Insurance.

Existing law creates the Department of Insurance, headed by the Insurance Commissioner, and generally regulates the business of insurance in the state. (1) Existing law requires a notice of cancellation or a notice of nonrenewal of a policy of property insurance to include specified information about the reasons for the cancellation or nonrenewal. Existing law requires an insurer that does not offer at least 50 percent above the residential dwelling coverage limit to an applicant for a policy of residential property insurance to provide a disclosure regarding the department's Homeowners Coverage Comparison Tool. Existing law requires a nonadmitted insurer to provide a specified notice to a home state insured or applicant regarding the insurer's nonadmitted status. Existing law requires a renewal offer that modifies the terms and conditions of an earthquake insurance policy, rider, or endorsement issued outside of the California Earthquake Authority to include a specified statement in a stand-alone document that states the changes to the policy, rider, or endorsement. On or after July 1, 2020, this bill would require a notice of cancellation or a notice of nonrenewal of a policy of property insurance to include a statement that the policyholder may have the department review the cancellation, and would require those notices to include specified contact information for the department. The bill would clarify that an insurer that offers at least 50 percent above the residential dwelling coverage limit to an applicant for a policy of residential property insurance is not required to provide a disclosure regarding the department's Homeowners Coverage Comparison Tool. The bill would update the notice from a nonadmitted insurer to a home state insured or applicant to include contact information and internet website addresses for the department and the National Association of Insurance Commissioners. The bill would, on and after July 1, 2020, revise the required statement to be included with a modified renewal offer of an earthquake insurance policy, rider, or endorsement issued outside of the California Earthquake Authority. (2) Existing law requires a person who is licensed in this state as an insurance agent or broker, advertises insurance on the internet, and transacts insurance in this state, as defined, to identify certain information on the internet, regardless of whether the agent or broker maintains the internet presence or if the presence is maintained on the person's behalf. On or after July 1, 2020, this bill would clarify that the information be identified on the agent's or broker's internet website home page or in a prominently displayed link from the home page. The bill would additionally define an agent or broker who advertises insurance on the internet to be transacting insurance in this state if the agent or broker solicits a California resident, enters into preliminary contract negotiations with a California resident, executes a contract with a California resident, or transacts matters after and arising out of that contract with a California resident. (3) Existing law requires an insurer doing business in the state to have an annual audit by an independent certified public accountant. Existing law requires an insurer to file an audit report in conformity with standards adopted by the National Association of Insurance Commissioners, and authorizes the commissioner to grant multiple 30-day extensions for that report. This bill would require an insurer or group of insurers to establish an internal audit function, as defined, to provide assurance to the insurer's audit committee and management regarding the insurer's governance, risk management, and internal controls. The bill would require the internal audit function to be organizationally independent, and would require its head to report to the audit committee no less than annually on specified information, including the periodic audit plan and material findings from completed audits. The bill would exempt an insurer from these requirements if the insurer has annual direct written and unaffiliated assumed premium less than $500,000,000, as specified, or if the insurer is a member of a group of insurers that has annual direct written and unaffiliated assumed premium less than $1,000,000,000, as specified. (4) Existing law requires an insurer to file financial statements with the commissioner. For purposes of those financial statements, existing law, until January 1, 2021, authorizes a domestic insurer to take a credit for reinsurance if the reinsurance is ceded to an assuming insurer that has been certified by the commissioner as a reinsurer in this state and the insurer secures its obligations in accordance with certain requirements, as specified. This bill would indefinitely extend the above-described credit allowed for a domestic insurer. (5) Existing law requires the department to display public pleadings, orders, or documents relating to a formal enforcement action against a licensee on its internet website. Existing law requires the department to remove a pleading, order, or document from, or post a clarifying statement on, its internet website within 30 days after an enforcement action is withdrawn. Existing law requires the department to remove an order or pleading related to a disciplinary proceeding, enforcement action, or issuance of a restricted license from its internet website 10 years from the date the action becomes final or the restriction is removed, unless another specified action is active or pending or has been finalized against the licensee within the previous 10 years. This bill would require the department to additionally post or remove pleadings, orders, or documents relating to a formal enforcement action against an applicant. The bill would eliminate the retention of an order or pleading on the department's internet website for more than 10 years if another specified action is active or pending or has been finalized against the licensee within the previous 10 years. (6) Existing law sets forth the procedures for formal and informal administrative adjudications. Existing law authorizes the commissioner to use a specified informal adjudication process when the commissioner determines a licensee has made a minor misstatement in an application for a new or renewal license. This bill would repeal that informal process to adjudicate minor misstatements by licensees. (7) Existing law requires an insurer to cooperate with the Department of Child Support Services to identify claimants who also owe past-due child support, and to report those claimants to the department if the claim seeks an economic benefit, defined as a payment of at least $1,000, not including a claim for property damage, under a liability insurance policy or underinsured motorist policy. Existing law exempts specified economic benefits, including payments made after the claimant presents a final bill or signed invoice in an amount equal or greater to the insurance payment and payments made to the mortgagee or lienholder of the property. This bill would instead specify that an economic benefit under a property and casualty insurance policy does not include payments to replace or repair lost or damaged property. The bill would delete the exemptions for payments made after the claimant presents a final bill or signed invoice in an amount equal or greater to the insurance payment and payments made to the mortgagee or lienholder of the property. (8) Existing law, the Insurance Holding Company System Regulatory Act, requires each insurer that is authorized to do business in this state and that is a member of an insurance holding company system to register with the Insurance Commissioner and to file a registration statement containing specified information. Existing law authorizes the commissioner to participate in a supervisory college for a domestic insurer that is a member of an insurance holding company system to ensure the insurer's compliance with the act. The California Public Records Act (CPRA) generally requires state and local agencies to make their records available for public inspection, unless the records are exempt from disclosure. Existing law exempts from CPRA disclosure the information, documents, and copies obtained by the commissioner or any other person in the course of a specified examination or investigation of an insurance holding company, or otherwise reported to or provided to the commissioner pursuant to specified laws, and provides that information is not subject to subpoena or discovery in a private civil action. This bill would additionally exempt information, documents, and copies obtained by, reported to, or provided to the commissioner during the commissioner's participation in a supervisory college from the disclosure requirements of CPRA, as well as from subpoena or discovery in a private civil action. 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.