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Legislature passes omnibus bill to amend insurance code. A.B. 1416 sent to governor for signature. It clarifies that individuals and organizations licensed for both property and casualty are required to get just one $10,000 bond to act as a broker. It also changes the code to now require a non-resident application for an organizational insurance license to name at least one person from a state other than California who may exercise power and perform duties under the license. The bill additionally includes many technical, conforming and related changes and deletes obsolete provisions. >> Gov. Jerry Brown signs law enacting stronger consumer protections in annuities market. Sellers must now verify that an annuity purchase, exchange or replacement is reasonably suitable for the consumer, based on age, income, financial objectives, liquidity and other factors. An agent’s license can be revoked if standards are violated. Fines and damages can be assessed. Law takes effect Jan. 1. >> Legislature sends S.B. 51 to governor for signing. It adopts federal medical loss ratio standards as state law. >> California Earthquake Authority enters its first-ever transaction that uses the capital markets instead of a reinsurer to backstop earthquake claims losses. It is using a special-purpose reinsurance vehicle, Bermuda-based Embarcadero Re, which sold $150 million in three-year catastrophe bonds to investors. Demand for the bonds significantly exceeded the issuance. Proceeds were placed into a collateral trust account from which CEA can draw to cover actual insured losses and loss-related expenses covered by the reinsurance contract. CEA still funds about a third ($3.1 billion) of its reinsurance through traditional methods. Citigroup’s Agency and Trust Services is the Indenture Trustee of the Embarcadero Re insurance-linked securities transaction. >> The Association of California Insurance Companies commends Commissioner Dave Jones for changing how workers comp pure premium rate is calculated. He is having the workers comp review board compare rates against average insurer-filed pure premium rate that is actually being charged in the market.



Commissioner Thomas Leonardi takes his defense of the U.S. insurance regulatory system on the road. He says that the U.S. system works, it is the largest market in the world (33.56% of global market share, with Japan in second at 11.67%), and it doesn’t need to change state-based system in favor of a one-size-fits-all European model.



Delaware bankruptcy judge has ordered insurers, including Lloyd’s, to pay into settlement with sex abuse victims of the Catholic Diocese of Wilmington under the diocese’s Chapter 11 reorg plan. Insurers want to wait until priests’ appellate cases are decided before signing any deal on a settlement. The priests are arguing against the bankruptcy court’s prohibition on the diocese to make any future payments for sustenance, medical benefits or pensions to priests identified as child abusers.



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