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SB-788 Insurance: licensing: requirements.(2017-2018)

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Date Published: 04/04/2017 04:00 AM
SB788:v98#DOCUMENT

Amended  IN  Senate  April 03, 2017

CALIFORNIA LEGISLATURE— 2017–2018 REGULAR SESSION

Senate Bill No. 788


Introduced by Senator Lara

February 17, 2017


An act to amend Section 10127.17 1666.5 of the Insurance Code, relating to insurance.


LEGISLATIVE COUNSEL'S DIGEST


SB 788, as amended, Lara. Insurance: life and annuity. licensing: requirements.
Existing law requires the Insurance Commissioner to require specified licensees, at the time of issuance or renewal of a license, to provide its federal employer identification number if the licensee is a partnership or his or her social security number for all others. Existing law also provides that any licensee failing to provide this information shall be reported by the licensing entity to the Franchise Tax Board, as specified, and shall be subject to a penalty if the licensee fails to provide the required information after notification by the board. Existing law requires the commissioner, upon request of the Franchise Tax Board, to furnish the board with specified information with respect to every licensee, including, but not limited to, the federal employer identification number if the entity is a partnership or the owner’s name and social security number for all others.
This bill would require the commissioner to require either a social security number or an individual taxpayer identification number if the applicant or licensee is an individual applying for or renewing a production agency license, and would require the commissioner, upon request of the Franchise Tax Board, to furnish to the board either a social security number or an individual taxpayer identification number for individuals who are production agency licensees. The bill would also make conforming changes.
Existing constitutional provisions require that a statute that limits the right of access to the meetings of public bodies or the writings of public officials and agencies be adopted with findings demonstrating the interest protected by the limitation and the need for protecting that interest.
This bill would make legislative findings to that effect.

Existing law creates the Life and Annuity Consumer Protection Fund as a special account within the Insurance Fund, and, until January 1, 2015, requires each insurer admitted to transact insurance in this state to pay a fee determined by the Insurance Commissioner, not to exceed $1, for each individual life insurance policy and each individual annuity product. If an insurer elects to charge the purchaser of a life insurance policy or annuity product this fee, the fee is required to be set forth as a separate charge in the contract schedule or premium notice. Existing law requires moneys in the Life and Annuity Consumer Protection Fund to be distributed, as provided, and requires those moneys to be used exclusively for the purpose of protecting consumers of life insurance and annuity products in this state. Existing law requires that 50% of the moneys in the fund be distributed within the Department of Insurance for functions related to individual life insurance and annuity products, including, among other things, responding to consumer inquiries and complaints related to life insurance or annuity products. Existing law further provides that the other 50% of the moneys in the fund be distributed to district attorneys for investigating and prosecuting individual life insurance and annuity product financial abuse cases involving insurance licenses, as specified.

This bill would make a technical, nonsubstantive change in the above provision.

Vote: MAJORITY   Appropriation: NO   Fiscal Committee: NOYES   Local Program: NO  

The people of the State of California do enact as follows:


SECTION 1.

 Section 1666.5 of the Insurance Code is amended to read:

1666.5.
 (a) (1) Notwithstanding any other provision of law, the commissioner shall at the time of issuance or renewal of any license under this chapter or Chapter 6 (commencing with Section 1760), Chapter 7 (commencing with Section 1800), or Chapter 8 (commencing with Section 1831) require that any licensee provide its federal employer identification number if the licensee is a partnership or his or her social security number for all others. others, except as provided in paragraph (2).
(2) The commissioner shall require either a social security number or an individual taxpayer identification number if the applicant or licensee is an individual applying for or renewing a license under this chapter.
(b) Any licensee failing to provide the federal identification number or number, social security number number, or individual taxpayer identification number shall be reported by the commissioner to the Franchise Tax Board and, if failing to provide after notification pursuant to paragraph (1) of subdivision (b) of Section 19528 of the Revenue and Taxation Code, shall be subject to the penalty provided in paragraph (2) of subdivision (b) of Section 19528 of the Revenue and Taxation Code.
(c) (1) The commissioner shall, upon request of the Franchise Tax Board, furnish to the board all of the following information with respect to every licensee:

(1)

(A) Licensee’s name.

(2)

(B) Address or addresses of record.

(3)

(C) Federal employer identification number if the entity is a partnership or owner’s name and social security number for all others.

(4)

(D) Type of license.

(5)

(E) Effective date of license or a renewal.

(6)

(F) Expiration date of license.

(7)

(G) Whether license is active or inactive, if known.

(8)

(H) Whether license is new or a renewal.
(2) Notwithstanding paragraph (1), the commissioner shall, upon request of the Franchise Tax Board, furnish to the board either a social security number or an individual taxpayer identification number for individuals licensed under this chapter.
(d) For the purposes of this section:
(1) “Licensee” means any entity, other than a corporation, authorized by a license, certificate, registration, or other means to engage in the insurance business regulated by this code.
(2) “License” includes a certificate, registration, or any other authorization needed to engage in the insurance business regulated by this code.
(e) The reports required under this section shall be filed on magnetic media or in other machine-readable form, according to standards furnished by the Franchise Tax Board.
(f) The commissioner shall begin providing to the Franchise Tax Board the information required by this section as soon as economically feasible, but no later than July 1, 1987. The information shall be furnished at a time that the Franchise Tax Board may require.
(g) Notwithstanding Chapter 3.5 (commencing with Section 6250) of Division 7 of Title 1 of the Government Code, the information furnished pursuant to this section shall not be deemed to be a public record and shall not be open to the public for inspection.
(h) Any deputy, agent, clerk, officer, or employee of the commissioner, or any former officer or employee or other individual who in the course of his or her employment or duty has or has had access to the information required to be furnished under this section, shall not disclose or make known in any manner that information, except as provided in this section to the Franchise Tax Board.
(i) It is the intent of the Legislature in enacting this section to utilize the social security account number number, individual taxpayer identification number, or federal employer identification number for the purpose of establishing the identification of persons affected by state tax laws and, to that end, the information furnished pursuant to this section shall be used exclusively for tax enforcement purposes.

SEC. 2.

 The Legislature finds and declares that Section 1 of this act, which amends Section 1666.5 of the Insurance Code, imposes a limitation on the public’s right of access to the meetings of public bodies or the writings of public officials and agencies within the meaning of Section 3 of Article I of the California Constitution. Pursuant to that constitutional provision, the Legislature makes the following findings to demonstrate the interest protected by this limitation and the need for protecting that interest:
In order to protect private and confidential personal information, it is necessary for that information to remain confidential.
SECTION 1.Section 10127.17 of the Insurance Code is amended to read:
10127.17.

(a)The Life and Annuity Consumer Protection Fund is hereby created as a special account within the Insurance Fund. Each insurer admitted to transact insurance in this state shall pay a fee to be determined by the commissioner, not to exceed one dollar ($1), for each individual life insurance policy and each individual annuity product that it issues to a resident of this state. If an insurer elects to charge the purchaser of a life insurance policy or annuity product this fee, the fee shall be set forth as a separate charge in the contract schedule or premium notice. Life insurance or annuity forms are not required to be filed again for review as a consequence of this provision. The revenue from this fee shall be deposited into the Life and Annuity Consumer Protection Fund.

(b)Moneys in the Life and Annuity Consumer Protection Fund shall be distributed by the commissioner, upon appropriation by the Legislature, to fund the reasonable costs incurred in regulating entities transacting life insurance and annuity products in this state. Moneys in the fund shall not be used for any other purpose.

(c)Fifty percent of these funds shall be distributed within the department for functions related to individual life insurance and annuity products, including, but not limited to:

(1)Investigating and prosecuting financial abuse by insurance licensees, or persons holding themselves out to be insurance licensees, or any person purporting to be engaged in the business of insurance.

(2)Responding to consumer inquiries and complaints related to life insurance or annuity products.

(3)Disseminating information to insurers, insureds, and others regarding the applicable regulation of life insurance and annuity products, including consumer protection, purchasing and using insurance and annuity products, claim filing, benefit delivery, and dispute resolution.

(4)Regulating and overseeing life insurance and annuity products and advertising for these products directed toward consumers.

(d)Fifty percent of the funds shall be distributed to district attorneys for investigating and prosecuting individual life insurance and annuity product financial abuse cases involving insurance licensees, or persons holding themselves out to be insurance licensees, or any person purporting to be engaged in the business of insurance, and for other projects beneficial to insurance consumers.

(1)The commissioner shall distribute funds to district attorneys who are able to show a likely positive outcome that will benefit consumers in the local jurisdiction based on specific criteria promulgated by the commissioner. Each local district attorney desiring a portion of those funds shall submit to the commissioner an application, including, at a minimum all of the following:

(A)The proposed use of the moneys and the anticipated outcome.

(B)A list of all prior relevant cases or projects and a copy of the final accounting for each. If cases or projects are ongoing, the most recent accounting shall be provided.

(C)A detailed budget, including salaries and general expenses, and specifically identifying the cost of purchase or rental of equipment or supplies.

(2)Each district attorney that receives funds pursuant to this section shall submit a final detailed accounting at the conclusion or closure of each case or project. For cases or projects that continue longer than six months, interim accountings shall be submitted every six months, or as otherwise directed by the commissioner.

(3)Each district attorney that receives funds pursuant to this section shall submit a final report to the commissioner, which may be made public, as to the success of the case or project conducted. The report shall provide information and statistics on the number of active investigations, arrests, indictments, and convictions. The applications for moneys, the distribution of moneys, and the annual reports shall be public documents.

(4)Notwithstanding any other provision of this section, information submitted to the commissioner pursuant to this section concerning criminal investigations, whether active or inactive, shall be confidential.

(5)The commissioner may conduct a fiscal audit of the programs administered under this subdivision. This fiscal audit shall be conducted by an internal audit unit of the department. The cost of any fiscal audits shall be paid for from the Life and Annuity Consumer Protection Fund established by this section.

(6)If the commissioner determines that a district attorney is unable or unwilling to investigate or prosecute a relevant financial abuse case, the commissioner may discontinue distribution of funds allocated for that matter and may redistribute those funds to other eligible district attorneys.

(e)If, as of June 30 of any calendar year, the total amount in the Life and Annuity Consumer Protection Fund exceeds five million dollars ($5,000,000), the commissioner shall reduce the amount of the assessment accordingly for the following year to eliminate that excess. An insurer, upon receipt of an invoice, shall transmit payment to the department for deposit in the Life and Annuity Consumer Protection Fund. Any balance remaining in the Life and Annuity Consumer Protection Fund at the end of the fiscal year shall be retained in the account, to be available in the next fiscal year.

(f)The commissioner may develop guidelines for implementing or clarifying these provisions, including guidelines for the allocation, distribution, and potential return of unused funds. The commissioner may, from time to time, issue regulations for implementing or clarifying these provisions.

(g)The commissioner shall provide a consolidated report annually on the department’s Internet Web site that shall include, but is not limited to, the following information:

(1)The number of opened consumer complaints related to life insurance or annuity products.

(2)The number of opened investigations related to life insurance or annuity products.

(3)The number of investigations related to life insurance or annuity products referred to and reported by prosecuting agencies.

(4)The number of administrative or regulatory cases related to life insurance or annuity products referred to the department’s legal division.

(5)The number of administrative or regulatory enforcement actions taken in cases related to life insurance or annuity products.

(6)Descriptions of efforts by the department to disseminate information to insurers and others regarding the applicable regulation of life insurance and annuity products, including consumer protection, purchasing and using insurance and annuity products, claim filing, benefit delivery, and dispute resolution.