents of this state, the number of those who declined to provide information on the personal worksheet, the number of applicants who did not meet the suitability standards, and the number who chose to conform after receiving a suitability letter. (j) This section shall not apply to life insurance policies that accelerate benefits for long-term care.  SEC. 13.   Section 11520.5 of the   Insurance Code   is amended to read:  11520.5. No person shall transact in this state the business described in this chapter without first procuring a certificate of authority from the commissioner for such purpose. Application for such certificate shall be made on a form prescribed by the commissioner accompanied by a filing fee of one thousand seven hundred seventy dollars ($1,770).  Such   The  certificate shall not be granted until the applicant conforms to the requirements of this chapter and the laws of this state prerequisite to its issue. After such issue the holder shall continue to comply with the requirements of this chapter and the laws of this state.  Where   When  a hearing is held under this section the proceedings shall be conducted in accordance with Chapter 5 (commencing with Section 11500) of Part 1, Division 3, Title 2 of the Government Code, and the commissioner shall have all of the powers granted therein. Subject to the annual fee provisions herein, every certificate of authority issued or held under this chapter shall be for an indefinite term and, unless sooner revoked by the commissioner, shall terminate upon occurrence of any of the following: (a) Upon the holder's ceasing to exist as a separate entity. (b) Upon the winding up or dissolution, or expiration or forfeiture of the corporate existence of a corporate holder thereof. (c) Upon winding up or dissolution of a holder not a corporation. (d) In any event upon surrender by the holder of its certificate of authority and cancellation of the same by the commissioner. The commissioner shall not cancel a surrendered certificate of authority until he is satisfied by examination, or otherwise, that the former holder has discharged its annuity liabilities to residents of this state or satisfactorily reinsured the same. Notwithstanding the preceding provisions for a certificate of authority of indefinite term, each holder of a certificate of authority under this chapter shall owe and pay in advance to the commissioner in lawful money of the United States an annual fee of fifty-eight dollars ($58) on account of  such   a  certificate of authority until its final termination or revocation.  Such   The  fee shall be for annual periods commencing on July 1st of each year and ending on June 30th of each year and shall be due on each March 1st and shall be delinquent on and after each April 1st. Each holder of a certificate of authority shall also be subject to the payment in advance of the following fees, as appropriate: (1) One hundred eighteen dollars ($118) for each amended certificate of authority caused by a change of the name of the holder. (2) Eighty-nine dollars ($89) for the services and expenses of the commissioner in connection with the filing of amended articles by a holder. (3) Three hundred fifty-four dollars ($354) for all services and expenses of the commissioner in connection with the withdrawal of a holder of a certificate of authority under this chapter.  (e) Upon the receipt of a notice of filing of a petition by or against a certificate holder under the United States Bankruptcy Code for bankruptcy or reorganization, the commissioner shall cease imposing, billing, or collecting the annual fees due under this chapter and this section to the certificate holder.   (f) Upon notice of the suspension of the corporate status of the certificate holder for a period of 12 months by the Secretary of State, the commissioner shall terminate the certificate of authority and shall deem the certificate to be terminated.   SEC. 14.   Section 11691 of the   Insurance Code   is amended to read:  11691. (a) (1) In order to provide protection to the workers of this state in the event that the insurers issuing workers' compensation insurance to employers fail to pay compensable workers' compensation claims when due, except in the case of the State Compensation Insurance Fund, every insurer desiring admission to transact workers' compensation insurance, or workers' compensation reinsurance business, or desiring to reinsure the injury, disablement, or death portions of policies of workers' compensation insurance under the class of disability insurance shall, as a prerequisite to admission, or ability to reinsure the injury, disablement, or death portion of policies of workers' compensation insurance under the class of disability insurance, deposit cash instruments or approved interest-bearing securities or approved stocks readily convertible into cash, investment certificates, or share accounts issued by a savings and loan association doing business in this state and insured by the Federal Deposit Insurance Corporation, certificates of deposit, or savings deposits in a bank licensed to do business in this state,  or is either domiciled in and has a principal place of business in this state, or is a national bank association with a trust office located in this state,  or approved letters of credit that perform in material respects as any other security allowable as a form of deposit for purposes of a workers' compensation deposit and that meet the standard set forth in Section 922.5, or approved securities registered with a qualified depository located in a reciprocal state as defined in Section 1104.9, with that deposit to be in an amount and subject to any exceptions as set forth in this article. The deposit shall be made from time to time as demanded by the commissioner and may be made with the Treasurer, or a bank or savings and loan association authorized to engage in the trust business pursuant to Division 1 (commencing with Section 99) or Division 2 (commencing with Section 5000) of the Financial Code, or a trust company. A deposit of securities registered with a qualified depository located in a reciprocal state as defined in Section 1104.9 may only be made in a bank or savings and loan association authorized to engage in the trust business pursuant to Division 1 (commencing with Section 99) or Division 2 (commencing with Section 5000) of the Financial Code, or a trust company, licensed to do business and located in this state  that is   either domiciled in and has a principal place of business in this state, or is a national bank   association with a trust office located in this state,  that is a qualified custodian as defined in paragraph (1) of subdivision (a) of Section  1104.9   1104.9,  and that maintains deposits of at least seven hundred fifty million dollars ($750,000,000). The deposit shall be made subject to the approval of the commissioner under those rules and regulations that he or she shall promulgate. The deposit shall be maintained at a deposit value specified by the commissioner, but in any event no less than one hundred thousand dollars ($100,000), nor less than the reserves required of the insurer to be maintained under any of the provisions of Article 1 (commencing with Section 11550) of Chapter 1, relating to loss reserves on workers' compensation business of the insurer in this state, nor less than the sum of the amounts specified in subdivision (a) of Section 11693, whichever is greater. The deposit shall be for the purpose of paying compensable workers' compensation claims under policies issued by the insurer or reinsured by the admitted reinsurer and expenses as provided in Section 11698.02, in the event the insurer or reinsurer fails to pay those claims when they come due. If the insurer providing the deposit is domiciled in a state where a state statute, regulation, or court decision provides that, with respect to covered claims within the deductible amount that are paid by a guarantee association after the entry of an order of liquidation under large deductible workers' compensation policies, any part of the reimbursement proceeds, other than the reasonable expenses of the receiver related to treatment of deductible policy arrangements of insurance companies in liquidation, owed by insureds on those deductible amounts, whether paid directly or through a draw of collateral, are general assets of the estate, then the amount of the insurer's deposit pursuant to this article shall be calculated based on the gross amount of that insurer's liabilities for loss and loss adjustment expenses under those policies without regard to the deductible, and those reserves shall not be reduced by any collateral or reimbursement obligations insureds were required to provide under those policies. (2)  Nothing in this   This  section  shall   does not  require that the deposit be calculated based on gross amounts of liabilities described above if the domiciliary state does not have an existing statute, regulation, or court decision providing that the reimbursement proceeds described above are general assets of the estate. (b) Each insurer or reinsurer desiring to have the ability to reinsure the injury, disablement, or death portions of policies of workers' compensation under the class of disability insurance shall provide prior notice to the commissioner, in the manner and form prescribed by the commissioner of its intent to reinsure that insurance. In the event of late notice, a late filing fee shall be imposed on the reinsurer pursuant to Section 924 for failure to notify the commissioner of its intent to reinsure workers' compensation insurance. (c) If the deposit required by this section is not made with the Treasurer, then the depositor shall execute a trust agreement in a form approved by the commissioner between the insurer, the institution in which the deposit is made or, where applicable, the qualified custodian of the deposit, and the commissioner, that grants to the commissioner the authority to withdraw the deposit as set forth in Sections 11691.2, 11696, 11698, and 11698.3. The insurer shall also execute and deliver in duplicate to the commissioner a power of attorney in favor of the commissioner for the purposes specified herein, supported by a resolution of the depositor's board of directors. The power of attorney and director's resolution shall be on forms approved by the commissioner, shall provide that the power of attorney cannot be revoked or withdrawn without the consent of the commissioner, and shall be acknowledged as required by law. (d) (1) The commissioner shall require payment in advance of fees for the initial filing of a trust agreement with a bank, savings and loan association, or trust company on deposits made pursuant to subdivision (a); for each amendment, supplement, or other change to the deposit agreement; for receiving and processing deposit schedules pursuant to this section; and for each withdrawal, substitution, or any other change in the deposit. The fees shall be set forth in the department's Schedule of Fees and Charges. (2) The commissioner shall require payment in advance of a fee for the initial filing of each letter of credit utilized pursuant to subdivision (a). In addition, the commissioner shall require payment in advance of a fee for each amendment of a letter of credit. The fees shall be set forth in the department's Schedule of Fees and Charges. (e) Any workers' compensation insurer that deposits cash or cash equivalents pursuant to this section shall be entitled to a prompt refund of those deposits in excess of the amount determined by the commissioner pursuant to subdivision (a). The commissioner shall cause to be refunded any deposits determined by the commissioner to be in excess of the amount required by subdivision (a) within 30 days of that determination. In the alternative, an insurer may use any excess deposit funds to offset a demand by the commissioner to increase its deposit due to the failure of a reinsurer to make a deposit pursuant to this section. (f) (1) An admitted insurer reinsuring business covered in this article (hereafter referred to as reinsurer) shall identify to the commissioner, in a form prescribed by the commissioner, amounts deposited for credit in the name of each ceding insurer. (2) All reinsurance agreements covering claims and obligations under business covered by this article, and allowable for purposes of granting a ceding carrier a deposit credit, shall include a provision granting the commissioner, in the event of a delinquency proceeding, receivership, or insolvency of a ceding insurer, any sums from a reinsurer's deposit that are necessary for the commissioner to pay those reinsured claims and obligations, or to ensure their payment by the California Insurance Guarantee Association, deemed by the commissioner due under the reinsurance agreement, upon failure of the reinsurer for any reason to make payments under the policy of reinsurance. The commissioner shall give 30 days' notice prior to drawing upon these funds of an intent to do so. Notwithstanding the commissioner's right to draw on these funds, the reinsurer shall otherwise retain its right to determine the validity of those claims and obligations and to contest their payment under the reinsurance agreement. Prior to a reinsurer's deposit being drawn upon, in whole or in part, by the department, the department shall provide a reinsurer with an explanation of procedures that a reinsurer may use to explain to the department why the use of the reinsurer's deposit may not be appropriate under the reinsurance agreement. (3)  No   A  reinsurer entering into a contract identified in paragraph (2), beginning on or after January 1, 2005, may  not  cede claims or obligations assumed from a ceding insurer unless the deposit securing the ceded claims or obligations is governed by paragraph (2) or, upon approval of the commissioner, would secure the ceded claims or obligations in all material respects and in the same manner as a deposit identified in paragraph (2) above. (4) All sums received from the reinsurer by the commissioner for those claims paid by the California Insurance Guarantee Association shall be held separate and apart from and not included in the general assets of the insolvent insurer, and shall be transferred to the California Insurance Guarantee Association upon receipt by the commissioner. In the event of a final judgment or settlement adverse to the drawing of funds by the commissioner pursuant to paragraph (2) or (3), the California Insurance Guarantee Association shall repay funds it obtained to pay covered claims and shall, if necessary, either levy a surcharge as needed or seek legislative approval to levy the surcharge if the California Insurance Guarantee Association is already levying the maximum surcharge permissible under law. (g) If a reinsurer has not maintained deposits as required by subdivision (a) in amounts equal to the amounts of deposit credits claimed by its ceding insurers, the commissioner, after notifying the reinsurer and its ceding insurers of the deposit shortfall and allowing 15 days from the date of the notice for the deposit shortfall to be corrected, may disallow all or a portion of the reserve credits claimed by the ceding insurers. A ceding insurer disallowed a reserve credit pursuant to this provision shall immediately make the deposit required by this section. (h) For interest-bearing securities that are debt securities and include principal payment features prior to maturity that are utilized pursuant to subdivision (a), all principal payments received shall be retained as part of the deposit. (i) Withdrawal of any amount of the deposit required under subdivision (a) that results in a reduction of the required amount of the deposit may only occur with the prior written consent of the commissioner.