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AB-1442 Insurance: certificate of authority.(2023-2024)



Current Version: 02/17/23 - Introduced

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AB1442:v99#DOCUMENT


CALIFORNIA LEGISLATURE— 2023–2024 REGULAR SESSION

Assembly Bill
No. 1442

Introduced by Assembly Member Chen

February 17, 2023

An act to repeal and add Section 717 of the Insurance Code, relating to insurance.


LEGISLATIVE COUNSEL'S DIGEST


AB 1442, as introduced, Chen. Insurance: certificate of authority.
Existing law prohibits a person from transacting any class of insurance business in this state without first being admitted for that class. Under existing law, admission is secured by procuring a certificate of authority from the Insurance Commissioner. Existing law requires the commissioner, before granting a certificate of authority or amended certificate of authority to any applicant, to consider the qualifications of the applicant, as specified, and to issue a certificate of authority upon consideration of all relevant qualifications, unless the commissioner makes a finding that the applicant is materially deficient in respect to one or more of the specified qualifications.
This bill would, on or before September 1, 2024, require the department to provide a report to the Legislature on the number of applicants approved and denied in the preceding 10 years, the reasons for denying the certificates of authority, and recommendations on how to accommodate innovation and allow for more competition in California’s insurance market.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: NO  

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


SECTION 1.

 Section 717 of the Insurance Code is repealed.
717.

Before granting a certificate of authority or amended certificate of authority to any applicant, the commissioner shall consider the qualifications of said applicant in respect to the following subjects: (a) capital and surplus; (b) lawfulness and quality of investments; (c) financial stability; (d) reinsurance arrangements; (e) competency, character, and integrity of management; (f) ownership and control of issued and outstanding shares in the case of a capital stock insurer; (g) whether claims under policies are promptly and fairly adjusted and are promptly and fully paid in accordance with law and the terms of policies; (h) fairness and honesty of methods of doing business; (i) method by which said applicant was promoted if any of its promoters remain as stockholders or in management; and (j) hazard to policyholders or creditors.

Upon consideration of all relevant qualifications the commissioner shall issue a certificate of authority to such applicant, unless the commissioner shall have made a finding, or findings, that the applicant is materially deficient in respect to one or more of the items as outlined in (a) through (j), above.

SEC. 2.

 Section 717 is added to the Insurance Code, to read:

717.
 (a) Before granting a certificate of authority or amended certificate of authority to an applicant, the commissioner shall consider the qualifications of the applicant with respect to the following subjects:
(1) Capital and surplus.
(2) Lawfulness and quality of investments.
(3) Financial stability.
(4) Reinsurance arrangements.
(5) Competency, character, and integrity of management.
(6) Ownership and control of issued and outstanding shares in the case of a capital stock insurer.
(7) Whether claims under policies are promptly and fairly adjusted and are promptly and fully paid in accordance with law and the terms of policies.
(8) Fairness and honesty of methods of doing business.
(9) Method by which the applicant was promoted if any of its promoters remain as stockholders or in management.
(10) Hazard to policyholders or creditors.
(b) Upon consideration of all relevant qualifications, the commissioner shall issue a certificate of authority to the applicant, unless the commissioner has made a finding, or findings, that the applicant is materially deficient in respect to one or more of the items outlined in paragraphs (1) to (10), inclusive, of subdivision (a).
(c) (1) The department, on or before September 1, 2024, shall provide a report to the Legislature that includes all of the following:
(A) The number of applicants the commissioner has approved and the number of applicants the commissioner has denied in the preceding 10 years.
(B) The main reasons an applicant has been denied a certificate of authority.
(C) Recommendations on how to modernize this section and other related sections to accommodate innovation and allow for more competition in California’s insurance market.
(2) The report to be submitted pursuant to this subdivision shall be submitted in compliance with Section 9795 of the Government Code.