California FAIR Plan Association: automatic payments.
Impact
The impact of AB 290 on state laws is significant as it modifies existing regulations governing the California FAIR Plan Association. Currently, insurers can cancel policies for nonpayment of premiums, but this bill adds protections by prohibiting cancellation solely due to a policyholder's non-enrollment in automatic payments. Furthermore, policyholders are granted a 10-day grace period to settle any outstanding installment premiums. This change is expected to enhance consumer protection and stabilize insurance coverage for holders who may have difficulties managing premium payments.
Summary
Assembly Bill 290, introduced by Assembly Member Bauer-Kahan, focuses on the California FAIR Plan Association and aims to implement an automatic payment system for insurance premiums. The bill requires the California FAIR Plan Association to have this system in place by April 1, 2026, allowing policyholders to make automatic payments. A significant feature of the bill is that the automatic payment amount must be equivalent to any other payment method, and it must not result in a different premium charge for those enrolled in the automatic payment system. A reasonable fee may be charged for the convenience of using this system, ensuring that policyholders are not penalized for choosing not to enroll in automatic payments.
Sentiment
The sentiment around AB 290 appears to be mostly positive among consumer advocacy groups, as it seeks to protect policyholders from abrupt policy cancellations due to nonpayment. Lawmakers and stakeholders recognize the importance of providing flexible payment options to consumers, particularly in the context of economic fluctuations. However, there may be concerns regarding the additional fees associated with the automatic payment system and who bears the cost of its implementation.
Contention
Notable points of contention may include debates over the reasonable fee structure that the California FAIR Plan Association can implement for using the automatic payment system. While the provisions intend to provide flexibility and protection for consumers, critics might argue that introducing any fees could dissuade policyholders from enrolling. Additionally, ensuring that the automatic payment system is user-friendly and effective will be critical to the bill's success and reception among policyholders.