Calif. Legislature Takes Action on Insurance Measures

California Senate and Assembly policy committees recently acted on a number of key insurance-related bills that had already passed out of their houses of origin, said Sam Sorich, president of the Association of California Insurance Companies.

Sorich noted that two measures, SB 603 and SB 46, were defeated in the Assembly Insurance Committee. SB 603 would have prohibited insurers from using credit information for underwriting and rating purposes. SB 46 would have imposed prior approval regulation on workers’ compensation insurance rates.

The same committee approved SB 2 and SB 518, but only after revising key provisions that had been opposed by ACIC.

SB 2 provisions that would have mandated homeowners insurers to pay contents coverage without the submission of an inventory and would have required insurers to give policyholders claim information before the information was submitted to claims databases were struck from the bill. SB 518’s requirement for delivering copies of policies to policyholders was limited.

In other action, the Assembly Judiciary Committee on a 6-3 vote approved – over the objections of ACIC and a broad-based coalition – SB 399, which seeks higher recoveries in liability lawsuits involving Medi-Cal recipients.

The Assembly Judiciary Committee also approved an ACIC-opposed bill, SB 815, that would allow a plaintiff in a lawsuit to serve process on the defendant’s insurance company.

Bills (SB 422 and AB 1459) increasing the recovery limits on Small Claims Court cases from $5,000 to $7,500 were approved in the Assembly Judiciary and the Senate Judiciary committees.

Following is ACIC’s weekly update on legislative action taken on insurance-related bills last week and the measures scheduled for consideration this week.

Assembly Business and Professions Committee- June 27 (10-Member)
SB 852 (Bowen) Identify Theft.SB 852 would have amended California’s law requiring notification to consumers whose private information is accessed by unauthorized sources and would extend the law to include “hard copy” types of documents such as old-fashioned manila files. The bill failed passage 1-5. Reconsideration was granted for an unspecified, later date. ACIC opposes the bill.

Senate Public Safety Committee – June 28 (7-member)
AB 1325 (Vargas) Motor Vehicle Speed Contest.AB 1325 would increase the minimum jail time for a person convicted of engaging in a motor vehicle speed contest from one day to five days. The bill passed the committee 5-0. The bill is in the Senate Appropriations Committee awaiting a hearing. ACIC supports the bill.

Assembly Judiciary Committee – June 28 – (7-member)
SB 399 (Escutia) Health care liens.SB 399 would allow public hospitals to file liens against judgments obtained by Medi-Cal recipients against third parties whose negligence caused the injury. The hospital would be entitled to a lien in an amount necessary to cover its costs even if those charges exceed the Medi-Cal reimbursement paid to the hospital as full payment for the care. The bill passed the committee 6-3. The bill is in the Assembly Health Committee awaiting a hearing. ACIC opposes the bill.

SB 422 (Simitian) Small Claims Court: Jurisdiction.SB 422 would increase the jurisdiction of the Small Claims Court from demands not exceeding $5,000 to demands not exceeding $7,500. The bill passed the committee 6-3. The bill is in the Assembly Appropriations Committee awaiting a hearing. ACIC opposes the bill.

SB 815 (Ortiz) Service of Process.SB 815 would allow a plaintiff to serve a defendant’s insurance company in lieu of publication of the summons where personal service cannot be achieved with reasonable diligence. The bill passed the committee 6-3. The bill is now before the full Assembly for a vote. ACIC opposes the bill.

Senate Judiciary Committee – June 28 (7-member)
AB 1351 (Vargas) Office of Administrative Law: Regulations.AB 1351 would establish a process in the Office of Administrative Law for the purpose of investigating a state agency’s use and enforcement of rules and regulations that have not been adopted pursuant to the Administrative Procedure Act (i.e. underground regulations). The bill passed the committee 6-0. The bill is in the Senate Appropriations Committee awaiting a hearing. ACIC supports the bill.

AB 1459 (Canciamilla) Small Claims Court: Jurisdiction. AB 1459 would increase the jurisdiction of Small Claims Court from $5,000 to $7,500. The bill passed the committee 4-2. The bill is in the Senate Appropriations Committee awaiting a hearing. ACIC opposes the bill.

Senate Governmental Organization Committee – June 28 (11-member)
AB 669 (La Suer) Firefighter Training and Standard. AB 669 would create the California Firefighter Training Standards Task Force to conduct a statewide needs assessment, make recommendations for the implementation and funding of fire training programs and report the findings of the task force to the Legislature no later than Dec. 31, 2005. The bill passed the committee 10-0. The bill is in the Senate Appropriations Committee awaiting hearing. ACIC supports the bill.

Assembly Insurance Committee – June 29 (10-member)
SB 2 (Speier) Homeowners Insurance: Valuation: Continuing Education.SB 2 would, among other things, 1) require agent-brokers to have an educational requirement demonstrating their ability to evaluate replacement costs of structures as well as identifying experts for evaluating replacement costs of structures; 2) make the mediation program permanent for fire and earthquake declared disasters; 3) require a list of items, eligible for reimbursement for additional living expenses, be provided to an insured in the event of a claim. The bill passed the committee 7-1. The bill is in the Assembly Appropriations Committee awaiting a hearing. ACIC opposes the bill.

SB 46 (Alarcon) Workers’ Compensation Insurance.SB 46 would have established a new system for regulating workers’ compensation insurance rates. A three-person commission would have been responsible for setting pure premium rates, experience modifications and expense multipliers. Any insurer that did not want to use the commission’s rate and expenses would have had to seek the commission’s prior approval. The bill failed passage 0-4. Reconsideration was granted for an unspecified, later date. ACIC opposes the bill.

SB 518 (Kehoe) Homeowners Insurance: Insurance Adjusters.SB 518 would 1) require insurers to provide copies of policies to insureds within 30 days of requests from the insured for policies other than commercial lines and workers’ compensation policies; 2) extend coverage for additional living expenses from 12 to 24 months; 3) impose additional requirements on public insurance adjusters. The bill passed the committee 10-0. The bill is in the Assembly Appropriations Committee awaiting a hearing. After the bill was amended, ACIC went from opposed to neutral.

SB 603 (Ortiz) Insurance: Credit Ratings.SB 603 would have prohibited an insurer from using credit ratings, credit reports, credit scoring models or credit information to underwrite or rate automobile and property insurance policies. The bill failed passage 3-2. Reconsideration was granted for an unspecified, later date. ACIC opposes the bill.

SB 1023 (Dunn) Workers’ Compensation: Enforcement Penalties.SB 1023 would require an employer to pay a workers compensation claimant an additional $2,000 when the claimant is required to seek enforcement of a workers’ compensation award. The payment would increase to $5,000 for subsequent enforcement actions. The bill passed the committee 7-3. SB 1023 is now before the full Assembly. ACIC opposes the bill.

Bills to be heard this week and ACIC’s positions :

Assembly Health Committee – July 5
SB 367 (Speier) Health Care Complaint System.SB 367 would require the insurance commissioner to establish a complaint system for health care providers to file complaints regarding health insurers. ACIC has a neutral position on the bill.

Senate Transportation and Housing Committee – July 5
AB 963 (Garcia) Vehicles: Provisional Driver’s License: Telephone Use.AB 963 would prohibit a teenage driver who is licensed pursuant to the graduated driver’s license program from using a cellular phone while operating a vehicle. ACIC supports the bill.

Assembly Judiciary Committee – July 5
SB 550 (Speier) Data Brokers. SB 550 would impose new duties on “data brokers” – as vaguely defined – regarding their maintenance and use of personal information. The definition of “data broker” – a new concept in California law – is broad enough to include virtually every business that utilizes personal information even for such routine operations as billing. ACIC opposes the bill.

Assembly Insurance Committee – July 6
SB 20 (Escutia) Auto Insurance: Low-Cost Policies.SB 20 would extend the existing sunset provision on the low-cost automobile insurance program from January 2007 to January 2012. The low-cost program now operates in Los Angeles and San Francisco counties. SB 20 would make the program a statewide program. Currently, in order to be eligible to purchase a low-cost program policy, a driver’s automobile must not have a value of more than $12,000. SB 20 would increase the value to $20,000. ACIC opposes the bill.

SB 150 (Escutia) Insurance: Adverse Underwriting Decisions. SB 150 would change notification requirements for adverse underwriting decisions made by insurers. Rather than supplying reasons the decision to insureds who submit written requests, SB 150 would require notification in all instances. ACIC opposes the bill.