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.