California Regulatory Report

March 7, 2012

California Regulatory Report Archives

Prepared for the State Bar Insurance Law Subcommittee by Bill Gausewitz, Michelman and Robinson, LLP

The following is a report of recent significant regulatory actions by the California Department of Insurance (CDI). The information is current as of the date of the report. Additional information about any of these proposals may be obtained from the CDI web site at www.insurance.ca.gov/0250-insurers/0500-legal-info/0200-regulations/proposed-regulations.cfm.

Department of Insurance Regulations under Review by OAL – There are presently no Department of Insurance regulations affecting insurers under review by the California Office of Administrative Law (OAL).

Recently Approved Regulations – OAL has taken the following actions on Department of Insurance regulations within the past two months:

• Life Settlement: The Department has proposed non-substantive changes to the Life Settlement regulations, Title 10, Cal. Code Regs § 2548.1, pursuant to the expedited procedure allowing non-substantive regulation changes without public notice and comment (Title 1, Cal. Code Regs § 100). OAL File # 2011-1215-03N; These regulations were approved on January 24, 2012.

   

• Policy Form Processing Cost Recovery: These regulations amend sections 2202(b), 2202(c) and 2202(d) of the Code of Regulations, Title 10, to increase the fees charged to insurance providers for processing, indexing and maintaining copies of documents defined in CCR sections 2201(a) and 2202(a) – primarily life, health and disability insurance. The regulations also amend section 2202(e) to allow the Commissioner to adjust a fee, when circumstances warrant, in a manner that is not necessarily uniform with fee adjustments in other filing classifications. OAL File # 2011-1230-01S. These regulations were approved on February 13, 2012.

   

• Loss Ratios for Individual Health Insurance: These regulations permanently adopt the currently effective emergency regulations requiring health insurers to satisfy the 80% medical loss ratio standard imposed by the federal Affordable Care Act. OAL File # 2011-1230-02S. These regulations were approved on February 8, 2012.

   

Regulations Proposed by the Department of Insurance – The following proposals are currently active in the Department of Insurance. That is, the Department has issued a formal Notice of Proposed Action on these proposals but has not yet submitted them for OAL review.

• Health Insurance – Gender Nondiscrimination – On October 14, 2011, the Department of Insurance proposed regulations to specify various circumstances which will be considered to be gender discrimination by insurers with respect to their treatment of transgender persons. The CDI file number for this rulemaking is REG-2011-00023. A hearing on the proposal was held on November 29, 2011.

   

• Premium Taxes – These regulations adopt standards to implement the decision of the State Board of Equalization in the California Automobile Insurance Company case. In that case the BOE held that insurers are permitted to pay premium taxes on the basis of premiums received rather than on the basis of written premium. The proposed regulations establish framework for an insurer that opts to transition from reporting and paying premium taxes based on premium written to premium received, while requiring newly admitted insurers to report and pay premium taxes on premium received as provided by the California Constitution. This proposal was previously submitted to OAL for approval but was withdrawn from OAL by the Department on February 7, 2012. The Department has until July 21, 2012 to resubmit this proposal to OAL.

   

• Annuity Nonforfeiture – On February 6 the Department proposed regulations to implement Insurance Code § 10168.25 regarding annuity nonforfeiture to regulate annuity nonforfeiture amounts. The proposed regulations adopt, with some modifications, the NAIC Model #806.

   

• Workshop on Life Settlement Regulations – The Department will hold a workshop in San Francisco on March 9 to consider possible amendments to the life settlement regulations – Title 10, Cal. Code Regs. §§ 2548.1 to 2548.31. The Department has not proposed a draft of actual proposed changes. The Invitation to the workshop lists only topics that may be discussed. A workshop is an informal off-the-record discussion which precedes formal rulemaking. The fact that an agency holds a workshop does not necessarily mean that the agency will then proceed to propose changes to the regulation. Any actual changes would require formal rulemaking with a formal notice and opportunity for public comment.