As outlined by Insurance Commissioner, Dave Jones, here are the major new laws affecting California insurance beginning January 12, 2012.
SB 51 (Alquist): Requires health insurers and HMOs to put a larger share of the money they collect from consumers into actual medical care instead of overhead and profits. This new law authorizes Commissioner Jones to enforce in California provisions Patient Protection and Affordable Care Act (PPACA), which require HMOs and health insurers to have a medical loss ratio (MLR) of 85 percent for large group health insurance and 80 percent for small group and individual health insurance – meaning that insurers and HMOs have to put 85 percent of what they collect from large employers and 80 percent of what they collect in premium from individuals and small employers into actual medical care versus insurer or HMO overhead and profit.
SB 599 (Kehoe): Requires life insurers to obtain a beneficiary’s written declaration as to how he or she wants to receive their benefit payment. Prevents life insurers from taking advantage of beneficiaries by automatically and without consent depositing benefits into a “retained asset account” which allows the insurance company to earn interest that otherwise could be earned by the beneficiary.
SB 621 (Calderon): Protects consumers of life, health, and disability insurance from “discretionary clauses” in their insurance policies, which give the insurer the sole discretion to decide if a beneficiary has become disabled, even if the consumer has a doctor certify that they are disabled. This new law levels the playing field and gives consumers an even chance to prove that they are entitled to disability and other insurance, by making the “discretionary clauses” that insurers have been putting into their insurance policies as void and unenforceable.
AB 689 (Blumenfield): Establishes landmark consumer protections in the annuities marketplace to protect the public, particularly seniors, from fraudulent activities involving these complex insurance products. It also authorizes the Insurance Commissioner to revoke an insurance agent’s license, impose fines, and restore money lost to the consumer when suitability standards are violated.
AB 793 (Eng): Limits insurance agents’ and brokers’ ability to “cross-sell” reverse equity mortgages and annuities, thereby protecting seniors and others from unscrupulous agents and brokers who seek to steer them inappropriately into both financial products.
AB 1416 (Assembly Insurance Committee): Makes several changes to various Insurance Code sections dealing with agent licensing, training, and previously enacted legislation. It also permits the Insurance Commissioner to remove a life agent’s authority to transact variable life insurance contracts upon learning that the agent is no longer registered to transact securities with the U.S. Securities and Exchange Commission or the Financial Industry Regulatory Authority.
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