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SB-488 Insurers: data reporting.(2017-2018)

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Date Published: 07/13/2017 09:00 PM
SB488:v97#DOCUMENT

Amended  IN  Assembly  July 13, 2017
Amended  IN  Senate  May 02, 2017

CALIFORNIA LEGISLATURE— 2017–2018 REGULAR SESSION

Senate Bill
No. 488

Introduced by Senator Bradford

February 16, 2017

An act to amend Sections 927, 927.1, and 927.2 of, to amend the heading of Article 10.2 (commencing with Section 927) of Chapter 1 of Part 2 of Division 1 of, and to amend, renumber, and add Section 927.3 of, and to add Section 12962.5 to, the Insurance Code, relating to insurance.


LEGISLATIVE COUNSEL'S DIGEST


SB 488, as amended, Bradford. Insurers: women, minority, disabled veteran, veteran, and LGBT business enterprises: procurement and board diversity. data reporting.
Existing law requires each admitted insurer with premiums written equal to or in excess of $100,000,000 to periodically submit to the Insurance Commissioner a report on its minority, women, and disabled veteran business enterprise procurement efforts, as specified, and subjects an insurer to a civil penalty if the insurer fails to file the report. Existing law requires the commissioner to maintain a link on the Internet Web site of the Department of Insurance that provides public access to the contents of each report. Existing law provides that these provisions shall remain in effect until January 1, 2019.
This bill would add veteran and lesbian, gay, bisexual, and transgender (LGBT) business enterprises to the entities for which the reporting described above is required. The bill would require each admitted insurer to report information about which procurements are made from minority, women, disabled veteran, veteran, and LGBT business enterprises with at least a majority of the enterprise’s workforce in California. The bill would require each admitted insurer to submit a report regarding its governing board and board diversity efforts at the same time that it submits the report on procurement efforts. The bill would make an individual governing board member’s participation in the collection of data regarding governing board diversity voluntary. The bill would require the Insurance Commissioner to maintain a link on the Internet Web site of the Department of Insurance that provides public access to the aggregate of governing board and board diversity data reported by insurers. The bill would provide that governing board and board diversity data collected pursuant to these provisions is confidential, would require the department to keep confidential any information that could be used to identify an individual participating board member, and, except as specified, would prohibit the release of that information by an insurer or the department. The bill would require each report to be submitted on July 1, 2018, and then biennially thereafter. The bill would extend the operation of these provisions to January 1, 2025.
Existing law authorizes the commissioner to obtain information from insurers through various means, including an examination of the business and affairs of the insurer, or by the issuance of subpoenas or subpoenas duces tecum for witnesses to attend, testify, and produce documents before him or her on any subject touching insurance business or in the aid of his or her duties, as specified.
This bill would authorize the commissioner to require any class of insurers to respond to a data call by adopting an emergency regulation, as provided, if the data call directly relates to specified subjects. The bill would authorize the commissioner to initiate a data call on other subjects through an adopted regulation or other specific statutory authorization. The bill would limit the commissioner’s authority to issue a data call, except as provided, would require the commissioner to limit the subject of data calls to activity within the state, and would prohibit the commissioner from initiating a data call to obtain information that is otherwise available through other specified means.
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.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: NO  

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


SECTION 1.

 The heading of Article 10.2 (commencing with Section 927) of Chapter 1 of Part 2 of Division 1 of the Insurance Code is amended to read:
Article  10.2. Minority, Women, Disabled Veteran, LGBT, and Veteran Business Enterprises

SEC. 2.

 Section 927 of the Insurance Code is amended to read:

927.
 The Legislature finds and declares all of the following:
(a) It is in the state’s interest to encourage competitive business opportunities for all of its people. Insurers are uniquely positioned to build relationships within the communities they serve through the development, inclusion, and utilization of certified minority, women, LGBT, veteran, and disabled veteran business enterprises whenever possible. National companies are able to leverage buying power to save costs to the benefit of policyholders.
(b) It is in the state’s interest to encourage corporate leadership opportunities for all of its people. Insurers are uniquely positioned to build relationships within the communities they serve through the development of a corporate board that represents the diversity of the state.
(c) By providing that each major insurer submit to the Insurance Commissioner a report explaining the insurer’s supplier diversity statement and expressing its goals regarding certified minority, women, LGBT, veteran, and disabled veteran business enterprises, and the insurer’s efforts and goals regarding board diversity, and the commissioner placing that information on the department’s Internet Web site, that online resource will help facilitate these supplier relationships.

SEC. 3.

 Section 927.1 of the Insurance Code is amended to read:

927.1.
 For the purposes of this article, the following definitions apply:
(a) “Control” means to exercise the power to make policy decisions.
(b) “Disabled veteran business enterprise” has the same meaning as defined in subparagraph (A) of paragraph (7) of subdivision (b) of Section 999 of the Military and Veterans Code, or any successor provision. Disabled veteran business enterprise certification eligibility requirements shall be consistent with those imposed by the Department of General Services, and this section applies only to those disabled veteran business enterprises certified by the Department of General Services.
(c) “LGBT business enterprise” (LGBTBE) means a business enterprise that is 51 percent owned, managed, operated, and controlled by one or more lesbian, gay, bisexual, or transgender (LGBT) individuals who are citizens or lawful permanent residents of the United States, has been legally formed in the United States, and exercises independence from any non-LGBT business enterprise.
(d) “Minority business enterprise” means a business enterprise, physically located in the United States or its trust territories, that is at least 51 percent owned by a minority group or groups, or, in the case of any publicly owned business, at least 51 percent of the stock of which is owned by one or more minority groups, and whose management and daily business operations are controlled by one or more of those individuals. “Minority” includes African Americans, Hispanic Americans, Native Americans, and Asian Pacific Americans who provide proof of United States citizenship or legal resident alien status.
(e) “Operate” means to be actively involved in the day-to-day management of the enterprise and not to be merely officers or directors.
(f) “Women business enterprise” means a business enterprise physically located in the United States or its trust territories, that is at least 51 percent owned by a woman or women, or, in the case of any publicly owned business at least 51 percent of the stock of which is owned by one or more women, and whose management and daily business operations are controlled by one or more of those individuals, who provide proof of United States citizenship or legal resident alien status.
(g) “Veteran business enterprise” means a business enterprise, physically located in the United States or its trust territories, that is at least 51 percent owned by one or more veteran groups or, in the case of a publicly owned business, at least 51 percent of the stock of which is owned by one or more veteran groups, and whose management and daily business operations are controlled by one or more of those individuals.

SEC. 4.

 Section 927.2 of the Insurance Code is amended to read:

927.2.
 (a) (1) Commencing July 1, 2018, and biennially on July 1 of each even-numbered year thereafter, each admitted insurer, with California premiums written of one hundred million dollars ($100,000,000) or more, shall submit a report to the commissioner on its minority, women, veteran, LGBT, and disabled veteran business enterprise procurement efforts during the previous two years.
(2) The report shall include all of the following:
(A) The insurer’s supplier diversity policy statement.
(B) The insurer’s outreach and communications to minority, women, LGBT, veteran, and disabled veteran business enterprises, including:
(i) How the insurer encourages and seeks out minority, women, LGBT, veteran, and disabled veteran business enterprises to become potential suppliers.
(ii) How the insurer encourages its employees involved in procurement to seek out minority, women, LGBT, veteran, and disabled veteran business enterprises to become potential suppliers.
(iii) How the insurer conducts outreach and communication to minority, women, LGBT, veteran, and disabled veteran business enterprises.
(iv) How the insurer supports organizations that promote or certify minority, women, LGBT, veteran, and disabled veteran business enterprises.
(v) Information regarding appropriate contacts at the insurer for interested business enterprises.
(C) Information about which procurements are made from minority, women, disabled veteran, veteran, and LGBT business enterprises with a headquarters’ address in California, and from disabled veteran business enterprises, as defined in subdivision (b) of Section 927.1, with each category aggregated separately, to the extent that information is readily accessible. An insurer may also include other relevant information in the report.
(D) Information about which procurements are made from minority, women, disabled veteran, veteran, and LGBT business enterprises with at least a majority of the enterprise’s workforce in California, with each category aggregated separately, to the extent that information is readily accessible. An insurer may also include other relevant information in the report.
(3) An insurer that does not enter into contracts to procure goods or services in California satisfies the requirements of paragraph (2) by filing a statement with the commissioner attesting that it does not enter into procurement contracts in California.
(b) Nothing in this section shall be construed to require quotas, set-asides, or preferences in an admitted insurer’s procurement of goods or services, nor does this section apply to insurer producer or licensee contracts. Admitted insurers retain the authority to use business judgment to select the supplier for a particular contract.
(c) Nothing in this section shall preclude an admitted insurer that is a member of an insurance holding company system, as defined in Article 4.7 (commencing with Section 1215) of Chapter 2, from complying with paragraphs (1) and (2) of subdivision (a) through a single filing on behalf of the entire group of affiliated companies.
(d) Failure to file the report required by subdivision (a), by July 1, 2013, shall subject the admitted insurer to a civil penalty to be fixed by the commissioner, not to exceed five thousand dollars ($5,000), or if the act or practice was willful, a civil penalty not to exceed ten thousand dollars ($10,000). An insurer may request, and the commissioner may grant, a 30-day extension to file the report if needed due to unintended or unforeseen delays. If the insurer has failed to file the report within 30 days of a written notice by the commissioner that the insurer has failed to file the report, the commissioner may find that the failure to file the report was willful and increase the civil penalty to an amount not to exceed ten thousand dollars ($10,000). The penalty imposed by this section shall be enforced by the commissioner and is appealable by means of any remedy provided by Section 12940, or by Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code. This subdivision is the sole means for enforcement of this section.
(e) By September 30 of the reporting year, the commissioner shall establish and maintain a link on the department’s Internet Web site that provides public access to the contents of each admitted insurer’s report on minority, women, LGBT, veteran, and disabled veteran business enterprise procurement efforts. The commissioner shall include a statement on the department’s Internet Web site that the information contained in the insurer’s report on minority, women, LGBT, veteran, and disabled veteran business enterprises is provided for informational purposes only.

SEC. 5.

 Section 927.3 of the Insurance Code is amended and renumbered to read:

927.4.
 This article shall remain in effect only until January 1, 2025, and as of that date is repealed, unless a later enacted statute, that is enacted before January 1, 2025, deletes or extends that date.

SEC. 6.

 Section 927.3 is added to the Insurance Code, to read:

927.3.
 (a) (1) Commencing July 1, 2018, and biennially on July 1 of each even-numbered year thereafter, each admitted insurer with California premiums written of one hundred million dollars ($100,000,000) or more, shall submit a report to the commissioner on its governing board and board diversity efforts during the previous two years.
(2) The report shall include the following information:
(A) The demographic make-up makeup of the insurer’s governing board.
(B) The insurer’s goals surrounding board diversity, including outreach and communication strategies to diversify its board.
(b) (1) An insurer shall provide each board member with an opportunity to participate in a survey for the purpose of collecting and reporting the information described in subparagraph (A) of paragraph (2) of subdivision (a).
(2) The insurer shall distribute a copy of the survey described in paragraph (1) to each board member and to every new board member upon his or her appointment. At the time of distribution the board member shall be notified in writing that participation in the survey is voluntary, that there shall be no adverse action taken if the board member declines to participate, and that the information collected through the survey shall remain confidential and private, except to the extent that it is reported in the aggregate as described in subdivision (e).
(3) Neither an insurer nor the department shall in any way encourage, incentivize, or attempt to influence the decision of a board member to participate in the survey described in paragraph (1).
(c) This section shall not be construed to require quotas, set-asides, or preferences in regard to an admitted insurer’s governing board.
(d) This section shall not preclude an admitted insurer that is a member of an insurance holding company system, as defined in Article 4.7 (commencing with Section 1215) of Chapter 2, from complying with paragraphs (1) and (2) of subdivision (a) through a single filing on behalf of an entire group of affiliated companies.
(e) (1) By September 30 of the reporting year, the commissioner shall establish and maintain a link on the department’s Internet Web site that provides public access access, in the manner described in paragraph (2), to the aggregate of data reported by insurers pursuant to this section. The commissioner shall include a statement on the department’s Internet Web site that the information contained in the insurer’s report is provided for informational purposes only.
(2) Notwithstanding subdivision (f), for the purposes of paragraph (1) the department shall publish aggregated data that represents each reported category and includes all participating board members. The department shall not publish any information in a manner that makes any distinction by individual, insurer, insurer holding company, line of insurance, or in any other manner, considering any other information that is publicly available, that could link the published data to a participating individual.
(f) The data collected pursuant to this section is confidential and shall not be released by the department or an insurer under any circumstances, except as provided in this section.
(g) The report required by this section may be submitted as a single report with the report required by Section 927.2.

SEC. 7.

 Section 12962.5 is added to the Insurance Code, to read:

12962.5.
 (a) (1) The commissioner may require any class of insurers to respond to a data call by adopting an emergency regulation if the subject of the data call directly relates to any of the following:
(A) The insurer’s obligations under an insurance contract.
(B) Consumer behavior in selecting products or coverage limits.
(C) The insurer’s underwriting and marketing practices.
(D) The characteristics or behavior of claimants and insureds.
(2) The commissioner shall adopt emergency regulations to implement this subdivision in accordance with Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code, and for the purposes of that chapter, including Section 11349.6 of the Government Code, the adoption of rules shall be considered by the Office of Administrative Law to be necessary for the immediate preservation of the public peace, health and safety, and general welfare.
(b) The commissioner may initiate a data call on other subjects only through a regulation adopted pursuant to the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code) or as otherwise specifically authorized by statute.
(c) The commissioner may not initiate a data call except as provided in this section.
(d) The commissioner shall limit the subject of data calls to activity within California.
(e) The commissioner shall not initiate a data call to obtain information that is otherwise available by financial examination or submitted through regular filings with the department.

SEC. 7.SEC. 8.

 The Legislature finds and declares that Section 6 of this act, which adds Section 927.3 to 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 the privacy and personal information of individual insurance company board members, it is necessary that this information be kept confidential.