Calif. Senate Insurance Committee Approves AB 393 and AB 481

June 30, 2000

The Senate Insurance Committee approved Assembly Bill 393, the agent licensing bill, and Assembly Bill 481, the claims bill, at a hearing on June 28.

AB 393 would prohibit employees of insurance companies who do not have agent licenses from “effecting contracts of insurance,” but fails to define “effecting.” The bill was amended to allow those employees to make “clerical changes,” and directs the California Department of Insurance (CDI) to define what those changes would be.

The National Association of Independent Insurers (NAII) testified against both bills. The association believes that mandating the licensing of employees who handle routine changes to existing policies would be an unnecessary burden on insurers, with an end result of slower service to consumers.

AB 481 would require the insurance commissioner to include restitution to policyholders in every settlement with the CDI where the commissioner has determined that the insurer failed to comply with fair claims settlement practices. NAII’s argument is that restitution is not warranted in every case and that mandating it would hinder the settlement process. Both measures are now headed to the Senate floor.

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