The California Legislature is considering expanding the types of insurance transactions that could be handled electronically. According to bill text of AB 328, “existing law generally permits parties to contract to conduct transactions by electronic means but excepts specific transactions from this permission, including various provisions regarding insurance.” Insurance transactions are required by law to be made by mail.
The proposed bill would remove specified insurance provisions from the exception, allowing parties to conduct transactions by electronic means as long as they consent to it. It would also generally allow an insurer, with the consent of the insured, to pay covered claims by an electronic funds transfer, and would prohibit an insurer from requiring an insured to consent to payment by an electronic funds transfer. The bill would, however, prohibit the notice of cancellation from being sent electronically. Those must continue to go out in writing.
According to Steve Young, general counsel for Insurance Brokers and Agents of the West (IBA West), “As a general matter, the greater the movement toward electronic transactions, the better it is for everyone involved – the Department of Insurance, insurers, agents, brokers and consumers – because of the speed and reduced expense and improved efficiency” electronic transactions would facilitate.
The bill has been amended and re-referred to the Senate Banking, Finance and Insurance Committee. IBA West said it is supportive of the amendments and continues to monitor the bill’s progress.
Topics California
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