Senate Committee on Insurance
Legislation, Regulation, and Litigation: Enforcement of the Unfair Practices Act
Joint Hearing with the Senate Budget Subcommittee No. 4 on State Administration and General Government
April 27, 2016 (Sacramento)
The Unfair Practices Act (UPA) establishes a basic code conduct for insurers to ensure that policyholders and claimants are treated fairly. Over the last decade or so, the insurance industry and the Department of Insurance have engaged in several legal skirmishes over regulations adopted pursuant to UPA. Some of the recent decisions and rulings have raised concerns about the enforceability of those regulations, as well as costs. During the hearing, the committee and subcommittee members examined the history of UPA, litigation related to the Insurance Commissioner's rulemaking authority, and potential legislative solutions.
Preparing for Global Warming and Drought: State of the Homeowners' Insurance Market
March 9, 2016 (Sacramento)
For each year that California’s severe drought continues, the chance of widespread and devastating fires grows. The purpose of this hearing is to examine the impact of climate change and drought on the availability and affordability of homeowners’ insurance in California’s expanding high and extreme wildfire risk areas. It will look at the increasing reluctance of the major insurers to offer insurance in these areas, the growing role of the surplus lines market, the role of the FAIR Plan as the “insurer of last resort,” and whether legislative or regulatory changes are needed to ensure communities can recover after a major disaster.
The State of the State Compensation Insurance Fund
March 11, 2015 (Sacramento)
The State Compensation Insurance Fund ("State Fund") was created by statute in 1914 to act as a workers’ compensation insurer for the state and to serve as the workers’ compensation "insurer of last resort" in the private market. It also serves as a Third Party Administrator (TPA) for the State of California and other self-insured public and private employers. Although created by the Legislature, it is operated as a private non-profit enterprise, and is supposed to be “neither more nor less than self-supporting.” The Senate Insurance Committee held an oversight hearing to assess the current operations of the State Fund that revisited findings from 2007 and 2008 that it had engaged in serious financial and operational improprieties, looked at the impact of subsequent and recent reforms, and assessed whether it is adequately managing its role as California’s workers’ compensation insurer of last resort. Participants included Insurance Commissioner Dave Jones and senior executives of the State Compensation Insurance Fund. Evidence was provided at the hearing that governance and other reforms have significantly improved operations, State Fund continues to address issues related to pricing and availability, and that it has a diminished role in the current market because of improved availability of private insurance.
Does Uninsured and Underinsured Motorist Coverage Meet Consumer Needs?
March 25, 2015 (Sacramento)
California law requires insurers that offer personal automobile coverage to offer a product known as “uninsured and underinsured motorist coverage” (“UM/UIM” coverage) intended to protect consumers from bodily injury-related damages caused by motorists that lack, or have too little, liabilty coverage. The law sets standards for UM/UIM coverage designed to keep premiums low, limit perverse incentives and fraudulent activity, and encourage greater financial responsibility on the part of insured; however, critics argue that some of these provisions are confusing, severely restrictive, and lead to unjust results. The committee held an oversight hearing on March 25, 2015, to examine whether California's UM/UIM coverage standards appropriately serves consumers. Participants included representatives from the Department of Insurance, consumer advocates, legal experts, and industry representatives. The committee considered testimony about the impact of California's standards, approaches taken by other states, and several reform proposals.