View this article online: https://www.claimsjournal.com/news/west/2004/06/17/43329.htm
Senate-passed legislation pending before a key Assembly committee is unconstitutional and would, if enacted, leave consumers without insurance coverage, according to the Association of California Insurance Companies (ACIC).
“Consumers assume that their insurance coverage will remain through the policy term and the premium for the policy is a settled fact. This bill would turn these assumptions on their head,” said ACIC President Sam Sorich.
The bill, SB 1315 by Sen. Deborah Ortiz (D-Sacramento), is scheduled to be heard by the Assembly Insurance Committee on Wednesday, June 23.
Sorich explained that SB 1315 would require insurers to submit policy forms for approval to the insurance commissioner. Policies that are currently used by insurers would have to be submitted to the commissioner within 90 days after SB 1315 becomes law.
“That means the commissioner could change the forms for policies currently in effect, casting a cloud over the coverages. Moreover, retroactively changing a policy is unconstitutional. The California Constitution prohibits the Legislature from enacting laws that impair contractual obligations. An insurance policy is a contract,” said Sorich.
SB 1315 would also impose significant new costs on the Department of Insurance.
“The department already devotes considerable staff and resources to the review and approval of rates. More staff would have to be added to review and approve forms. Yet, the department acknowledges in a brief filed in the Donabedin v. Mercury Insurance Co. case that it is unable to find illegal procedures in insurance rate filings,” said Sorich.
“If the department is unable to adequately review rate filings, there is no justification to give the department the added responsibility to review and approve policy forms.”