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AB-2611 Residential property insurance.(2017-2018)

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Date Published: 03/22/2018 09:00 PM
AB2611:v98#DOCUMENT

Amended  IN  Assembly  March 22, 2018

CALIFORNIA LEGISLATURE— 2017–2018 REGULAR SESSION

Assembly Bill No. 2611


Introduced by Assembly Member Obernolte

February 15, 2018


An act to amend Section 12744 of add Section 676.11 to the Insurance Code, relating to insurance.


LEGISLATIVE COUNSEL'S DIGEST


AB 2611, as amended, Obernolte. Home protection Residential property insurance.
Existing law generally regulates classes of insurance, including residential property insurance, and provides for the powers and duties of the Department of Insurance, headed by the Insurance Commissioner. Existing law limits the basis under which an insurer may cancel or fail to renew policies of insurance relating to loss of, or damage to, real property that is used predominantly for residential purposes.
This bill would establish an appeal process for an insured or applicant for insurance who disagrees with a determination made by an insurer using a wildfire risk model, as defined. The bill would require an insurer to provide notice to the insured or applicant giving the specific reasons for the decision if an appeal results in an adverse underwriting decision, and would require the notice to include the contact information of the unit within the Department of Insurance that performs review of those decisions. The bill would require the Insurance Commissioner to issue a bulletin to insurers with that contact information and issue updated information as necessary.

Existing law generally regulates classes of insurance, including home protection contracts. Existing law prohibits a person from issuing or offering to issue a home protection contract unless the person holds a home protection company license, and prohibits a foreign applicant from receiving a home protection company license unless specified requirements are met.

This bill would make technical, nonsubstantive changes to that 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 676.11 is added to the Insurance Code, immediately following Sections 676.10, to read:

676.11.
 (a) (1) An insured or applicant for a policy of residential property insurance who disagrees with a determination made by an insurer using a wildfire risk model, including, but not limited to, a determination whether to insure residential property or the amount of a premium for a policy of residential property insurance, may appeal the determination directly with the insurer.
(2) The insurer shall respond to an appeal filed pursuant to paragraph (1) within 30 calendar days. An insurer shall not make an adverse underwriting decision, as defined in Section 791.02, against its insured during the pendency of the appeal, including, but not limited to, cancellation, nonrenewal, or charging a premium increase on the policy.
(3) (A) If the appeal results in an adverse underwriting decision, as defined in Section 791.02, the insurer shall provide notice to the insured or applicant giving the specific reasons for the decision, including, but not limited to, each factual and legal basis known at that time by the insurer for the adverse underwriting decision. The notice shall also advise the insured or applicant that he or she may seek review by the department of the adverse underwriting decision and the notice shall include the mailing address, Internet Web site address, and telephone number of the unit within the department that performs this review function.
(B) The commissioner shall issue a bulletin to insurers providing the contact information of the unit within the department that performs the review function, as described in subparagraph (A), and issue updated information, as necessary.
(b) For purposes of this section:
(1) “Policy of residential property insurance” shall have the same meaning as defined in Section 10087.
(2) “Wildfire risk model” means a computer-based, map-based, or other measurement or simulation tool used by an insurer to rate, underwrite, or otherwise assess or evaluate the risk of wildfire or consequence of wildfire to residential structures.

SECTION 1.Section 12744 of the Insurance Code is amended to read:
12744.

(a)A person shall not issue or offer to issue home protection contracts in this state unless the person holds a home protection company license issued by the department, except as provided in subdivision (b) of this section.

(b)An insurer admitted for the class of insurance defined in Section 120 is authorized, in addition to the underwriting powers granted by the class, to issue home protection contracts, but the provisions of this part shall not be otherwise applicable to those insurers or their contracts.

(c)A license shall not be granted to a foreign applicant that has not fulfilled the requirements of Sections 716 and 717. For purposes of this part, the term “class of insurance” as used in Section 716 means the business of a home protection company. This section shall not prohibit the admission of a foreign home protection company that has actively transacted home protection business in its state of domicile for three years or more.

(d)The commissioner shall, by regulation, prescribe forms for applications for home protection company licenses consistent with the provisions of this part. A reference to certificate of authority in Article 3 (commencing with Section 699) of Chapter 1 of Part 2 of Division 1 means home protection company license.

(e)(1)Subject to paragraph (2), and notwithstanding subdivision (c) or a regulation to the contrary, the following requirements shall not apply to a foreign applicant:

(A)Filing a financial statement certified by the applicant’s home state regulatory official as a true and correct copy of the statement filed with that official. This exemption applies only if the official does not require a home protection company or the applicant to file a financial statement.

(B)Filing an examination report certified by the applicant’s home state regulatory official as a true and correct copy. This exemption applies only if the official does not prepare examination reports of home protection companies or has not prepared an examination report of the applicant.

(C)Holding a certificate of authority as an insurance company.

(2)The exemptions described in paragraph (1) apply only if the applicant’s chief executive officer stipulates that the company will provide financial reports in the same manner required of domestic home protection companies.