Work Comp, Privacy Most Prominent Issues in Calif. Legislature

August 11, 2003

Several bills of interest to the California property/casualty insurance industry – including proposals to reform the workers’ compensation system and address privacy issues – are pending on the Senate and Assembly floors. The Senate and the Assembly recessed after passing the controversial budget bill, and will reconvene on Aug. 18. The 2003 session is scheduled to end on Sept. 12.

In its current form, SB 1 would require a financial institution to provide a consumer with an option to “opt-out” of the disclosure of his or her nonpublic personal information to affiliated entities and to obtain a consumer’s written consent (“opt-in”) before sharing information with third parties. The bill passed the Senate earlier this year, but has been rejected twice by the Assembly Banking and Finance Committee. It would create the country’s most restrictive
privacy standards, according to the Association of California Insurance Companies (ACIC).

“ACIC believes current state law and Department of Insurance regulations give insurance policyholders adequate protection from any unauthorized use of personal financial information by insurance companies,” said ACIC president Sam Sorich. “The imposition of stricter requirements would only make it more difficult for insurers and other financial institutions to do business in the state.”

Privacy will remain a legislative issue until proponents of a privacy initiative file the needed signatures to qualify for the March 2, 2004 statewide ballot. The ballot initiative would require a consumer’s consent before a company shares information with affiliates or non-affiliates. At a July 30 news conference, the backers of a statewide privacy initiative said they would delay the submission of signatures to the secretary of state until Aug. 19 to give the Assembly another chance to pass SB 1.

Workers’ compensation reform remains a top legislative priority this year, but the specifics of any legislation are still very much in doubt, Sorich said.

Twenty bills that addressed an array of workers’ compensation issues, including medical treatment, rehabilitation, litigation, administrative procedures and insurance rate regulation, were passed by Assembly and Senate committees on July 9, with the understanding that all of the bills would be referred to a Senate/Assembly conference committee later this legislative session. It will be up to the conference committee to craft reform legislation that is acceptable to the Senate and the Assembly, Sorich said.

Other bills still pending include:
· SB 27 would require a business releasing a customer’s personal information to a third party to disclose what information and to whom it was released.
· SB 551 would restrict an insurer’s ability to refer claimants to body repair shops. In concept, insurance industry representatives have agreed to language that reflects current insurance department regulations.
· AB 1049 would prohibit insurers from using an inquiry in an adverse
underwriting decision.
· AB 1181 would require that when a policy is issued, and in each renewal notice of an auto policy, rating information should be disclosed regarding the information that was applied in determining the premium that was charged for the policy.
· AB 1191 would require insurers to provide certain homeowners rating information, upon the request of the policyholder, in writing.
· AB 1729 would allow a plaintiff to sue an insured defendant by serving the complaint on the insurer without serving the defendant personally.

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