California Insurance Commissioner John Garamendi announced that Gov. Arnold Schwarzenegger has signed all 12 Department of Insurance-sponsored bills to reach his desk in 2004. The bills provide a wide range of protections for all insurance consumers, including homeowners, seniors and disaster victims.
“I applaud Governor Schwarzenegger for signing these important consumer protection measures,” said Garamendi. “All Californians will benefit from the cooperation that helped make these new laws a reality. I also commend the legislators who carried these bills for their vision and dedication to consumer protection.”
The bills include the Commissioner’s Homeowners Bill of Rights, which helped bring relief to wildfire disaster survivors; financial protection measures to protect seniors and other consumers from scams in the life insurance and annuities industry; and assorted bills covering auto insurance, health care, and the investigation of potential insurance fraud.
Following is a list and brief description of each of the measures:
Senate Bill 1273 (Scott): Increases jail time to one year and monetary penalties to $50,000 for “twisting” or “churning” of annuities. “Twisting” or “churning” is the practice of inducing a person to take out a policy of insurance, then encouraging them to lapse, forfeit, switch policies or surrender a policy, resulting in large commissions to the agent.
Assembly Bill 2316 (Chan): Establishes the “Senior Protection Fund” by assessing up to $1 per each new individual annuity or life insurance product sold in California. This fund will be used for investigative and educational efforts related to life insurance/annuity fraud.
Assembly Bill 2384 (Nakano): Allows the department to penalize insurance companies who don’t pay credit life and disability policy death benefits within 30 days of the date of a death.
Assembly Bill 2557 (Koretz): Increases the misdemeanor penalty for individuals who transact insurance without a license to imprisonment for up to one year in county jail, and provides for a fine up to $50,000.
Assembly Bill 2199 (Kehoe): Extends the time for rebuilding destroyed homes. This bill establishes a minimum 12-month period (24 months in a declared State of Emergency) for homeowners to repair, rebuild, or replace their home after a loss, commencing with payment of actual cash value.
Assembly Bill 2962 (Pavley): Guaranteed Renewability/Premium Adjustments. Insurers are prohibited from canceling coverage during the course of rebuilding the destroyed structure and must renew a policy at least once if a total loss was caused by a disaster. Also establishes a uniform measurement of “actual cash value.”
Senate Bill 64 (Speier): Mediation Program for Fire Survivors. Authorizes the Department of Insurance to sponsor a mediation program to expedite the resolution of conflicts between victims of the Southern California wildfires and their insurance carriers relating to issues such as coverage, scope of loss, and claims settlement and payment practices.
Senate Bill 1855 (Alpert): Underinsurance Disclosures. Consumers are provided various disclosures when they purchase a homeowners policy. One disclosure, known as the “Petris Disclosure”, is given to consumers every two years and defines each of the categories of coverage available in the marketplace. The coverage currently known as ‘Extended’ Replacement Cost will now be called ‘Limited’ Replacement Cost. The “Declarations” page for the policy will include a new consumer disclosure about limitations on reconstruction costs for their home. In addition, a new ‘California Residential Property Insurance Bill of Rights’ will be provided to consumers every two years.
Assembly Bill 2677 (Ridley-Thomas): Requires automobile insurers and insurer groups to provide consumers a cost estimate for its lowest price personal automobile insurance policy at the limits the consumer has requested and for which the consumer is eligible.
AB 2208 (Kehoe): Conforms health insurance law to other statutes requiring domestic partners to be treated the same as spouses for health insurance purposes.
AB 1227 (McCarthy): The bill creates more effective penalties than currently exist to apply when insurers’ Special Investigations Units are found to be inadequate.
AB 1728 (Vargas): Makes several substantive changes to the law regarding investments by insurers in subsidiaries, reporting requirements disability fraud funding, and a technical change to eliminate an obsolete provision prohibiting a rollback of surety rates.
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