New Insurance Laws Aim to Protect Consumers

The California Legislature has passed several bills that have been sponsored or publicly supported by the California Department of Insurance (CDI):

• AB 1846 (Gordon) establishes a regulatory licensing framework for consumer owned and operated plans (CO-OPs), which are designed to foster the creation of consumer-driven, nonprofit health insurance organizations.
• AB 1761 (Perez) prohibits people or entities from representing, constituting, or otherwise providing services on behalf of the California Health Benefit Exchange without having a valid agreement with the Exchange.
• AB 999 (Yamada) modifies the process for LTC rate development to protect consumers from excessive premium rate volatility. It is considered one of the strongest LTC consumer protection measures in the nation.
• AB 2138 (Blumenfield) provides increased funding for district attorneys to investigate and prosecute health and disability insurance fraud in collaboration with CDI enforcement personnel.
• SB 1216 (Lowenthal) and SB 1448 (Calderon) ensure that CDI has the regulatory authority to protect consumers in response to changes brought by the globalization of the insurance business and insurer use of reinsurance.
• SB 1216 provides a framework for when a California-based insurer cedes business to a non-U.S. based reinsurer. Commissioner Dave Jones notes that the recession brought to light the need for regulators to have more authority to evaluate the risks that a non-insurance entity poses on an insurer in a holding company system.
• SB 1448 updates California’s Insurance Holding Company System Regulatory Act so the financial status of an insurer in a holding company system can be assessed.
• AB 2303 (Assembly Committee on Insurance) gives the insurance commissioner the authority to take over an insurer that the U.S. Treasury Secretary determines is insolvent or in danger of becoming insolvent.
• SB 1170 (Leno) expands restrictions on misleading advertising tactics directed at seniors and senior veterans. It would enhance the notification requirements for an agent or broker to meet with a senior in their home to sell an insurance product.
• SB 1184 (Corbett) is designed to stop unscrupulous insurance agents and brokers who charge a fee to help senior veterans qualify for veterans’ aid programs when these services are readily available for free for those who qualify. Insurance agents and brokers cannot be involved in obtaining senior veterans’ benefits with the sole purpose of financial gain.
• AB 1747 (Feuer) requires a life insurer to send a pending lapse notice to the policyholder within 30 days of nonpayment. The policyholder must be able to name one or more people to receive a copy of the pending lapse notice or termination of a policy for nonpayment of premium. People can easily lose the critical protection of life insurance if just one premium is accidentally missed, even if they have been paying premiums on time for many years, notes Commisioner Dave Jones.

Last Updated 05/25/2022

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