Legislation & Court Cases

Calif. court refuses summary judgment to insurer in COVID case

Judy Greenwald January 27, 2023

A Los Angeles state court on Thursday refused to grant an Allianz SE unit’s motion for summary judgment in a COVID-19-related business interruption case that was returned to a lower court after a pro-policyholder state appeals court ruling.

In July, in a rare policyholder victory, the California Court of Appeal in Los Angeles reversed a lower court and reinstated the coverage lawsuit filed by a Los Angeles hotel and restaurant, Marina Pacific Hotel and Suites LLC, stating it was premature to dismiss the litigation, according to the ruling in Marina Pacific Hotel and Sites LLC et al. v. Fireman’s Fund Insurance Co.

Plaintiffs in the case, who are owners of the Hotel Erwin and Larry’s, an adjacent restaurant in the Los Angeles neighborhood of Venice, sued Allianz SE unit Fireman’s Fund in July 2020 under their commercial property insurance policy, which provided $22 million in business interruption coverage.

The ruling issued Thursday by a different judge in Superior Court in Santa Monica cites the appellate court ruling and states, “Defendant fails to engage Plaintiff’s allegations that it suffered ‘direct physical loss or damage’ due to COVID under the Business Income, Business Access and Civil Authority coverage.”

It states the insurer “does not present any evidence or argument challenging Plaintiff’s allegation that the COVID virus is an external force that causes physical change or alteration onto Hotel Erwin’s property,” and “fails to negate Plaintiff’s allegation that the surface at Hotel Erwin were exposed to COVID and the virus was present on them.”

“At best, defendant’s evidence suggests there may have been additional, contributing causes for Plaintiff’s business suspension and reduction in addition to the physical loss or damage caused by the virus,” the order states.

In December, the court issued a motion to compel Fireman’s Fund president and CEO William Scaldaferri to participate in a deposition, which took place on Jan. 10.

Attorneys in the case did not respond to requests for comment.

CA Court finds direct physical loss or damage adequately caused by presence of COVID-19

The California Court of Appeal recognized that its conclusion differed from courts across the country.

The court decided that direct physical loss or damage could be shown without evidence of a physical alteration in the insured property.

The California Court of Appeal has reversed the trial court’s granting of demurrer and found that an insured adequately pled a claim of direct physical loss or damage due to the presence of the COVID-19 virus on an insured property. The case is Marina Pacific Hotel & Suites, LLC v. Fireman’s Fund Ins. Co., No. B316501, 2022 Cal. Ct. App. (Ct. App. July 13, 2022).

Fireman’s Fund insurance company issued a commercial property policy to Mariana Pacific Hotel and Suites for the time period between July 1, 2019, and July 1, 2020, that provided coverage for direct physical loss or damage to the insured property. The policy provided business interruption coverage with a $22 million limit for the “actual loss of business income and necessary extra expense you sustain due to necessary suspension of your operation during the period of restoration arising from direct physical loss or damage to property.”

Fireman’s paid out for the actual loss of business income due to the necessary suspension of operations during the period of restoration arising from direct physical loss or damage to the property. The hotel filed an amended complaint alleging that “the presence of COVID-19 on property, including on and within Insured Properties, caused and continues to cause physical loss and/or damage to property by causing, among other things, a distinct, demonstrable or physical alteration to property.”

The first amended complaint also alleged that “[a] study by the Virology Journal showed that COVID-19 can survive on surfaces up to 28 days, serving as a vehicle for transmission during that time span.” The hotel alleged that COVID-19 had been present in and before March 2020 on a variety of physical objects in the insured properties, including furniture, countertops, walls, bedding, appliances and food and other packaged items, as well as in the air. According to a government order, the hotel had to be evacuated, decontaminated, or disinfected and one employee was ordered by the Department of Health to evaluate the hotel and quarantine.

In order to meet the physical loss or damage to property requirement, the hotel must have closed or completely suspended operations. Fireman’s Fund demurred to the first amended complaint and argued that the hotel failed to allege facts showing that there was direct physical loss or damage to the covered property. Fireman’s Fund noted that courts across the country had ruled the pandemic did not equate to physical loss or damage and then argued that loss of use alone did not constitute direct physical loss or damage.

The trial court granted Fireman’s Fund’s demurrer, and relied on MRI Healthcare Center of Glendale, Inc. v. State Farm General Ins. Co., 187 Cal. App. j4th 766 (2010), which held that “accidental direct physical loss required ‘an actual change in insured property then in a satisfactory state, occasioned by accident or other fortuitous event directly upon the property causing it to become unsatisfactory for future use or requiring that repairs be made to make it so. . . . where the property has simply been rendered unusable based on a virus, rather than an external force, the loss of use of the property in a typical manner is not a ‘directly physical loss’ contemplated by the insurance policy.”

On appeal, the hotel pointed to prior cases where the Court of Appeal held that a home had suffered physical loss or damage when the land under the home slid away, leaving the home standing on the edge of a previously nonexistent cliff. The hotel noted another case in which a third-party liability policy was in place, and the existence of asbestos fibers on surfaces in a building constituted property damage.

The hotel pleaded direct physical loss or damage to covered property within the definition articulated in MRI Healthcare, a distinct, demonstrable, physical alteration of the property. The hotel also alleged that physical loss or damage caused a slowdown of the operation of the business while the covered property was restored or remediated, triggering their business interruption coverage. The court decided that direct physical loss or damage could be shown without evidence of a physical alteration in the insured property.

Many prior cases, including Inns-by-the-Sea v. California Mutual Ins. Co., 71 Cal. App. 5th 688 (2021), involved allegations of loss of use of insured property as a result of government-ordered closures to limit the spread of COVID-19, rather than a claim the presence of the virus on the insured premises caused physical damage to covered property, which in turn led to business losses. Because the insureds adequately alleged losses covered by Fireman’s Fund’s policy, they were entitled to an opportunity to present their case, at trial or in opposition to a motion for summary judgment.

Editor’s Note: The court recognized that its conclusion was at odds with almost all of the decisions considering whether business losses from the pandemic shutdowns were covered. In this case, the federal case law was not binding on the court, and the pleading rules were different in federal court when evaluating a trial court order sustaining a demurrer. Under California law, different from federal law, the plausibility of the insureds’ allegations has no role in deciding a demurrer requiring the court to deem as true, however improbable, facts alleged in a pleading.

CHAPTER 11. Cancellation and Failure to Renew Certain Property Insurance [675 - 679.7

678.  

(a) (1) At least 45 days before the policy expiration, an insurer shall deliver to the named insured or mail to the named insured at the address shown in the policy, either of the following:

(A) An offer of renewal of the policy contingent upon payment of premium as stated in the offer, stating each of the following:

(i) Any reduction of limits or elimination of coverage. That reduction of limits or elimination of coverage shall identify the specific limits being reduced or coverage being eliminated by the offer of renewal. The elimination of coverage for the previously covered peril of fire shall be subject to subdivision (b) of Section 10103.6.

(ii) The telephone number of the insurer’s representatives who handle consumer inquiries or complaints. The telephone number shall be displayed prominently in a font size consistent with the other text of the renewal offer.

(B) A notice of nonrenewal of the policy. That notice shall contain all of the following:

(i) The specific reason or reasons for the nonrenewal.

(ii) The telephone number of the insurer’s representatives who handle consumer inquiries or complaints. The telephone number shall be displayed prominently in a font size consistent with the other text of the notice of nonrenewal.

(iii) Until July 1, 2020, a brief statement indicating that if the consumer has contacted the insurer to discuss the nonrenewal and remains unsatisfied, the consumer may have the matter reviewed by the department. The statement shall include the telephone number of the unit within the department that responds to consumer inquiries and complaints.

(iv) On or after July 1, 2020, a statement that if the consumer has contacted the insurer to discuss the nonrenewal and remains unsatisfied, the consumer may have the matter reviewed by the department. The statement shall include the department’s internet website, www.insurance.ca.gov, the department’s telephone number, (800) 927-HELP (4357), and the mailing address of the department’s Consumer Services Division, 300 S. Spring Street, Los Angeles, CA 90013.

(2) On and after July 1, 2022, subdivision (a) of Section 1013 of the Code of Civil Procedure applies if an offer or notice is mailed.

(b) If an insurer fails to give the named insured either an offer of renewal or notice of nonrenewal as required by this section, the existing policy, with no change in its terms and conditions, shall remain in effect for 45 days from the date that either the offer to renew or the notice of nonrenewal is delivered or mailed to the named insured. A notice to this effect shall be provided by the insurer to the named insured with the policy or the notice of renewal or nonrenewal.

(c) Notwithstanding subdivisions (a) and (b), with respect to a notice of nonrenewal for a policy that expires on or after July 1, 2020, the following timelines apply:

(1) At least 75 days before the policy expiration, the insurer shall deliver the notice of nonrenewal to the named insured or mail the notice of nonrenewal to the named insured at the address shown in the policy. The notice shall include the information contained in subparagraph (B) of paragraph (1) of subdivision (a). On and after July 1, 2022, subdivision (a) of Section 1013 of the Code of Civil Procedure applies if a notice is mailed.

(2) If an insurer fails to give the named insured a notice of nonrenewal at least 75 days before the policy expiration, as required by paragraph (1), the existing policy, with no change in its terms and conditions, shall remain in effect for 75 days from the date that the notice of nonrenewal is delivered or mailed to the named insured. A notice to this effect shall be provided by the insurer to the named insured with the notice of nonrenewal.

(d) A policy written for a term of less than one year shall be considered as if written for a term of one year. A policy written for a term longer than one year, or a policy with no fixed expiration date, shall be considered as if written for successive policy periods or terms of one year.

(e) A notice of nonrenewal for a residential property insurance policy expiring on or after July 1, 2021, shall be accompanied by the following notice:

The California Department of Insurance has developed the California Home Insurance Finder, an online tool that can assist you in obtaining insurance for your home. The Finder contains names, addresses, telephone numbers, and internet website links of licensed insurance agents, brokers, and insurance companies that may be able to sell insurance to you. The Finder is organized by ZIP Code and the languages in which the agent, broker, or insurance company sells insurance.

The California FAIR Plan (FAIR Plan) provides basic property insurance as the “insurer of last resort” if you cannot find insurance coverage for your property in the normal (voluntary) insurance market. The FAIR Plan provides basic property insurance coverage for residential structures, as well as personal property coverage for residential and business occupancies. However, FAIR Plan policies may not cover liability, theft, or water damage, among other things. There are also optional coverages available for both residential properties. Applications can be made directly with the FAIR Plan (cfpnet.com), although the FAIR Plan strongly encourages use of a licensed agent or broker for assistance in preparing and obtaining a quote. There is no additional cost for using an agent or broker for purchasing a FAIR Plan policy.

California law requires an agent or broker to assist a person seeking a FAIR Plan policy by (1) submitting a coverage application to the FAIR Plan on behalf of the consumer, (2) providing the consumer the FAIR Plan’s internet website address and toll-free telephone number, or (3) obtaining a policy for the consumer through an admitted or nonadmitted insurer.

To supplement a FAIR Plan policy, a Difference in Conditions (DIC) policy should be considered. A DIC policy is sold by some private insurers, and provides coverage for things not covered by the basic property insurance policy provided by the FAIR Plan. A consumer who wants broader coverage than that provided by the FAIR Plan policy should contact an agent, broker, or insurance company that offers a DIC policy to obtain this additional coverage. The Department of Insurance maintains a list of insurance companies that sell DIC policies on its internet website (insurance.ca.gov). Additional assistance may be obtained by contacting an agent or broker listed with the department’s online agent locator.

(f) An insurer may use a notice substantially similar to the notice set forth in subdivision (e) to the extent that the notice provides additional or more detailed information.

(g) This section applies only to policies of insurance specified in Section 675.

(Amended by Stats. 2021, Ch. 627, Sec. 2. (AB 1511) Effective January 1, 2022.)

First-in-nation legislation for early warning and ranking of extreme heat waves introduced in California Assembly

News: 2022 Press Release

For Release: February 16, 2022

Media Calls Only: 916-492-3566

Email Inquiries: cdipress@insurance.ca.gov

First-in-nation legislation for early warning and ranking of extreme heat waves introduced in California Assembly

AB 2238 jointly authored by Assembly Members Luz Rivas and Eduardo Garcia and sponsored by Commissioner Lara would create statewide advance warning and ranking system to help protect vulnerable Californians from climate change-intensified injuries

SACRAMENTO, Calif. – California State Assembly Members Luz Rivas (D-San Fernando Valley) and Eduardo Garcia (D-Coachella), in partnership with Insurance Commissioner Ricardo Lara, formally introduced legislation today that would be the first in the nation to create a statewide advance warning and ranking system of extreme heat waves in order to help save lives, reduce hospitalizations, and protect vulnerable communities. State Senators Henry Stern (D-Los Angeles) and Bob Hertzberg (D-Los Angeles) are principal co-authors of this legislation.

California has experienced record-breaking heat waves in recent years that are projected to increase in frequency and severity. In 2020, emergency room visits increased by 10 times the normal number during record-breaking heat as high as 121 degrees in Los Angeles County. California’s 2021 heat wave broke records across the state, with Sacramento topping out at 109 degrees and the Coachella Valley having its hottest year ever with temperatures reaching 123 degrees. Temperatures climbed to near 90 degrees in Los Angeles during Super Bowl LVI, when many people are unprepared to experience high heat in mid-February.

The idea of ranking heat waves was first proposed by Commissioner Lara and the California Climate Insurance Working Group, which issued a new report in 2021 aimed at protecting Californians who are more vulnerable to the impacts of climate change. According to the newly introduced bill, “[h]eat waves and extreme heat are responsible for more deaths than all other extreme weather events, and disproportionately impact communities of color, persons with disabilities, seniors, and low-income communities.”

“Extreme heat waves are the deadliest climate threat that California is facing today. With more heat waves forecast in the years ahead, it is essential to public health and safety that we help Californians prepare, especially our most vulnerable,” said Insurance Commissioner Ricardo Lara, who was a member of the Climate Insurance Working Group. “Giving advance warning and ranking these heat waves help us confront the growing threat of extreme heat with actions that people and communities can take to stay safe and healthy.”

“California’s climate has become increasingly erratic – we must take bold action to protect our residents from climate crises like extreme heat, which has intensified in both severity and occurrence,” said Assemblywoman Luz Rivas (D-Los Angeles), Chair of the Assembly Natural Resources Committee. “For years, I have elevated extreme heat policy issues because we cannot keep leaving our most vulnerable residents exposed to dangerous heat waves without proper warning or preparation. I’m excited to work with Commissioner Ricardo Lara and my colleague Eduardo Garcia, both of whom are environmental leaders and champions for Californians disproportionately suffering from the effects of rising temperatures.”

“Extreme heat is a matter of life and death in my district and throughout California. We can no longer ignore this escalating climate consequence as it jeopardizes health and safety conditions for residents,” said Assemblymember Eduardo Garcia (D-Coachella), Chair of the Assembly Utilities and Energy Committee. “Assemblymember Luz Rivas, Insurance Commissioner Lara, and I are taking legislative action and enlisting support to better prepare and protect our most vulnerable communities with this first-in-the-nation, lifesaving heat ranking system.”

"When it’s 110 and above in the San Fernando Valley, it's the people with medical issues who are homebound without shade, sufficient insulation, AC, or stable power supplies that I worry most about. This legislation is needed to notify everyone of what is coming and mobilize resources to those who need it," said Senator Henry Stern (D-Los Angeles), Chair of the Senate Natural Resources and Water Committee and Joint Legislative Committee on Emergency Management.

“We are no longer in the business of climate change as a distant problem to deal with in the future, we are seeing the devastating impacts of a changed climate today, especially here in California,” said Senate Majority Leader Emeritus Bob Hertzberg (D-Van Nuys). “Extreme heat is killing Californians, disproportionately impacting communities of color and our most vulnerable. This heat ranking system is vital to protecting our state and will save countless lives.”

AB 2238 directs the California Environmental Protection Agency (Cal EPA) to work in coordination with the California Department of Insurance and the Governor’s Office of Planning and Research (OPR) to create and implement a statewide extreme heat ranking system. Heat-wave ranking would include the projected health impact and meteorological data, such as maximum and minimum temperatures, as well as how long a heat wave is anticipated to persist.

The Integrated Climate Adaptation and Resiliency at OPR would undertake a communications strategy and planning guidance for local communities in consultation with a variety of local stakeholders. This bill also directs the Department of Insurance to study the insured and uninsured costs related to past extreme heat waves in order to identify “insurance gaps” of uncovered costs and promote more effective risk communication and planning.

An early warning ranking system for heat waves would further empower local governments and communities to plan in advance and implement specific policies to reduce the impacts from the harshest heat waves, especially on vulnerable communities and those more susceptible to extreme heat.

Commissioner Lara and the authors of AB 2238 first proposed the bill last November at the international climate conference, COP 26 — the 26th United Nations Climate Change Conference of Parties — in Glasgow, 

New insurance laws for 2022 will protect Californians’ health and safety

News: 2022 Press Release

For Release: January 4, 2022

New insurance laws for 2022 will protect Californians’ health and safety

Commissioner Lara-sponsored legislation takes effect this year

SACRAMENTO, Calif. — California consumers and hard-working families will have additional insurance protections under new laws now in effect in 2022. These include laws that provide new health coverage options for older adults being cared for by their adult children, expand requirements for medically necessary basic health care services including women’s reproductive services, and increase insurance oversight to protect the safety of people recovering from substance use disorders and prevent child abuse by youth volunteers.

The California Department of Insurance will also implement new insurance requirements to protect those held in for-profit detention facilities and prisons – the first law of its kind nationwide.

“We are protecting Californians’ health with new coverage options for families caring for older adults while preventing discrimination and abuse,” said Insurance Commissioner Ricardo Lara, who sponsored these new laws. “My Department of Insurance is using every tool at our disposal to protect consumers including expanding and enforcing insurance laws as well as working with the Legislature and Governor Newsom on creating new laws.”

  • Assembly Bill 570, authored by Assembly Member Miguel Santiago, will increase access to health coverage and help reduce coverage costs for older adults by allowing adult children to add their dependent parents, or step-parents, to their health coverage policies in the individual market just as dependent children can currently be added to their parents’ health coverage. The Department of Insurance will be implementing the new coverage option, which will be made available during the open enrollment period starting in November 2022, with coverage effective January 1, 2023.

  • Senate Bill 280, authored by Senator Monique Limón, will remove discriminatory practices in the large group health insurance market by requiring these health insurance policies to cover medically necessary basic health care services such as women’s reproductive services, HIV medicines, cancer treatments, obesity care, and organ transplants. In addition, it codifies the federal Affordable Care Act’s prohibition on discriminatory large group health insurance benefit designs and marketing practices under California law and forbids discrimination based upon sexual orientation and gender identity.

  • Assembly Bill 1158, authored by Assembly Member Cottie Petrie-Norris, will ensure that licensed alcohol or drug abuse recovery and treatment facilities and recovery residences that contract with a government entity maintain minimum insurance coverage levels to ensure more adequate consumer protections.

  • Assembly Bill 506, authored by Assembly Member Lorena Gonzalez, will require youth service organizations to implement child abuse and neglect prevention measures, mandate administrators, employees, and regular volunteers of youth service organizations to take training on child abuse and neglect identification and reporting, and permit liability insurance companies to confirm compliance with these requirements.

  • Senate Bill 334, authored by Senator María Elena Durazo, will require private, for-profit prisons and detention facilities operating in California to adhere to all state and local health, safety, fire, and labor standards already mandated today for state and local publicly managed prisons and facilities while also requiring they obtain workers’ compensation and liability insurance coverage from an admitted insurance carrier authorized by the Department of Insurance to do business in California.

 Commissioner Lara has already taken steps to implement these new consumer protection laws:

  • Ordering insurance companies to cover the costs of injectable PrEP medication to prevent HIV infection in at-risk adults and adolescents. The Federal Drug Administration approved the use of injectable PrEP on December 20, 2021. The U.S. Centers for Disease Control report that growing use of PrEP has helped to decrease new HIV infections. The Commissioner’s Bulletin also directs insurance companies to eliminate discriminatory benefit plans in large group insurance pursuant to SB 280.

  • Issuing a notice to insurance companies about the new insurance requirements covering for-profit prisons and detention centers under SB 334.

    Commissioner Lara thanked Governor Gavin Newsom for protecting California consumers through the signing of 11 bills that he sponsored this past legislative year. These new laws will expand access to insurance, ensure discriminatory insurance practices cannot continue, create critical protection measures in various essential business sectors, increase diversity on insurance company boards, and expand job opportunities for the state’s small and diverse businesses, among others. Visit the Department of Insurance website for a full list.

Governor Newsom Signs Executive Order Extending Price Gouging Protections for Consumers

Published: Dec 30, 2021

SACRAMENTO – Governor Gavin Newsom today signed an executive order that supports ongoing recovery efforts in counties severely impacted by wildfires by extending various prohibitions on price gouging.

The order also allows state-level prohibitions in other counties, where recovery efforts are further along, to expire, allowing local officials to enact similar protections if deemed necessary.

A copy of the Governor’s executive order can be found here.

Senate Bill No. 11

CHAPTER 128 An act to amend Sections 10091 and 10094 of, and to add Section 10094.5 to, the Insurance Code, relating to insurance, and declaring the urgency thereof, to take effect immediately. [Approved by Governor July 23, 2021. Filed with Secretary of State July 23, 2021.] legislative counsel’ s digest SB 11, Rubio.

The California FAIR Plan Association: basic property insurance: exclusions. Under existing law, the California FAIR Plan Association is a joint reinsurance association in which all insurers licensed to write basic property insurance participate in administering a program for the equitable apportionment of basic property insurance for persons who are unable to obtain that coverage through normal channels. Existing law defines “basic property insurance” for these purposes, and excludes from that definition insurance on automobile or farm risks.

Existing law authorizes the governing committee of the association to establish separate classifications of written premiums for the purpose of equitable distribution of basic property insurance, but prohibits those classifications from including premiums from automobile or farm risks. This bill would instead exclude insurance on automobile risks, commercial agricultural commodities or livestock, or equipment used to cultivate or transport agricultural commodities or livestock from the definition of “basic property insurance,” and would require the association, within 90 days of the bill’s operative date, to file a new or amended rate application with the Insurance Commissioner consistent with these exclusions.

The bill would prohibit the governing committee from including premiums from automobile risks, commercial agricultural commodities or livestock, or equipment used to cultivate or transport agricultural commodities or livestock from the above-described separate classifications. This bill would declare that it is to take effect immediately as an urgency statute. The people of the State of California do enact as follows:

SECTION 1. Section 10091 of the Insurance Code is amended to read: 10091. Unless the provision or context otherwise requires, the following definitions govern the construction of this chapter: 93 (a) “Association,” “industry placement facility,” or “facility,” means a joint reinsurance association, the California FAIR Plan Association, formed by insurers licensed to write and engaged in writing basic property insurance within this state to assist persons in securing basic property insurance and to formulate and administer a program for the equitable apportionment among insurers of basic property insurance. (b) “Commissioner” means the Insurance Commissioner of this state. (c) (1) “Basic property insurance” means insurance against direct loss to real or tangible personal property at a fixed location in those geographic or urban areas, as designated by the commissioner, from perils insured under the standard fire policy and extended coverage endorsement, from vandalism and malicious mischief, and includes other insurance coverages as may be added with respect to that property by the industry placement facility with the approval of the commissioner or by the commissioner, but shall not include insurance on automobile risks, commercial agricultural commodities or livestock, or equipment used to cultivate or transport agricultural commodities or livestock. (2) For the purposes of earthquake coverage that is provided as a component of basic property insurance, the association shall sell only the policy described in Section 10089. In force policies of basic property insurance that include earthquake coverage shall be renewed with the coverage specified in Section 10089, and the association shall comply with the notice requirements of paragraph (2) of subdivision (a) of Section 10086. (d) “Inspection bureau” means the organization or organizations designated by the association with the approval of the commissioner to make inspections to determine the condition of the properties for which basic property insurance is sought and to perform other duties as may be authorized by the association. (e) “Premiums written” means gross direct premiums charged with respect to property in this state on all policies of basic property insurance and the basic property insurance premium components of all multiperil policies, less return premiums, dividends paid or credited to policyholders, or the unused or unabsorbed portions of premium deposits. (f) “Insurer” means a person who undertakes to indemnify another against loss, damage, or liability arising from a contingent or unknown event, and shall include reciprocals and interinsurance exchanges.

SEC. 2. Section 10094 of the Insurance Code is amended to read: 10094. (a) Within 30 days after the effective date of this chapter, with the approval of the commissioner, all insurers licensed to write and engaged in writing in this state, on a direct basis, basic property insurance or any component of basic property insurance in multiperil policies, shall establish an industry placement facility, the California FAIR Plan Association, to formulate and administer a program for the equitable apportionment among insurers of basic property insurance that may be afforded to persons having an interest in real or tangible personal property who, after diligent effort, as specified in subdivision (a) of Section 10093, are unable to procure insurance through normal channels from an admitted insurer or a surplus 93 Ch. 128 — 2 — line broker. Each insurer, as a condition of its authority to transact those kinds of insurance in this state, shall participate in an industry placement facility program in accordance with rules to be established by a governing committee, composed of nine insurers annually elected in the manner to be provided in the program.

The governing committee shall also have as nonvoting members one representative of insurance agents, one representative of insurance brokers, one representative of surplus line brokers, and one representative of the public, each to be appointed by the Governor. (b) The governing committee may establish separate classifications of written premiums for the purpose of equitable distribution, but shall not include premiums from automobile risks, commercial agricultural commodities or livestock, or equipment used to cultivate or transport agricultural commodities or livestock. (c) The program may provide, with the approval of the commissioner, for assessment of all members in amounts sufficient to operate the facility, and may establish maximum limits of liability to be placed through the program, reasonable underwriting standards for determining insurability of a risk, and commission to be paid to the licensed producer designated by the applicant.

SEC. 3. Section 10094.5 is added to the Insurance Code, to read: 10094.5. Within 90 days following the effective date of this section, the association shall file a new or amended rate application with the commissioner consistent with paragraph (1) of subdivision (c) of Section 10091.

SEC. 4. This act is an urgency statute necessary for the immediate preservation of the public peace, health, or safety within the meaning of Article IV of the California Constitution and shall go into immediate effect. The facts constituting the necessity are: Many farmers, growers, and ranchers rely on insurance in order to secure loans used for operation. The Legislature finds that commercial insurance for farmers has become increasingly unavailable and that, as such, the farms, farmworkers, and Californians as a whole may suffer because of this unavailability. Consequences from that unavailability may include the closure of farms unable to find insurance, employment struggles for the affected farm workers, and higher food costs. In order for farmers, growers, and ranchers to obtain coverage from the FAIR Plan approved by California Department of Insurance as soon as possible, it is necessary that this measure go into effect immediately.

California Insurance Company pushes for its “day in court”

by Lyle Adriano 09 Jul 2021

Following the dismissal of its lawsuit against the California Department of Insurance (CDI), California Insurance Company (CIC) has publicized its intention to have its “day in court” to make its case on why it should be allowed to redomesticate its business from California to New Mexico.

CIC initially filed a lawsuit against the CDI, to stop the regulator from placing the insurance company into conservatorship – a measure the insurer says is reserved only for insolvent companies or when there is a risk to policyholders. CDI had initially ruled that CIC’s redomestication to New Mexico did not present any risks to California policyholders, but later made an “about face” and waged a bad faith campaign against the insurer, according to CIC.

Read more: California Insurance Company accuses regulator of “illegal interference” in lawsuit

However, that complaint was recently shot down, when US District Court Judge William Shubb of the Eastern District of California granted the motion by the CDI to dismiss CIC’s lawsuit.

In a statement, CIC indicated that in response to its lawsuit being dismissed, it will file an appeal to the US Court of Appeals for the Ninth Circuit for “an eventual return to argue the merits of its dispute with the CDI.”

The company also noted that while its conservation was put into place nearly two years ago in an ex parte hearing where it was not present to defend itself, it has yet to be granted a proper hearing to hear the actual merits of CDI’s case, including the legitimacy of the conservatorship.

CIC also said that Judge Shubb’s decision once again puts off its “day in court,” when the company could contesr the CDI’s seemingly arbitrary and allegedly illegal imposition of a conservatorship.

“Point is, this narrow decision was based on technicalities and did not weigh the merits of the case, a prospect that will be enabled when we pursue any of our available actions and appeals in the next round to set the path to a judgement on the actual merits,” commented CIC general counsel Jeffrey Silver, Esq. “CIC will raise issues of constitutional law in its effort to terminate the conservatorship imposed by CDI after it agreed with CIC’s planned move to New Mexico, then suddenly reversed its position and used the conservatorship in what is arguably an illegal manner.”

2021 California Legislative Update: Assembly Bill 3012

2021 California Legislative Update: Assembly Bill 3012

By Mark Dillman on February 21, 2021

POSTED IN CONSUMER PROTECTION, STATE LEGISLATION

If you’re a repeat reader of the Property Insurance Coverage Law Blog, you have likely come across a reference to one of Bill Wilson’s most important policy interpretation doctrines: RTFP!1 or “Read the full policy.” But what happens when you encounter a conflict not contemplated in the policy? Or worse yet, are not aware that consumer protections exist that can assist claim handling and broaden or clarify coverage?

California has an active legislature that makes an effort to protect policyholders. Unfortunately, all too often—and especially following devastating wildfires—out-of-state insurance adjusters are sent to handle claims in California without the proper knowledge or understanding of the California Insurance Code or the California Code of Regulations. If you represent policyholders, or are one yourself, you cannot depend on the insurance company adjuster to know the rules of the game. It is up to you to be informed on new legislation that may override policy language or expand on consumer protections in claim handling.

In this California mini-series, we will discuss three bills that contain policyholder protections that every public adjuster, attorney, or policyholder should be aware of that take effect in 2021:

AB 3012

Assembly Bill number 3012 provides many protections to policyholders, but three are particularly noteworthy:

1. 30% of contents coverage owed without an itemized claim following a loss resulting from a state of emergency.

California Insurance Code § 10103.7(b)(1) is amended to read:

“In the event of a covered total loss of a primary dwelling under a residential property insurance policy resulting from a state of emergency, as defined in Section 8558 of the Government Code, if the residence was furnished at the time of the loss, the insurer shall offer a payment under the contents (personal property) coverage in an amount no less than 30 percent of the policy limit applicable to the covered dwelling structure, up to a maximum of two hundred fifty thousand dollars ($250,000), without requiring the insured to file an itemized claim.

While many insurers have adopted the practice of advancing contents proceeds, and the voluntary claims handling reforms have called for insurers to advance 25% of policy limits, there is certainly a difference between may and must. This section is limited to residential total losses resulting from a state of emergency, and only to furnished homes up to $250,000. To collect additional benefits above 30% of the policy limits, the insured must create a contents inventory unless their insurance company waives the requirement.

This section is effective as of January 1, 2021.

2. Land value deduction is prohibited.

In the event of a total loss, California Insurance Code § 2051.5(c)(1) allows an insured to transport the benefits owed to them to rebuild at a new location or to purchase an already build home elsewhere. This includes payments for any extended replacement cost and building code coverage that would have been owed based on the home that suffered the loss.

Unfortunately, many policyholders who decided to take advantage of this code section, and purchase an already built home, ran into an issue that left them less than indemnified – some insurers have been deducting the value of the new property’s land from the owed policy benefits. This deduction has ranged from tens of thousands of dollars for some, and millions for others. Whether insurers are legally able to make this land deduction for losses prior to January 1, 2021, is still seemingly unclear.

AB 3012 states that a deduction for the value of land is not permitted. California Insurance Code § 2051.5(c)(2) is amended to read:

Notwithstanding any other law, for a residential property insurance policy, the measure of damages available to a policyholder to use to rebuild or replace the insured home at another location shall be the amount that would have been recoverable had the insured dwelling been rebuilt at its original location, and a deduction for the value of land at the new location shall not be permitted from that measure of damages. However, the measure of indemnity shall not exceed the cost, including the building code upgrade cost and any extended replacement cost coverage, if applicable, to rebuild the insured structure at its original location. (emphasis added)

This section is effective as of January 1, 2021, and is not retroactive to losses that occurred before this date. However, while it may not be binding on insurers for losses that occurred prior to 2021, policyholders may be able to cite it to show the intent of the legislature. United Policyholders has an article, Buy or Rebuild, that outlines a handful of arguments as to why insurers should not have been taking a land value deduction.

3. Civil Authority Coverage – two-week extensions.

As wildfires approach communities, evacuation orders are put in place and policyholders are forced to leave their homes. Many policies provide coverage under “Loss of Use” if a civil authority order prohibits a policyholder from the use of their home, but often for no more than two weeks. In 2020, many communities were forced to evacuate for more than two weeks and were also left unable to return to assess damages.

AB 3012 helps resolve this issue by requiring two weeks of additional living expenses and additional extensions for good cause. California Insurance Code § 2060(c) is amended to read:

For a loss that is otherwise not subject to subdivision (b) or (c), in the event of a state of emergency, as defined in Section 8558 of the Government Code, that is accompanied by an order of civil authority restricting access to the home, related to a covered peril, additional living expense coverage shall be provided for at least two weeks. Additional extensions of two weeks shall be provided to a policyholder for good cause, but shall be subject to other policy provisions.

Check out the rest of AB 3012 here. Look out for the next California blog on SB 872 and AB 2756.

May 13, 2021

California Insurance Enters Rugged 2021 Legislative and Regulatory Terrain

Steve Coony, Armand Feliciano

Manatt, Phelps & Phillips, LLP

California lawmakers proposing changes in the state’s insurance laws face their first significant hurdles in the next two weeks. These bills must be set, heard and passed by the Insurance Committee in their house by May 7 (or sooner) to meet house of origin deadlines or risk becoming a two-year bill—meaning the bill will not come up for consideration again until 2022. The California Department of Insurance (CDI), the state’s primary insurance regulator, is also commencing its own review of new regulatory proposals, making this and the next few months a particularly important time for California’s insurers. Here Manatt provides a snapshot of various insurance policy proposals that will be at the forefront of legislative and regulatory deliberations this year.

Life Insurance

Under California law, life insurers must provide consumers with at least 30 days’ notice prior to lapse and termination of their policy, and life insurance contracts must contain a grace period of no less than 60 days for the policy owner to address the issue. In 2012, the California Legislature passed legislation that required life insurers to permit policy owners to designate at least one other person to receive notice before the lapse or termination of a policy for nonpayment. Recently introduced legislation by Assemblymember Low, AB 1498, would provide that the person designated by the policy owner to receive the notice may live at a different address. AB 1498 would also apply this change retroactively to life insurance policies issued prior to January 1, 2013. Insurers are opposed to AB 1498’s retroactivity, arguing that insurance policies are governed by the statutory and decisional law in force at the time the policy is issued. AB 1498 is set to be heard in the Assembly Insurance Committee on April 29, 2021.

Auto Insurance

CDI looks to have an especially heavy regulatory agenda in 2021, with numerous regulatory changes proposed by Insurance Commissioner Lara that are likely to affect consumers and the insurance industry. In auto insurance, as it did in 2020, CDI continues its efforts to compel insurers to refund insurance premiums to consumers affected by the COVID-19 pandemic. Earlier this year, CDI issued an order to require insurers to report by April 30, 2021, how they will return to consumers additional premiums that were “over-collected” in 2020. According to CDI, the rationale for its order is that “on average, insurance companies over-collected premiums due to the lower loss exposures during the pandemic and did not return enough premium to drivers in 2020.” It should be noted that as in last year’s directive, CDI’s 2021 order is silent about its regulatory authority to impose the requirement.

Another insurance issue brought to center stage by the insurance commissioner is the long-standing practice of “affinity group” auto discounts for California drivers. As the state’s landmark law on auto insurance, Proposition 103, plainly states, “Any insurer may issue any insurance coverage on a group plan, without restriction as to the purpose of the group, occupation or type of group.” Over the decades, group discounts have become widely available to various membership and occupational groups, including, for example, alumni associations, professional organizations, credit unions, police and firefighters, and union groups representing teachers and nurses. Critics of auto group discounts have argued that such programs unfairly subsidize affluent communities at the expense of lower-income communities. According to CDI data, drivers living in ZIP codes with average per capita income above $49,000 are more likely to receive auto group discounts than are drivers who live in ZIP codes with average per capita income of $22,500 or below.

In early February, CDI issued draft regulations intended to phase out existing auto group discounts and instead require insurers to extend auto group discounts to drivers who live in specific ZIP codes. Insurers argue that millions of drivers could lose their group discounts if the regulations are adopted, and policy change is likely to draw litigation, particularly on the question of whether CDI has the authority to restrict auto group discounts when California voters long ago approved broad discretion in the creation of such groups by enacting Proposition 103.

Wildfire Insurance

California’s wildfire crisis continues to headline public policy discussions as state policymakers attempt to address the issue of insurance availability and affordability in wildfire areas. While it is well-documented that homeowners’ insurance has been difficult to find in certain parts of California, more recently commercial insurance has also been difficult to obtain for farmers and winemakers in territories threatened by wildfires. In a recent Senate Insurance Committee hearing, insurers testified that CDI’s decision to pause approval of commercial coverage pending review of insurer data has not helped the availability of commercial insurance coverage. To help address the farm insurance coverage issue, Senator Rubio (Chair of the Senate Insurance Committee) is authoring SB 11 (sponsored by the California Farm Bureau), which would allow the California FAIR Plan (California’s property insurer of last resort) to cover farm risks moving forward. SB 11 was amended and then passed as a consent item by Senator Rubio’s committee on April 8. Other legislation, such as AB 1522 by Assemblymember Levine, proposes a far more sweeping approach, prohibiting insurers from canceling or refusing to renew residential and commercial insurance solely on the basis that the property is located in a high-risk wildfire area. AB 1522 has not been set for a committee hearing as of this writing, and has until May 7 to be heard and reported to the Assembly Floor if passed by the Assembly Insurance Committee.

Commercial Insurance

Business interruption coverage and civil authority coverage are both additional coverages businesses can purchase to insure against loss of income and to reimburse operating expenses for businesses after a covered event. A typical policy provision requires demonstration of physical damage to the policyholder’s business property (e.g., fire damage) and generally excludes losses resulting from communicable diseases or any viruses such as COVID-19. In 2020, many state legislatures, including California’s, attempted to pass legislation that would have included COVID-19 as a covered loss, but such proposals ultimately stalled. One of the primary arguments against the proposals is that they would be unconstitutional. The U.S. Constitution’s Contract Clause prohibits states from passing laws that impair the obligations of contracts (Article I, Section 10, Clause 1), and many of the legislative proposals in 2020 were to require retroactive coverage for losses related to COVID-19.

In 2021, California continues to consider making changes to business interruption insurance, with Assemblymember Ramos introducing AB 743. As proposed, AB 743 provides that COVID-19 cannot be excluded from business interruption coverage unless viruses are expressly stated as an exclusion, and the bill is drafted to apply retroactively to all business interruption policies in force on and after March 4, 2020. AB 743 has not been set for a hearing and it is unclear whether it has the votes to move forward at this point, but commercial insurers, as they were a year ago, are opposed to the measure on the basis of its retroactive application.

Workers’ Compensation Insurance

Lawyers representing injured workers and labor groups are sponsoring legislation, AB 1465 by Assemblymember Reyes, to create the California Medical Provider Network (CMPN) as a state-administered network of workers’ compensation medical providers. The rationale for AB 1465 is that it will lead to greater access to care for injured workers, as they will know which medical providers are available to them. The sponsors argue that having the CMPN will also encourage more medical providers to welcome workers’ compensation patients, and reduce the risk of employers having influence over the doctor a patient will see.

Under existing law, employers create medical provider networks (MPNs) and select medical providers to be part of the MPN. An injured employee is then required to choose his or her treating medical provider from the employer’s MPN. A coalition of employers and insurers is collectively opposing AB 1465 because, according to the coalition’s members, the quality of care for injured workers could actually plummet as medical providers who “seek to defraud or otherwise provide poor quality medical treatment to injured workers” are likely to be included in the CMPN.

Employers and insurers more broadly argue that AB 1465 increases costs—which is counterproductive as the business community attempts to climb out of the pandemic—and wipes away important prior reforms that were the subject of negotiations between labor and management. Given the robust support for and opposition to AB 1465 and significant policy changes for employers and injured workers, the bill is likely to be heavily debated and a difficult vote for policymakers. AB 1465 is set to be heard in the Assembly Insurance Committee on April 29, 2021.

What to Expect in 2021

While COVID-19 greatly curtailed the number of bills considered and ultimately enacted by the California Legislature in 2020, it seems likely that many proposals that didn’t “make the cut” last year will be fully considered this year, and a good number of them—including our highlighted bills—will be hotly debated in committee and outside the hearing process. The Senate and Assembly adjourn for this first year of the two-year session on September 15, and it will then be up to Governor Newsom to make the final decision on whether to sign or veto bills passed this year. In the meantime, the regulatory machinery for consideration of CDI’s non-legislative policy proposals is not subject to fixed deadlines this year. The process is gathering steam and should provide another interesting and highly contested public policy forum on insurance issues in the coming months.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Manatt, Phelps & Phillips, LLP 2021 | Attorney Advertising

New 2021 laws sponsored by Commissioner Lara that protect California insurance consumers ring in the New Year

New 2021 laws sponsored by Commissioner Lara that protect California insurance consumers ring in the New Year

SACRAMENTO, Calif. — The new year brings new protections for California consumers, as six laws sponsored by Insurance Commissioner Ricardo Lara and the California Department of Insurance go into effect on January 1, 2021.

“These new laws will help future wildfire survivors recover faster and defend the rights of domestic workers and small businesses in a state of emergency,” said Commissioner Lara. “I am grateful to the legislators who championed these important issues and appreciate Governor Newsom's signature which continues California’s longstanding history of protecting our most vulnerable consumers.”

These new laws include:

  • Senate Bill 872, authored by Senator Bill Dodd, removes barriers for future wildfire survivors to get critical insurance benefits and streamlines wildfire recovery processes for homeowners who suffer wildfire losses. The new law will require an advance payment for no less than four months of Additional Living Expenses (ALE) and no longer require an itemized inventory form for content claims, among other consumer protections. As of July 1, 2021, the law will expand ALE benefits, including for policyholders whose homes are rendered uninhabitable due to wildfire damage to essential infrastructure.

  • Assembly Bill 2756, jointly authored by Assemblymembers Monique Limón and Richard Bloom, provides additional insurance for disaster survivors to rebuild and requires more transparency when a new policy is sold that does not cover losses from wildfire. In addition, this new law reduces the burden on disaster survivors when they rebuild their home.

  • Assembly Bill 2658, authored by Assemblymember Autumn Burke, protects domestic workers from employer retaliation, including firing, if they refuse to work in hazardous conditions, including those caused by wildfires. It also prevents an employer from ordering an employee, including a household domestic service worker, to remain in or enter a mandatory evacuation zone as a result of wildfires or a local public health order, which would include circumstances caused by the COVID-19 pandemic.

Three other Department-sponsored bills go into effect on January 1, 2021:

  • Senate Bill 1192, authored by Senator Steven Bradford, creates Department oversight of public safety workers’ benefits associations to ensure these associations provide financially sound insurance benefits and are transparent to their members.

  • Assembly Bill 2049, authored by Assembly Member Ken Cooley, incorporates the National Association of Insurance Commissioners (NAIC)-approved revisions to the Credit for Reinsurance Model Regulation into California law, thus preventing federal preemption of California’s existing law regarding credit for reinsurance and retaining the state’s accreditation by the NAIC.

  • Senate Bill 1255, jointly authored by Senator Lena Gonzalez and the Senate Insurance Committee, remedies several issues identified by the Department and stakeholders to clarify and clean-up various technical Insurance Code sections. This new law also includes the Equal HIV Insurance Act which, starting January 1, 2023, will prohibit an insurance company from declining an application or enrollment request for coverage under a policy for life insurance or disability income insurance based solely on the applicant’s HIV status.

In addition to these and other consumer protection bills, Commissioner Lara strongly supported Senate Bill 855 authored by Senator Scott Wiener and Assembly Bill 979 jointly authored by Assemblymembers Chris Holden, David Chiu, and Cristina Garcia. Effective January 1, 2021, SB 855 will require health insurance companies to provide parity in coverage for mental health conditions, as well as substance use disorders, equal to coverage provided for other medical conditions. It will also require health insurance companies to adhere to the same standards of care that are followed by addiction and mental health care providers. Commissioner Lara issued a Notice to insurance companies last month to ensure they comply with the new law. Also effective January 1, 2021, AB 979 will require public companies with a principal executive office in California to include members from historically underrepresented communities on their boards of directors or incur financial penalties levied by the California Secretary of State.

Commissioner Lara also strongly supported multiple measures to address social and racial justice including Assembly Bill 1196, jointly authored by Assemblymembers Mike Gipson, Wendy Carrillo, David Chiu, Tim Grayson, Miguel Santiago, and Shirley Weber, and Assembly Bill 1460, authored by Assemblymember Shirley Weber.  AB 1196 will, effective January 1, 2021, prohibit a law enforcement agency from authorizing the use of a carotid restraint or a choke hold. The Department of Insurance has prohibited its own peace officers from using these tactics to subdue suspects for over 20 years. AB 1460 will require, commencing with the 2021-22 academic school year, the California State University to provide courses in ethnic studies at each of its campuses and, starting with the 2024-25 academic year, will make an ethnic studies course an undergraduate requirement. 

California Supreme Court rules insurers are not immune to lawsuits over excessive insurance costs

by Lyle Adriano 23 Mar 2021

The California Supreme Court has ruled that insurance companies cannot avoid lawsuits filed by consumers over excessive title insurance costs – a ruling which could set an important precedent for all personal insurance lines, a consumer advocate says.

In the case Villanueva v. Fidelity National Title Company, the court rejected Fidelity Insurance Company’s argument that consumers have no right to go to court to challenge overcharges in connection with a sale or refinance of their homes. Previously, a court of appeal had sided with Fidelity Insurance, citing anti-trust immunity laws – which authorize insurers to share claims and pricing data with each other – that practically invalidate Proposition 103 and consumers’ rights to sue insurers.

Proposition 103 is a state law which gives Californian consumers protections against insurance pricing abuse. One of its provisions repeals the insurance industry’s exemption from state anti-trust laws.

But the Supreme Court’s decision reversed the court of appeal, determining that the title insurance immunity laws do not obstruct a consumer from going to court to challenge excessive fees.

According to non-profit Consumer Watchdog, most people are not aware of the hidden fees associated with title insurance – many allegedly excessive and unfair – until they sign the papers to close the loan.

Consumer Watchdog believes that while the California Supreme Court’s decision only addressed title insurance, the ruling’s legal analysis of the immunity statutes’ meaning and purposes applies equally to the nearly identical statutes in other Proposition 103 cases.

“Insurance companies must be brought to justice when they violate the law,” said Consumer Watchdog founder and author of Proposition 103 Harvey Rosenfield.

“The Supreme Court’s decision should clear away the confusion created by the insurance industry over whether citizens can sue an insurance company for overcharging them, discriminating against them or other violations of Prop 103 and California’s consumer protection laws.”

Rosenfield had submitted a “friend of the court” brief in the Villanueva v. Fidelity National Title Company case, on behalf of Consumer Watchdog and the Consumer Federation of America and the Consumer Federation of California.

Legislation Introduced to Protect Patients in Recovery

News: 2021 Press Release

For Release: February 19, 2021

Media Calls Only: 916-492-3566

Email Inquiries: cdipress@insurance.ca.gov

Legislation Introduced to Protect Patients in Recovery

Insuring Safety in Recovery (AB 1158) will require minimum insurance coverage, higher standards and reporting of hospitalizations and deaths

SACRAMENTO - In order to protect the safety of patients recovering from alcohol and substance use, Assemblywoman Cottie Petrie-Norris, in collaboration with Insurance Commissioner Ricardo Lara, introduced AB 1158 on Thursday, February 18, 2021. This bill will ensure that licensed drug abuse recovery and treatment facilities and recovery residences that contract with the government maintain minimum insurance coverage levels and higher standards to protect patients from abuse or injury.

The COVID-19 pandemic has led to an unprecedented rise in substance use and an increasing number of Californians have begun to search for recovery services. But well-documented abuses of vulnerable patients, including death and serious injury, show the need for additional consumer protections.

“Can you imagine what it’s like to begin a drug or alcohol recovery program and then be faced with substandard and abusive care? It’s no wonder suicide rates have tragically increased,” said AB 1158 Author Assemblywoman Cottie Petrie-Norris (D-Laguna Beach). “It is critical that patients at treatment facilities receive the care they need without worrying about their safety. By guaranteeing minimum insurance coverage levels, patients will be much better protected.”

“Californians seeking help for alcohol and substance use urgently need additional consumer protections now more than ever during this pandemic,” said Commissioner Lara, who leads enforcement personnel at the Department of Insurance charged with investigating fraud and abuse. “Requiring minimum insurance standards and reporting of injuries and deaths means my Department’s investigators can swiftly act to protect public health and safety.”

While there are many good actors in the state helping individuals get on their feet, media reports detail unscrupulous business practices that exploit patients for profits, including the Orange County Register’s investigative series about Southern California’s “Rehab Riviera” that highlighted the problems caused by unlicensed recovery residences operating with little to no government regulation or private insurance industry risk management.

AB 1158 will require a recovery residence, including a sober living home, that contracts with a government entity or an alcohol or drug abuse recovery or treatment facility that is licensed by the government to maintain minimum insurance coverage levels, including liability and workers’ compensation to protect patients and workers on site. Additionally, this proposal would increase the ability for an insurance company to protect the well-being of people in recovery by ensuring a residence or facility’s compliance with health and safety standards, including reporting any incidents of death or injuries requiring hospitalization, back to the insurance company and respective government entity. This proposal will enhance the ability of state regulatory agencies to work collaboratively to investigate insurance complaints, protect patients, and prevent fraud at these facilities and residences.

“We cannot allow grifters who masquerade as substance abuse recovery providers to abuse their caregiver status just to turn a profit,” said Casey Johnson, Board of Directors Member, Consumer Attorneys of California. “Californians working hard to recover from drug and alcohol addiction deserve the high quality of care they are paying for, and AB 1158 will ensure the victims of the unscrupulous ‘patients for profits’ business model can pursue justice when they are harmed or taken advantage of by bad actors in the addiction treatment industry.”

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Assembly Bill No. 685

CHAPTER 84

An act to amend, repeal, and add Sections 6325 and 6432 of, and to add and repeal Section 6409.6 of, the Labor Code, relating to occupational safety.
[ Approved by Governor September 17, 2020. Filed with Secretary of State September 17, 2020. ]
LEGISLATIVE COUNSEL'S DIGEST

AB 685, Reyes. COVID-19: imminent hazard to employees: exposure: notification: serious violations.(1) Existing law, the California Occupational Safety and Health Act of 1973 (OSHA), requires the Division of Occupational Safety and Health, when, in its opinion, a place of employment, machine, device, apparatus, or equipment or any part thereof is in a dangerous condition, is not properly guarded, or is dangerously placed so as to constitute an imminent hazard to employees, to prohibit entry or use, as applicable, and to attach a conspicuous notice of that condition, as specified. OSHA requires that this prohibition be limited to the immediate area in which the imminent hazard exists. OSHA prohibits this notice from being removed except by an authorized representative of the division under certain conditions. OSHA makes a violation of this provision regarding dangerous conditions a crime.This bill would authorize the division, when, in its opinion, a place of employment, operation, or process, or any part thereof, exposes workers to the risk of infection with severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2, also known as COVID-19), so as to constitute an imminent hazard to employees, to prohibit the performance of that operation or process, or entry into that place of employment. The bill would require the division to provide a notice thereof to the employer, to be posted in a conspicuous place at the place of employment. The bill would require such a prohibition to be limited to the immediate area in which the imminent hazard exists, as specified. The bill would require such a prohibition to be issued in a manner so as not to materially interrupt the performance of critical governmental functions essential to ensuring public health and safety functions or the delivery of electrical power or water. By expanding the scope of a crime, the bill would impose a state-mandated local program.This COVID-19 imminent hazard provision would be repealed on January 1, 2023.(2) Existing law requires an employer to file a report of every occupational injury or occupational illness, as defined, of each employee that results in lost time beyond the date of the injury or illness, and that requires medical treatment beyond first aid, with the Department of Industrial Relations, on a form prescribed by the department. Existing law requires an employer to immediately report a serious occupational injury, illness, or death to the division by telephone or email, as specified.This bill would require a public or private employer or representative of the employer, except as specified, that receives a notice of potential exposure to COVID-19 to provide specified notifications to its employees within one business day of the notice of potential exposure. The bill would require the employer to provide prescribed notice to all employees, and the employers of subcontracted employees, who were on the premises at the same worksite as a qualifying individual, as defined, within the infectious period, as defined, that they may have been exposed to COVID-19. The bill would require notice to the exclusive representative, if any, of notified employees. The bill would require an employer to provide those employees and any exclusive representative with certain information regarding COVID-19-related benefits and options. The bill would require an employer to notify all employees, the employers of subcontracted employees, and any exclusive representative on the disinfection and safety plan that the employer plans to implement and complete per the guidelines of the federal Centers for Disease Control. The bill would require an employer to maintain records of notifications for at least 3 years. The bill would provide for a specified civil penalty for an employer that violates the notification requirements. The bill would define additional terms for its purposes.The bill would require an employer, if the employer or representative of the employer is notified of the number of cases that meet the definition of a COVID-19 outbreak, as defined, within 48 hours, to report prescribed information to the local public health agency in the jurisdiction of the worksite. The bill would require an employer that has an outbreak to continue to give notice to the local health department of any subsequent laboratory-confirmed cases of COVID-19 at the worksite. The bill would exempt a health facility, as defined, from this reporting requirement.The bill would require the State Department of Public Health to make specified information on outbreaks publicly available on its internet website, as specified. The bill would require local public health departments and the division to provide a link to this page on its internet websites. By requiring additional duties from local public health departments, this bill would impose a state-mandated local program.(3) OSHA creates a rebuttable presumption that a “serious violation” exists in a place of employment if the division demonstrates that there is a realistic possibility that death or serious physical harm could result from the actual hazard created by the violation. OSHA requires the division, before issuing a citation alleging that a violation is serious, to make a reasonable attempt to determine and consider certain facts. This OSHA requirement is satisfied if the division sends, at least 15 days before issuing such a citation, a standardized form containing descriptions of the alleged violation the division intends to cite as serious and clearly soliciting the prescribed information. OSHA permits an employer to rebut the presumption, as prescribed, and establishes inferences that may be drawn at hearing with regard to information provided by an employer in rebuttal.This bill would exempt a citation alleging a serious violation relating to SARS-CoV-2 from the precitation standardized form provision and the rebuttal at hearing provision.This exemption would be repealed on January 1, 2023.(4) The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.This bill would provide that with regard to certain mandates no reimbursement is required by this act for a specified reason.With regard to any other mandates, this bill would provide that, if the Commission on State Mandates determines that the bill contains costs so mandated by the state, reimbursement for those costs shall be made pursuant to the statutory provisions noted above.(5) Existing constitutional provisions require that a statute that limits the right of access to the meetings of public bodies or the writings of public officials and agencies be adopted with findings demonstrating the interest protected by the limitation and the need for protecting that interest.This bill would make legislative findings to that effect.

DIGEST KEY

Vote: majority Appropriation: no Fiscal Committee: yes Local Program: yes

BILL TEXT

THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


SECTION 1.

The Legislature finds and declares all of the following:

(a) As COVID-19 continues to ravage California, one of the best tools available for limiting exposure and minimizing spread is to gather thorough and accurate data.

(b) As the average age of those falling ill from COVID-19 has become younger, it is critical to track workplace exposure and to use that data to find ways to keep workers safe on the job.

(c) With infections and deaths disproportionately high in the Latino, Black, and Asian-Pacific Islander communities, more information about workplace illness and industry clusters can inform policy makers in addressing healthcare disparities and protecting vulnerable workers.

(d) Current law lacks clarity as to an employer’s reporting requirements, including to their own workforce. This deficiency has led to workers and members of the public living in fear for their own safety, unaware of where outbreaks may already be occurring.

(e) Consistent with California’s efforts to track and trace COVID-19 cases, it is imperative that positive COVID-19 tests or diagnoses be reported immediately in the occupational setting, to members of the public, and to relevant state agencies.

SEC. 2.

Section 6325 of the Labor Code is amended to read:

6325.

(a) When, in the opinion of the division, a place of employment, machine, device, apparatus, or equipment or any part thereof is in a dangerous condition, is not properly guarded or is dangerously placed so as to constitute an imminent hazard to employees, entry therein, or the use thereof, as the case may be, shall be prohibited by the division, and a conspicuous notice to that effect shall be attached thereto. Such prohibition of use shall be limited to the immediate area in which the imminent hazard exists, and the division shall not prohibit any entry in or use of a place of employment, machine, device, apparatus, or equipment, or any part thereof, which is outside such area of imminent hazard. Such notice shall not be removed except by an authorized representative of the division, nor until the place of employment, machine, device, apparatus, or equipment is made safe and the required safeguards or safety appliances or devices are provided. This subdivision shall not prevent the entry or use with the division’s knowledge and permission for the sole purpose of eliminating the dangerous conditions.

(b) When, in the opinion of the division, a place of employment, operation, or process, or any part thereof, exposes workers to the risk of infection with severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2) so as to constitute an imminent hazard to employees, the performance of such operation or process, or entry into such place of employment, as the case may be, may be prohibited by the division, and a notice thereof shall be provided to the employer and posted in a conspicuous place at the place of employment. Such prohibition of use shall be limited to the immediate area in which the imminent hazard exists, and the division shall not prohibit the performance of any operation or process, entry into or use of a place of employment, or any part thereof, which is not exposing employees to, or is outside such area of imminent hazard. In addition, this prohibition shall be issued in a manner so as not to materially interrupt the performance of critical governmental functions essential to ensuring public health and safety functions or the delivery of electrical power or water. This notice shall not be removed except by an authorized representative of the division, nor until the place of employment, operation, or process is made safe and the required safeguards or safety appliances or devices are provided. This subdivision shall not prevent the entry or use with the division’s knowledge and permission for the sole purpose of eliminating the dangerous conditions.

(c) This section shall remain in effect only until January 1, 2023, and as of that date is repealed.

SEC. 3.

Section 6325 is added to the Labor Code, to read:

6325.

(a) When, in the opinion of the division, a place of employment, machine, device, apparatus, or equipment or any part thereof is in a dangerous condition, is not properly guarded or is dangerously placed so as to constitute an imminent hazard to employees, entry therein, or the use thereof, as the case may be, shall be prohibited by the division, and a conspicuous notice to that effect shall be attached thereto. Such prohibition of use shall be limited to the immediate area in which the imminent hazard exists, and the division shall not prohibit any entry in or use of a place of employment, machine, device, apparatus, or equipment, or any part thereof, which is outside such area of imminent hazard. Such notice shall not be removed except by an authorized representative of the division, nor until the place of employment, machine, device, apparatus, or equipment is made safe and the required safeguards or safety appliances or devices are provided. This section shall not prevent the entry or use with the division’s knowledge and permission for the sole purpose of eliminating the dangerous conditions.

(b) This section shall become operative on January 1, 2023.

SEC. 4.

Section 6409.6 is added to the Labor Code, to read:

6409.6.

(a) If an employer or representative of the employer receives a notice of potential exposure to COVID-19, the employer shall take all of the following actions within one business day of the notice of potential exposure:

(1) Provide a written notice to all employees, and the employers of subcontracted employees, who were on the premises at the same worksite as the qualifying individual within the infectious period that they may have been exposed to COVID-19 in a manner the employer normally uses to communicate employment-related information. Written notice may include, but is not limited to, personal service, email, or text message if it can reasonably be anticipated to be received by the employee within one business day of sending and shall be in both English and the language understood by the majority of the employees.

(2) Provide a written notice to the exclusive representative, if any, of employees under paragraph (1).

(3) Provide all employees who may have been exposed and the exclusive representative, if any, with information regarding COVID-19-related benefits to which the employee may be entitled under applicable federal, state, or local laws, including, but not limited to, workers’ compensation, and options for exposed employees, including COVID-19-related leave, company sick leave, state-mandated leave, supplemental sick leave, or negotiated leave provisions, as well as antiretaliation and antidiscrimination protections of the employee.

(4) Notify all employees, and the employers of subcontracted employees and the exclusive representative, if any, on the disinfection and safety plan that the employer plans to implement and complete per the guidelines of the federal Centers for Disease Control.

(b) If an employer or representative of the employer is notified of the number of cases that meet the definition of a COVID-19 outbreak, as defined by the State Department of Public Health, within 48 hours, the employer shall notify the local public health agency in the jurisdiction of the worksite of the names, number, occupation, and worksite of employees who meet the definition in subdivision (d) of a qualifying individual. An employer shall also report the business address and NAICS code of the worksite where the qualifying individuals work. An employer that has an outbreak subject to this section shall continue to give notice to the local health department of any subsequent laboratory-confirmed cases of COVID-19 at the worksite.

(c) The notice required pursuant to paragraph (2) of subdivision (a) shall contain the same information as would be required in an incident report in a Cal/OSHA Form 300 injury and illness log unless the information is inapplicable or unknown to the employer. This requirement shall apply regardless of whether the employer is required to maintain a Cal/OSHA Form 300 injury and illness log. Notifications required by this section shall not impact any determination of whether or not the illness is work related.

(d) For purposes of this section, the following definitions apply:

(1) “COVID-19” means severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2).

(2) “Infectious period” means the time a COVID-19-positive individual is infectious, as defined by the State Department of Public Health.

(3) “Notice of potential exposure” means any of the following:

(A) Notification to the employer or representative from a public health official or licensed medical provider that an employee was exposed to a qualifying individual at the worksite.

(B) Notification to the employer or representative from an employee, or their emergency contact, that the employee is a qualifying individual.

(C) Notification through the testing protocol of the employer that the employee is a qualifying individual.

(D) Notification to an employer or representative from a subcontracted employer that a qualifying individual was on the worksite of the employer receiving notification.

(4) “Qualifying individual” means any person who has any of the following:

(A) A laboratory-confirmed case of COVID-19, as defined by the State Department of Public Health.

(B) A positive COVID-19 diagnosis from a licensed health care provider.

(C) A COVID-19-related order to isolate provided by a public health official.

(D) Died due to COVID-19, in the determination of a county public health department or per inclusion in the COVID-19 statistics of a county.

(5) “Worksite” means the building, store, facility, agricultural field, or other location where a worker worked during the infectious period. It does not apply to buildings, floors, or other locations of the employer that a qualified individual did not enter. In a multiworksite environment, the employer need only notify employees who were at the same worksite as the qualified individual.

(e) An employer shall not require employees to disclose medical information unless otherwise required by law.

(f) An employer shall not retaliate against a worker for disclosing a positive COVID-19 test or diagnosis or order to quarantine or isolate. Workers who believe they have been retaliated against in violation of this section may file a complaint with the Division of Labor Standards Enforcement pursuant to Section 98.6. The complaint shall be investigated as provided in Section 98.7.

(g) The State Department of Public Health shall make workplace industry information received from local public health departments pursuant to this section available on its internet website in a manner that allows the public to track the number and frequency of COVID-19 outbreaks and the number of COVID-19 cases and outbreaks by industry reported by any workplace in accordance with subdivision (b). Local public health departments and the division shall provide a link to this page on their internet websites. No personally identifiable employee information shall be made public or posted.

(h) This section shall apply to both private and public employers, except that subdivision (b) shall not apply to a “health facility,” as defined in Section 1250 of the Health and Safety Code.

(i) This section shall not apply to employees who, as part of their duties, conduct COVID-19 testing or screening or provide direct patient care or treatment to individuals who are known to have tested positive for COVID-19, are persons under investigation, or are in quarantine or isolation related to COVID-19, unless the qualifying individual is an employee at the same worksite.

(j) No personally identifiable employee information shall be subject to a California Public Records Act request or similar request, posted on a public internet website, or shared with any other state or federal agency.

(k) An employer shall maintain records of the written notifications required in subdivision (a) for a period of at least three years.

(l) The division shall enforce paragraphs (1), (2), and (4) of subdivision (a) by the issuance of a citation alleging a violation of these paragraphs and a notice of civil penalty in a manner consistent with Section 6317. Any person who receives a citation and penalty may appeal the citation and penalty to the appeals board in a manner consistent with Section 6319.

SEC. 5.

Section 6432 of the Labor Code is amended to read:

6432.

(a) There shall be a rebuttable presumption that a “serious violation” exists in a place of employment if the division demonstrates that there is a realistic possibility that death or serious physical harm could result from the actual hazard created by the violation. The demonstration of a violation by the division is not sufficient by itself to establish that the violation is serious. The actual hazard may consist of, among other things:

(1) A serious exposure exceeding an established permissible exposure limit.

(2) The existence in the place of employment of one or more unsafe or unhealthful practices, means, methods, operations, or processes that have been adopted or are in use.

(b) (1) Before issuing a citation alleging that a violation is serious, the division shall make a reasonable attempt to determine and consider, among other things, all of the following:

(A) Training for employees and supervisors relevant to preventing employee exposure to the hazard or to similar hazards.

(B) Procedures for discovering, controlling access to, and correcting the hazard or similar hazards.

(C) Supervision of employees exposed or potentially exposed to the hazard.

(D) Procedures for communicating to employees about the employer’s health and safety rules and programs.

(E) Information that the employer wishes to provide, at any time before citations are issued, including, any of the following:

(i) The employer’s explanation of the circumstances surrounding the alleged violative events.

(ii) Why the employer believes a serious violation does not exist.

(iii) Why the employer believes its actions related to the alleged violative events were reasonable and responsible so as to rebut, pursuant to subdivision (c), any presumption established pursuant to subdivision (a).

(iv) Any other information that the employer wishes to provide.

(2) The division shall satisfy its requirement to determine and consider the facts specified in paragraph (1) if, not less than 15 days prior to issuing a citation for a serious violation, the division delivers to the employer a standardized form containing the alleged violation descriptions (“AVD”) it intends to cite as serious and clearly soliciting the information specified in this subdivision. The director shall prescribe the form for the alleged violation descriptions and solicitation of information. Any forms issued pursuant to this section shall be exempt from the rulemaking provisions of the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code).

(c) If the division establishes a presumption pursuant to subdivision (a) that a violation is serious, the employer may rebut the presumption and establish that a violation is not serious by demonstrating that the employer did not know and could not, with the exercise of reasonable diligence, have known of the presence of the violation. The employer may accomplish this by demonstrating both of the following:

(1) The employer took all the steps a reasonable and responsible employer in like circumstances should be expected to take, before the violation occurred, to anticipate and prevent the violation, taking into consideration the severity of the harm that could be expected to occur and the likelihood of that harm occurring in connection with the work activity during which the violation occurred. Factors relevant to this determination include, but are not limited to, those listed in subdivision (b).

(2) The employer took effective action to eliminate employee exposure to the hazard created by the violation as soon as the violation was discovered.

(d) If the employer does not provide information in response to a division inquiry made pursuant to subdivision (b), the employer shall not be barred from presenting that information at the hearing and no negative inference shall be drawn. The employer may offer different information at the hearing than what was provided to the division and may explain any inconsistency, but the trier of fact may draw a negative inference from the prior inconsistent factual information. The trier of fact may also draw a negative inference from factual information offered at the hearing by the division that is inconsistent with factual information provided to the employer pursuant to subdivision (b), or from a failure by the division to provide the form setting forth the descriptions of the alleged violation and soliciting information pursuant to subdivision (b).

(e) “Serious physical harm,” as used in this part, means any injury or illness, specific or cumulative, occurring in the place of employment or in connection with any employment, that results in any of the following:

(1) Inpatient hospitalization for purposes other than medical observation.

(2) The loss of any member of the body.

(3) Any serious degree of permanent disfigurement.

(4) Impairment sufficient to cause a part of the body or the function of an organ to become permanently and significantly reduced in efficiency on or off the job, including, but not limited to, depending on the severity, second-degree or worse burns, crushing injuries including internal injuries even though skin surface may be intact, respiratory illnesses, or broken bones.

(f) Serious physical harm may be caused by a single, repetitive practice, means, method, operation, or process.

(g) A division safety engineer or industrial hygienist who can demonstrate, at the time of the hearing, that their division-mandated training is current shall be deemed competent to offer testimony to establish each element of a serious violation, and may offer evidence on the custom and practice of injury and illness prevention in the workplace that is relevant to the issue of whether the violation is a serious violation.

(h) Paragraph (2) of subdivision (b) and subdivision (d) shall not apply to a citation alleging a serious violation relating to the severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2).

(i) This section shall remain in effect only until January 1, 2023, and as of that date is repealed.

SEC. 6.

Section 6432 is added to the Labor Code, to read:

6432.

(a) There shall be a rebuttable presumption that a “serious violation” exists in a place of employment if the division demonstrates that there is a realistic possibility that death or serious physical harm could result from the actual hazard created by the violation. The demonstration of a violation by the division is not sufficient by itself to establish that the violation is serious. The actual hazard may consist of, among other things:

(1) A serious exposure exceeding an established permissible exposure limit.

(2) The existence in the place of employment of one or more unsafe or unhealthful practices, means, methods, operations, or processes that have been adopted or are in use.

(b) (1) Before issuing a citation alleging that a violation is serious, the division shall make a reasonable attempt to determine and consider, among other things, all of the following:

(A) Training for employees and supervisors relevant to preventing employee exposure to the hazard or to similar hazards.

(B) Procedures for discovering, controlling access to, and correcting the hazard or similar hazards.

(C) Supervision of employees exposed or potentially exposed to the hazard.

(D) Procedures for communicating to employees about the employer’s health and safety rules and programs.

(E) Information that the employer wishes to provide, at any time before citations are issued, including, any of the following:

(i) The employer’s explanation of the circumstances surrounding the alleged violative events.

(ii) Why the employer believes a serious violation does not exist.

(iii) Why the employer believes its actions related to the alleged violative events were reasonable and responsible so as to rebut, pursuant to subdivision (c), any presumption established pursuant to subdivision (a).

(iv) Any other information that the employer wishes to provide.

(2) The division shall satisfy its requirement to determine and consider the facts specified in paragraph (1) if, not less than 15 days prior to issuing a citation for a serious violation, the division delivers to the employer a standardized form containing the alleged violation descriptions (“AVD”) it intends to cite as serious and clearly soliciting the information specified in this subdivision. The director shall prescribe the form for the alleged violation descriptions and solicitation of information. Any forms issued pursuant to this section shall be exempt from the rulemaking provisions of the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code).

(c) If the division establishes a presumption pursuant to subdivision (a) that a violation is serious, the employer may rebut the presumption and establish that a violation is not serious by demonstrating that the employer did not know and could not, with the exercise of reasonable diligence, have known of the presence of the violation. The employer may accomplish this by demonstrating both of the following:

(1) The employer took all the steps a reasonable and responsible employer in like circumstances should be expected to take, before the violation occurred, to anticipate and prevent the violation, taking into consideration the severity of the harm that could be expected to occur and the likelihood of that harm occurring in connection with the work activity during which the violation occurred. Factors relevant to this determination include, but are not limited to, those listed in subdivision (b).

(2) The employer took effective action to eliminate employee exposure to the hazard created by the violation as soon as the violation was discovered.

(d) If the employer does not provide information in response to a division inquiry made pursuant to subdivision (b), the employer shall not be barred from presenting that information at the hearing and no negative inference shall be drawn. The employer may offer different information at the hearing than what was provided to the division and may explain any inconsistency, but the trier of fact may draw a negative inference from the prior inconsistent factual information. The trier of fact may also draw a negative inference from factual information offered at the hearing by the division that is inconsistent with factual information provided to the employer pursuant to subdivision (b), or from a failure by the division to provide the form setting forth the descriptions of the alleged violation and soliciting information pursuant to subdivision (b).

(e) “Serious physical harm,” as used in this part, means any injury or illness, specific or cumulative, occurring in the place of employment or in connection with any employment, that results in any of the following:

(1) Inpatient hospitalization for purposes other than medical observation.

(2) The loss of any member of the body.

(3) Any serious degree of permanent disfigurement.

(4) Impairment sufficient to cause a part of the body or the function of an organ to become permanently and significantly reduced in efficiency on or off the job, including, but not limited to, depending on the severity, second-degree or worse burns, crushing injuries including internal injuries even though skin surface may be intact, respiratory illnesses, or broken bones.

(f) Serious physical harm may be caused by a single, repetitive practice, means, method, operation, or process.

(g) A division safety engineer or industrial hygienist who can demonstrate, at the time of the hearing, that their division-mandated training is current shall be deemed competent to offer testimony to establish each element of a serious violation, and may offer evidence on the custom and practice of injury and illness prevention in the workplace that is relevant to the issue of whether the violation is a serious violation.

(h) This section shall become operative on January 1, 2023.

SEC. 7.

No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution for certain costs that may be incurred by a local agency or school district because, in that regard, this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIII B of the California Constitution.

However, if the Commission on State Mandates determines that this act contains other costs mandated by the state, reimbursement to local agencies and school districts for those costs shall be made pursuant to Part 7 (commencing with Section 17500) of Division 4 of Title 2 of the Government Code.

SEC. 8.

The Legislature finds and declares that Section 4 of this act, which adds Section 6409.6 to the Labor Code, imposes a limitation on the public’s right of access to the meetings of public bodies or the writings of public officials and agencies within the meaning of Section 3 of Article I of the California Constitution. Pursuant to that constitutional provision, the Legislature makes the following findings to demonstrate the interest protected by this limitation and the need for protecting that interest:

The need to protect the privacy of employees from the public disclosure of their personally identifiable information outweighs the interest in public disclosure of that information.

Governor Newsom Signs Bill Immediately Ensuring Access to Paid Sick Leave for Every California Employee

Published: Sep 09, 2020

New law eliminates coverage gaps to ensure every employee has access to paid sick days if they are exposed or test positive to COVID-19 for 2020

Announcement delivers on Governor Newsom’s commitment to work with the Legislature to expand paid sick days

SACRAMENTO — Governor Newsom today signed AB 1867, legislation that immediately extends critical paid sick days protections to California’s workforce. Building on historic early action to expand paid sick days to employees in the food sector at the beginning of this crisis, this legislation means that every California employee that has been exposed to or tests positive for COVID-19 will have access to paid sick days for the rest of the 2020 calendar year.

AB 1867, a budget trailer bill, closes the gaps in paid sick days provided in federal law and the Governor’s Executive Order by including employers with over 500 employees and public and private employers of first responders and health care employees who opted not to cover their employees under federal law. The bill also allows California’s Labor Commissioner to cite workplaces for a lack of paid sick days, a critical enforcement tool that will promote safety for employees and customers alike.

“Helping employees stay home when they are sick is foundational in our response to COVID-19,” said Governor Newsom. “This bill fills in gaps in our federal and state paid sick days policy and gives our extraordinary employees a little more peace of mind as they take time to care for themselves and protect those around them from COVID-19. I look forward to continuing to work with the Legislature and other partners to make more progress in this space.”

Expanding access to paid sick days and protecting employees has been a priority of the Newsom Administration before and during the COVID-19 pandemic. Governor Newsom has taken several actions to benefit employees on the front lines, including paid sick days for food sector employees; workers’ compensation benefits for employees who contract COVID-19 during the stay-at-home-order; critical child care services for essential employees and vulnerable populations; additional weekly unemployment benefits; and support for employees to isolate and quarantine outside their home.

Changes to take effect in July:

  • Insurers will be required to locate beneficiaries of customers who have died and provide appropriate claim forms or instructions.

  • Those who live in rental units, mobile homes, and condos must be provided with a Residential Property Insurance Disclosure statement and the California Residential Property Insurance Bill of Rights Disclosure.

  • Insurers will be required to provide at least 75 days’ notice when nonrenewing a homeowners’ policy that expires on or after July 1, giving homeowners a chance to consider their options.

“We won many victories for California consumers last year, and secured more protections for homeowners, motorists, seniors, and diverse businesses,” said Lara. “I am looking forward to a new year creating additional new protections for consumers, including those affected by catastrophic wildfires. We will continue working with our partners, the Legislature, and the Governor to make a better California for all in 2020.”

Commissioner Lara expands order for insurance companies to partially refund premiums amid ongoing COVID-19 pandemic

News: 2020 Press Release

For Release: May 15, 2020

Media Calls Only: 916-492-3566

Email Inquiries: cdipress@insurance.ca.gov

Commissioner Lara expands order for insurance companies to partially refund premiums amid ongoing COVID-19 pandemic

In a separate action, Commissioner Lara calls for additional 60-day extension on insurance premium grace period

SACRAMENTO, Calif. – Today Insurance Commissioner Ricardo Lara issued a Bulletin extending his previous order requiring insurance companies to return partial insurance premiums to consumers and businesses and provide much-needed financial relief amid the ongoing COVID-19 pandemic. The Department of Insurance will review all premium adjustments to ensure they are fair and adequate and reflect policyholders’ reduced risk.

The Bulletin now includes the month of May, having already included the months of March and April, covering at least six different insurance lines: private passenger automobile, commercial automobile, workers’ compensation, commercial multi-peril, commercial liability, medical malpractice, and any other insurance line where the risk of loss has fallen substantially as a result of the COVID-19 pandemic.

The Commissioner’s Bulletin 2020-4 requires insurance companies to provide an adjustment to the premium in the form of a premium credit, reduction, return of premium, or other appropriate adjustment as soon as possible, and no later than August 11, 2020. For most if not all consumers, this will be a percentage of the premium — not 100 percent — and the Department of Insurance will validate each insurance company’s plan so that refunds are adequate and reflect the reduced risk.

“With the vast majority of Californians still under ‘stay at home’ orders, the risk of accident and loss remains low for many lines of insurance and their premiums should reflect that,” said Commissioner Lara. “While I appreciate companies that have already taken action to return premiums, the Department of Insurance will be checking that the reductions are adequate and consumers and businesses are not shortchanged.”

On March 18, Commissioner Lara issued a Notice, calling on all admitted and non-admitted insurance companies to provide their policyholders with a 60-day grace period to pay their premiums. With the deadline for this grace period fast approaching, Commissioner Lara today issued a second Notice requesting insurance companies to work with their policyholders who may be struggling financially to allow them an additional 60-days, effectively extending the grace period until July 14, 2020. After July 14, 2020, insurers are encouraged to work with their individual policyholders who have been acutely impacted by COVID-19 and are still unable to timely pay their premiums.

“Consumers who have lost their jobs or businesses due to this crisis deserve flexibility in paying their premiums, just like any other,” said Commissioner Lara. “I am asking insurance companies to be mindful of the revenue stream Californians have consistently provided to insurers over the years, stand with their customers in this crisis and extend grace periods an additional 60 days.”

Commissioner Lara is also requesting that all insurance agents, brokers, and other licensees who accept premium payments on behalf of insurers take steps to ensure that customers have the ability to make prompt insurance payments, if and where possible. This includes alternate methods of payment, such as online payments, to eliminate the need for in-person payment methods in order to protect the health and safety of both workers and customers.

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Insurance Commissioner Lara extends auto insurance coverage to delivery drivers for California’s essential businesses

News: 2020 Press Release

For Release: April 10, 2020

Media Calls Only: 916-492-3566

Email Inquiries: cdipress@insurance.ca.gov

Insurance Commissioner Lara extends auto insurance coverage to delivery drivers for California’s essential businesses

Commissioner’s action ensures food, medication, other essential goods can continue to be delivered during COVID-19 pandemic

LOS ANGELES, Calif. – With restaurants and businesses expanding deliveries to comply with “shelter in place” rules, Insurance Commissioner Ricardo Lara today urged insurance companies to extend auto insurance coverage for drivers who are using their personal vehicles to fulfill deliveries for California’s essential businesses during the COVID-19 pandemic.

Because personal automobile policies do not typically provide coverage for vehicles used for commercial purposes and some drivers may not be covered under their employer’s commercial automobile policy issued to a California essential business, temporary delivery drivers may be inadvertently uninsured as they carry out their job duties. Today’s action ensures that businesses can continue to provide essential goods to residents and families at their homes and that delivery workers are protected at all times so that they may continue their work critical to public health and safety.

“This is an unprecedented time so we must take unprecedented action to help Californians comply with public health ‘shelter in place’ orders,” said Insurance Commissioner Ricardo Lara. “Delivery drivers are performing essential services to help our seniors and families, and this action will protect them while on the roads.” 

Under today’s Notice, insurance companies should not deny a claim under a personal auto policy solely because the driver was providing delivery service on behalf of a California essential business impacted by the COVID-19 pandemic. The Notice applies to 16 categories of “essential critical infrastructure workers” identified by the U.S. Department of Homeland Security on March 19, including those who deliver food, medication, and other essential goods. 

The Department is also requesting insurance companies to extend delivery coverage for motorcycle and bicycle riders, and allow essential businesses to retroactively add drivers to their commercial automobile policies beginning on March 19, 2020.

“We appreciate Commissioner Lara’s attempt to help our industry in these historically challenging times," said Matt Sutton, Senior Vice President for Government Affairs and Public Policy at the California Restaurant Association. "Any and all help is welcome.”

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Renew California Bill Would Create an Insurance Guarantee to Harden Homes Against Wildfire

News: 2020 Press Release

For Release: February 18, 2020

Media Calls Only: 916-492-3566

Email Inquiries: cdipress@insurance.ca.gov

Renew California Bill Would Create an Insurance Guarantee to Harden Homes Against Wildfire

Requiring insurance companies to write and renew homeowner insurance policies for hardened homes and communities that meet statewide standard

SACRAMENTO, Calif. — Today Assemblywoman Lorena Gonzalez (D-San Diego), Assemblywoman Monique Limón (D-Santa Barbara), Insurance Commissioner Ricardo Lara, and United Policyholders introduced legislation to give insurance companies a greater role in protecting communities from devastating wildfires. Renew California (AB 2367) would require insurance companies to write or renew policies for existing homes in communities that meet a new statewide standard for fire-hardening. The bill also would authorize the Insurance Commissioner to require insurance companies to offer financial incentives for homeowners to do the work to make their homes more fire-safe.

The bill focuses on insurance companies that have been writing fewer homeowner policies and sharply increasing non-renewals of homes with wildfire risk across the state—a response to several years of devastating wildfires. Lack of insurance has sparked a wildfire “domino effect” that disrupts real estate markets and threatens the property tax base that local communities rely on to fund emergency services and more. Data released by the California Department of Insurance in August 2019 showed that insurance is becoming harder to find for communities across the state, with six counties from the Sierra to San Diego seeing a greater than 10 percent increase in non-renewals in 2018 alone. This data does not account for the full impact of insurance companies’ non-renewal response to the Camp Fire and Woolsey/Hill Fires—catastrophic wildfires that killed 89 people, destroyed 13,000 homes and businesses, and cost more than $11.4 billion in damages—in addition to all fires in 2019.

"Homeowners who have done all the right things, hardening their homes and mitigating for fire danger, are still seeing their insurance cancelled or non-renewed," Assemblywoman Gonzalez said. "We can’t allow insurance companies to continue to drop responsible homeowners from San Diego to the Sierras just because they can. Creating the Wildfire Resilience Task Force will bring certainty to consumer homeowners and bring balance back to our insurance markets."

Under AB 2367, the Insurance Commissioner, the California Governor’s Office of Emergency Services (Cal OES) and the State Fire Marshal will develop statewide standards for home and community hardening, in consultation with the California Department of Forestry and Fire Prevention (CAL FIRE) and the Governor’s Office of Planning and Research. Hardened homes in communities that meet this standard would receive a guaranteed offer or renewal of insurance, contributing to community resilience while ending the cycle of lost home sales, falling prices, and declining property values negatively impacting communities across the state.

"More Californians are hardening their homes against wildfires but not seeing the results of their hard work when it comes time to obtain or renew insurance," said Commissioner Lara. "If you have a fire-hardened home in a fire-hardened community, you should be able to get insurance and keep it. We need insurance companies to renew their commitment to wildfire safety with incentives that will allow Californians to lower risk while stopping the domino effect of unstable real estate markets and a declining local tax base for vital services."

This law would apply only to existing homes, whose owners are facing an abrupt change in insurance availability related to wildfire risk. Risk reduction benefits homeowners, insurance companies, local governments, and the state by avoiding or reducing the losses of future wildfires.

"Since the Thomas Fire in 2017, homeowners in my district have been heavily affected by the unprecedented rates of insurance non-renewals even when the community has been working towards reducing the risk," said Assemblywoman Limón. "I am proud to joint-author this bill that works towards creating a fair structure for insurance companies to follow while protecting homeowners and providing them peace of mind."

Commissioner Lara and Department of Insurance staff have met with more than 2,000 residents and local leaders across 15 counties suffering from an increasing lack of insurance. Many spoke about their frustration at losing insurance, even after decades with the same company and no claims history. Meanwhile, an increasing number of homeowners are turning to the FAIR Plan, California’s insurer of last resort, which offers coverage that is less comprehensive and often more expensive compared to traditional insurance.

"Three years ago when insurers started dropping homeowners in rural counties and hitting them with up to 500% price increases, UP issued a call for California to follow the lead of Florida, Alabama and South Carolina and create a risk reduction and insurance reward program. Now the problem has spread throughout the state and insurers won't come to the table voluntarily. The Legislature must act," said Amy Bach, executive director of United Policyholders. "We stand with Commissioner Lara and the many stakeholders that recognize that we must establish risk reduction standards, a certification program and insurance assurance. We must engage Californians in helping reducing their wildfire risk and give them assurance that if they do, they can continue to protect their assets via affordable, available coverage."  

More legislators are calling for action to preserve insurance access and, last year, Governor Gavin Newsom said that “we must do more” to address non-renewals in his signing message for AB 1816 (Daly), a bill that Commissioner Lara supported that increased an insurance company’s non-renewal notice requirement to a policyholder from 45 to 70 days. In December, Commissioner Lara implemented a new law, which he authored as a member of the California State Senate in 2018, currently protecting more than 1 million households near recent wildfires from non-renewal due to wildfire risk for one year.

"There is no easy path forward, but by working together we can lower risk and preserve and protect communities that have been in place for generations," said Commissioner Lara. "We have to renew California."

AB 2367 has support from the California Professional Firefighters, California State Firefighters’ Association, Consumer Attorneys of California and the Consumer Federation of California.

AB 1266: Governor Signs Bill to Make Intersections Safer for Bicyclists

State Capitol, Sacramento, CA – Governor Gavin Newsom signed a bill today that will make it safer for bicycle riding in California at busy intersections. The bill requires Caltrans to develop a street marking or design that allows cyclists to go straight from a right or left turn lane and to safely cross outside of the high-traffic lanes.

“AB 1266 bill will make our roadways safer for everyone by matching street design with the already practiced, safe behavior of cyclists at busy intersections. I’m committed to making sure Californians have safe, healthy, and non-polluting transportation choices as we expand our efforts to combat climate change,” said Assemblymember Robert Rivas (D-Hollister).

“This bill authorizes a bicyclist to travel straight through a right or left-hand turn only lane and requires Caltrans to develop standards for lane striping, pavement marking, and appropriate regulatory signs to implement this bill. It will save lives,” said Dave Snyder, director of the California Bicycle Coalition.

About AB-1266 Traffic control devices: bicycles

Currently, cyclists approaching an intersection may thread the needle between the right-hand turn lane and the adjacent go-straight lane. However, legally, like cars, cyclists should proceed through an intersection in a go-straight lane and are prohibited from going through an intersection from the right-turn lane. Cyclists traveling in a bicycle lane that disappears, converting into a right-turn lane before an intersection, must merge left into the go-straight lane, proceed through the intersection, and then, if the bicycle lane resumes after the intersection, merge right back into the bicycle lane.

This bill will fix that problem by allowing bicyclists to cross intersections straight ahead from the relative safety of a right or left turn lane. This will be marked on the street or via sign, so all road users understand the rule.

Wildfire insurance crisis leads commissioner to call for first-ever statewide non-renewal moratorium

News: 2019 Press Release

For Release: December 5, 2019

Media Calls Only: 916-492-3566

Email Inquiries: cdipress@insurance.ca.gov

Wildfire insurance crisis leads commissioner to call for first-ever statewide non-renewal moratorium

Action to head off growing insurance availability crisis follows

OAKLAND, Calif. — Today Insurance Commissioner Ricardo Lara issued a mandatory one-year moratorium on insurance companies non-renewing policyholders--helping at least 800,000 homes in wildfire disaster areas in Northern and Southern California. The commissioner’s action is the result of Senate Bill 824—authored last year by Lara while serving as state senator—in order to give temporary relief from non-renewals to residents living near a declared wildfire disaster. This is the first time the department has invoked the new law, which took effect in January.

Because the homeowner insurance crisis extends beyond the wildfire perimeters and impacts residents statewide, Commissioner Lara went a step further and called on insurance companies to voluntarily cease all non-renewals related to wildfire risk statewide until December 5, 2020, in the wake of Governor Gavin Newsom's declaration of statewide emergency due to fires and extreme weather conditions. A statewide moratorium would provide all California homeowners, renters, and businesses peace of mind, and allow time for stakeholders to come together to work on lasting solutions, help reduce wildfire risk, and stabilize the insurance market.

“This wildfire insurance crisis has been years in the making, but it is an emergency we must deal with now if we are going to keep the California dream of home ownership from becoming the California nightmare, as an increasing number of homeowners struggle to find coverage,” said Commissioner Lara. “I am calling on insurance companies to push the pause button on issuing non-renewals for one year to give breathing room to communities and homeowners while they adapt and mitigate risks, give the Legislature time to work on additional lasting solutions, and allow California's insurance market to stabilize.”

Commissioner Lara announced the action at a home in Oakland alongside local leaders from affected areas and consumer advocates, following months of meetings across the state with county officials, community leaders, and more than 2,000 homeowners who have been non-renewed and struggled to find new coverage.

“As communities across California continue to recover from wildfires and natural disasters, insurance companies are critical partners in helping our communities rise up,” said Sonoma County Supervisor James Gore, who serves as second vice president of the California State Association of Counties. “The inability to obtain insurance after disaster strikes impacts home values and tax revenues for emergency services that help ensure the integrity of California communities. On behalf of Sonoma County and every county statewide navigating the rebuilding and recovery process, we call on our insurance partners to help us move toward a more resilient future.”

The mandatory one-year moratorium covers more than 800,000 residential policies in ZIP Codes adjacent to recent wildfire disasters under the newly enacted Senate Bill 824 (Lara, Chapter 616, Statutes of 2018), also known as the Wildfire Safety and Recovery Act. While existing law prevents non-renewals for those who suffer a total loss, the new law established protection for those living adjacent to a declared wildfire emergency who did not suffer a total loss—recognizing for the first time in law the disruption that non-renewals cause in communities following wildfire disasters.

Home insurance is not a luxury - it's a necessity. Yet for hundreds of thousands of Californians it's become almost impossible to find and afford. This puts people between a rock and a hard place, and communities up and down the state are hurting,” said Amy Bach, Executive Director of United Policyholders. “At United Policyholders we are doing all we can to help consumers deal with this situation and we thank Commissioner Lara for authoring the moratorium bill and agreeing to take further action with a statewide voluntary moratorium.”

Following Governor Newsom's emergency declarations in October, the Department of Insurance partnered with CAL-FIRE and the Governor’s Office of Emergency Services to identify wildfire perimeters and adjacent ZIP codes within the mandatory moratorium area. Today’s bulletin includes seven of the 16 wildfires within state-declared emergency areas, and CAL-FIRE is working to identify perimeters for the remaining nine fires, which the Department of Insurance will announce in a separate bulletin.

Commissioner Lara's action comes amid growing evidence that homeowner insurance has become more difficult for Californians to obtain from traditional markets, forcing them into more expensive, less comprehensive options such as the FAIR Plan that do not offer the same level of coverage or protections.

In August, the Department of Insurance released data revealing insurance companies are dropping an increasing number of residents in areas with high wildfire risk. The number of non-renewals rose by more than 10% last year in seven counties from San Diego to Sierra—a direct response to California’s recent devastating wildfires. The number of consumers covered by the FAIR Plan—California’s insurer of last resort —has surged in areas with high wildfire risk. According to the U.S. Forest Service, more than 3.6 million California households are located in the wildland urban interface where wildfires are most likely to occur.

Today's action builds on Commissioner Lara's order last month to modernize the FAIR Plan and strengthens our insurance safety net. No later than June 1, 2020, the FAIR Plan will expand its coverage to offer a full homeowners policy in addition to its current limited fire-only policy. By April 1, 2020, the FAIR Plan will increase the Dwelling Fire combined policy limit from $1.5 million to $3 million, in recognition of higher home values. By February 1, 2020, the FAIR Plan will offer a monthly payment plan without fees and allow people to pay by credit card or electronic funds transfer without fees.

 

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Commissioner Lara issues emergency notice to help expedite insurance claims from California fires

News: 2019 Press Release

For Release: November 20, 2019

Media Calls Only: 916-492-3566

Email Inquiries: cdipress@insurance.ca.gov

Commissioner Lara issues emergency notice to help expedite insurance claims from California fires

SACRAMENTO, Calif. – Insurance Commissioner Ricardo Lara today issued an emergency notice to all property and casualty insurance companies doing business in California, requesting they expedite claims handling for California wildfire survivors in order to help them begin the recovery and rebuilding process more quickly.

Survivors of the recent fires in Northern and Southern California face the long and painful task of recovery, which often includes trying to inventory lost possessions and reconstruct destroyed or missing documents.

“I have met with many wildfire survivors since taking office, and they need immediate help to start the rebuilding process, not red tape and unnecessary paperwork that adds to their problems,” said Commissioner Lara. “These expedited claims handling procedures will give policyholders the help they need, and I urge insurers to do the right thing for these survivors.”

Commissioner Lara is asking insurance companies to provide greater flexibility to survivors affected by wildfires across the state with some deadlines and documentation typically required to pay claims, including:

  • Minimum four-month advance payment of Loss of Use, Fair Rental Value or Additional Living Expenses

  • Minimum 60-day billing grace period to allow for lost or destroyed renewal notices

  • Advance payment of at least 25% of policy limits for personal property — without the completion of an inventory

  • Accepting any inventory form that contains substantially the same information as a company-specific form

  • Accepting an inventory that includes groupings of personal property, such as clothing, shoes, books, or food items rather than listing individual item

  • Expediting payment of vehicle damage claims covered under comprehensive loss coverage

  • Cooperating with consolidated debris removal efforts coordinated through city, county, and state agencies, unless the insurer can provide more rapid debris removal outside of this effort

The Department of Insurance has issued similar notices after other devastating fires, including the Camp, Woolsey, and Hill fires in 2018. Virtually all insurers heeded the Commissioner’s call during previous fires when similar Notices were sent out. This notice is also in recognition of Governor Gavin Newsom’s declared states of emergencies related to the wildfires.

This notice builds on the Department’s recent actions to help California consumers facing wildfire risk.

Last week, Commissioner Lara ordered the FAIR Plan — California’s insurer of last resort — to help homeowners find adequate coverage by offering a comprehensive policy in addition to its current dwelling fire-only coverage by June 1, 2020, and taking other steps to modernize its options.

Commissioner Lara has met with more than 2,000 Californians at community roundtables in nine counties across the state to discuss wildfire insurance issues, and he mobilized the Department’s staff to help consumers at local assistance centers following the recent fires this year in Sonoma, Los Angeles, Ventura, and San Bernardino counties.

Court issues order to conserve California Insurance Company

News: 2019 Press Release

For Release: November 5, 2019

Media Calls Only: 916-492-3566

Email Inquiries: cdipress@insurance.ca.gov

Court issues order to conserve California Insurance Company to protect policyholders

Conservation order blocks out-of-state merger and preserves California protection of existing policyholders

SACRAMENTO, Calif. — On Monday, November 4, the San Mateo County Superior Court issued an order appointing the California Department of Insurance’s Conservation and Liquidation Office as conservator of California Insurance Company (CIC) and directing the conservator to take immediate possession of the workers’ compensation insurer in response to the company’s willful violation of state law and established pattern of continually flouting California’s regulatory processes. 

The Department of Insurance sought the order after company officials unilaterally and illegally attempted to merge its business with a New Mexico-based insurer without first securing the Department’s prior approval. 

The order also blocks the attempted merger, which seeks to divest California of its regulatory oversight over this entity. If CIC is permitted to consummate this illegal transfer, CIC employer policyholders, employees with serious work-related injuries and other claimants entitled to vital and necessary insurance benefits, will be left holding policies of a non-admitted insurer not qualified to transact insurance in California. 

Effective immediately, the Department of Insurance’s Conservation and Liquidation Office will serve as conservator to protect the company’s existing policyholders and covered workers from an insurer attempting to operate without the approval and authority to continue to transact insurance in California.

The conservator will, to the fullest extent of the law, ensure that California Insurance Company policyholders remain covered under their existing policies and retain the full protections provided to them under California law. 

This action follows an established pattern and practice by company officials of illegal actions, misrepresentations, and willful disregard for the authority of the Department of Insurance and other states’ regulators:

  • In 2016, the Department of Insurance issued a precedential decision In the Matter of the Appeal of Shasta Linen Supply, Inc. stating that California Insurance Company (CIC) “created a product to circumvent California’s statutory and regulatory requirement; a product that ultimately enriched CIC at the expense of California employers.”

  • The Department subsequently served California Insurance Company officials with a Cease and Desist Order for selling unapproved workers’ compensation policies to unsuspecting business owners in what amounted to a “bait and switch” scheme.

  • Other states including Vermont, Wisconsin, New York, and New Jersey have also taken regulatory actions against the same company officials’ affiliated companies for engaging in similar unapproved transactions within those states.

While the Department of Insurance was in the process of reviewing the company’s application for sale, on October 9, with less than 48 hours’ notice to California, company officials attempted to transfer the ownership of California-domiciled California Insurance Company to a New Mexico entity called “California Insurance Company II.” 

The California Department of Insurance denied an application for approval of the sale of California Insurance Company on October 18, citing, among other reasons, the applicants’ abrupt and unilateral attempt to merge the company with a New Mexico-based entity without seeking or obtaining California’s prior approval. 

California law is unequivocal in giving the Department of Insurance the responsibility and power to review transactions of California-based insurers in order to protect policyholders and the public. No company can evade this authority if it wants to sell insurance in this state.

# # #Media Notes

  • Court order of conservation

  • The San Mateo County Superior Court issued the order under California Insurance Code 1011(c), which allows the Department to act as conservator for a company that “without first obtaining the consent in writing of the commissioner, has transferred, or attempted to transfer, substantially its entire property or business or, without consent, has entered into any transaction the effect of which is to merge, consolidate, or reinsure substantially its entire property or business in or with the property or business of any other person.”

  • California Insurance Company has $185 million in written premiums in California. California’s overall worker’s compensation market has more than $12 billion in written premium.


The California Department of Insurance, established in 1868, is the largest consumer protection agency in California. Insurers collect $310 billion in premiums annually in California. Since 2011 the California Department of Insurance received more than 1,000,000 calls from consumers and helped recover over $469 million in claims and premiums. Please visit the Department of Insurance website at www.insurance.ca.gov. Non-media inquiries should be directed to the Consumer Hotline at 800.927.4357. Telecommunications Devices for the Deaf (TDD), please dial 800.482.4833.

Insurance Companies Agree to Extend Time for 2017 Wildfire Survivors to Access Additional Living Expense Benefits Past Two-Year Cutoff

News: 2019 Press Release

For Release: October 18, 2019

Media Calls Only: 916-492-3566

Email Inquiries: cdipress@insurance.ca.gov

Insurance Companies Agree to Extend Time for 2017 Wildfire Survivors to Access Additional Living Expense Benefits Past Two-Year Cutoff

26 companies representing a majority of 2017 wildfire survivors respond to Commissioner Lara’s request to extend remaining benefits

SACRAMENTO, Calif. — 26 insurance companies have agreed to extend the time limits for 2017 wildfire survivors to access additional living expense benefits after Commissioner Ricardo Lara appealed to them to stand by their customers who are still in the process of rebuilding their homes. These companies represent a majority of the total losses from the devastating 2017 wildfires that struck Santa Rosa and other parts of Northern California. 

With only approximately 20 percent of homes rebuilt today, many survivors have faced unavoidable delays due to the scale of destruction and construction labor shortages. Commissioner Lara approached insurance companies to honor the spirit of a new state law passed in the wake of the deadly 2017 fires by extending additional living expense, or ALE benefits, from 24 to 36 months.

“Two years is clearly not enough time for people to get back on their feet in a disaster of this magnitude,” said Commissioner Lara. “The voluntary action by 26 insurance companies to extend additional living expense time limits is a step that will bring relief to those with benefits remaining while they continue to rebuild.”

ALE coverage typically includes additional food and housing costs, furniture rental, relocation and storage, and extra transportation expenses, among other reimbursable costs. ALE benefits differ by insurance company. Some plans have a set dollar limit, some have a time limit, and others have no limits. Policyholders should contact their insurance company or the Department of Insurance at (800) 927-4357 to determine if they have remaining ALE benefits.

In the aftermath of the catastrophic 2017 wildfires, the Department, California State Legislature, and Governor recognized that 24 months does not provide sufficient time to remove debris, obtain all necessary building permits, locate and hire a contractor and multiple subcontractors, and completely rebuild destroyed homes. The extraordinary circumstances of the 2017 fires still persist today with many consumers remaining in limbo due to these circumstances beyond their control.

The passage of Senate Bill 894 (Dodd and McGuire, Chapter 618, Statutes of 2018 ), Assembly Bill 1772 (Aguiar-Curry and Wood, Chapter 627, Statutes of 2018), and Assembly Bill 1800 (Levine, Chapter 628, Statutes of 2018) increased the 24-month mandatory ALE coverage period to a minimum of 36 months if a policyholder acting in good faith and with reasonable diligence encounters delays in the reconstruction process of their home.

Commissioner Lara first made the request to insurance companies to voluntarily extend ALE benefits in May at a meeting with Sonoma County fire survivors, and he renewed it in a September letter to survivors as the two-year anniversary of the deadly blazes approached. To date, the Department of Insurance has helped more than 1,000 people obtain $100 million in benefits related to the 2017 Sonoma County fires.

“I urge policyholders who lost access to ALE benefits to contact my Department for further assistance, including if they believe their insurance company played any role in causing a delay,” said Commissioner Lara.

An example of a delay includes an insurance company taking an extensive amount of time before approving a contractor’s final estimate for rebuilding.

 Media Notes:

  • Insurance companies’ responses to voluntary request to extend ALE benefits

  • Different residential property insurance companies have different levels of coverage for Additional Living Expenses. Some insurers have a dollar limit for ALE. In those cases (for the insurers that agreed to extend the ALE time), if the insured still has ALE coverage limits, the insurers have agreed to extend the period that the insured may collect ALE as long as there are coverage limits available. Other insurers have no dollar coverage limit. In those cases (for the insurers that agreed to extend the ALE time), the insurers have agreed to extend the period that the insured may collect ALE with no coverage limit. Consumers should check their policy to determine the type of ALE coverage available and contact the Department of Insurance at (800) 927-4357 if they have questions about their coverage.

  • Not all residential property insurance companies reported total loss claims from the 2017 wildfires. The Department of Insurance data only reflects responses from those insurance companies that reported total loss claims from the 2017 wildfires. If a homeowner suffered a total loss from the 2017 wildfires and their insurance company or insurance group is not listed above, they should contact their insurance company to determine whether their insurer will agree to Commissioner Lara’s request.

LEGISLATIVE UPDATE:  California Insurance Alert

The California Legislature is on a July 12th deadline set by Governor Gavin Newsom to enact a wildfire financing package designed to help PG&E to exit bankruptcy and to protect the bond ratings of other California investor owned utilities.  Utilities such as Southern California Edison and Sempra Energy’s San Diego Gas & Electric face junk bond ratings if the state fails to act.  Power lines are already sparking blazes early in this year’s wildfire season.

The state Senate passed SB 1054 on July 8th that would create a multibillion dollar fund that utility companies could borrow from to cover future wildfire liabilities.  It would also make it easier for them to recover costs from their customers.  The state Assembly has until July 12th, when a recess begins, to approve AB 1054.  Legislators and industrial rate payers have other items they want attached to the Governor’s plan.  AB 1054 has been tagged as an urgency bill, requiring a two-thirds vote.

California’s market for homeowners insurance, especially for homes in the Wildland-Urban Interface (WUI) is already challenged.  Homeowners have experienced rate increases, cancellations, and non-renewals.  There has been an increase in properties insured in the non-admitted market and in the FAIR Plan.  Some legislators plan to introduce at least three new proposals relating to availability, under-insurance, and non-renewals that would adversely affect residential property insurers appetite for writing insurance.

These bills include:  1) guaranteed renewal for home hardening up to 10 years, 2) an annual comprehensive replacement cost estimate to be prepared by the insurer, and 3) 11-month notice prior to non-renewal, even if the policy is written for less than one year.  These bills are in addition to proposals to increase the California Insurance Guarantee Fund (CIGA) cap from $500,000 to $1 million for coverage A and to increase the FAIR Plan maximum coverage from $1.5 million to $3 million.

Sources include: Insurance Journal July 10, 2019 and IIABCal Connect July 8, 2019

Submitted by Margaret S. Lamdagan

California Disaster Insurance Act Passes Key Committee

Legislation by that could lead California to consider buying insurance in the private market to cover rapidly increasing costs of fighting wildfires due to climate change cleared a key committee vote Tuesday.

Senate Bill 290, called the California Disaster Insurance Act, was authored by state Sen. Bill Dodd, D-Napa, and is co-sponsored by Insurance Commissioner Ricardo Lara and Treasurer Fiona Ma.

It aims to stabilize state budget costs from major disasters. SB 290 would authorize the governor, insurance commissioner, and treasurer to enter into an insurance policy that pays out when California has unexpected disaster costs.

The bill passed the Senate Governmental Organization committee on Tuesday. SB 290 now moves to the Senate Committee on Appropriations.

Lara said the law if passes it would enable the state to officially engage with the insurance industry and figure out how to pay the state’s pay skyrocketing firefighting costs – solutions could be found through insurance, reinsurance, issuing a bond or creating a parametric product, according to Lara.

“It works like home insurance, but for the state,” Lara told Insurance Journal in February as the bill was first introduced.

Dodd said climate change has led to devastating wildfires and the need for a strategy to reduce the strain that puts on the state’s coffers.

“Unpredictable disaster costs require large budget reserves and threaten cuts to critical programs,” Dodd said in a statement. “Allowing the state to invest in an insurance policy will provide predictability and limit taxpayers’ risk of increasing disasters costs.”

The federal government, the World Bank, and the state of Oregon have all used insurance to reduce the risk to taxpayers following disasters. Oregon purchased insurance protection against wildfire costs for nearly 40 years – spending $61 million on premiums and receiving $102 million in insurance payments, according a 2017 University of Idaho report.

The high claim figures were pushed up by back-to-back years in which the policy limits were reached at $25 million in claims both in 2013 and 2014. The following year the state paid $3.8 million in premiums but no claims were triggered.

California has seen the cost of fighting wildfires grow to record levels over the past decade. California spent $947 million in 2017-18 through the emergency fund for firefighting – nearly $450 million more than budgeted, according to Cal Fire. The costs of fighting wildfires have overrun Cal Fire’s emergency budget in seven of the last 10 years. Since 2007, California has experienced 11 of the top 20 most destructive fires in its history.

California currently pays for wildfire disasters with available funds, and California Disaster Insurance will come from those same sources, according to proponents of the bill.

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Commissioner issues regulations prohibiting gender discrimination in automobile insurance rates

News: 2019 Press Release For Release: January 3, 2019

Media Calls Only: 916-492-3566 Email Inquiries: cdipress@insurance.ca.gov

Commissioner issues regulations prohibiting gender discrimination in automobile insurance rates

New rule prohibits gender rating; promotes fairness and social equity

SACRAMENTO, Calif. — California Insurance Commissioner Dave Jones has issued new regulations that prohibit the use of gender in private passenger automobile insurance rating in California. The Gender Non-Discrimination in Automobile Insurance Rating Regulation became effective on January 1, 2019.

“My priority as Insurance Commissioner is to protect all California consumers, and these regulations ensure that auto insurance rates are based on factors within a driver’s control, rather than personal characteristics over which drivers have no control,” said Insurance Commissioner Dave Jones. 

This is not the first regulatory action Commissioner Jones has taken to prevent gender-based discrimination in California’s insurance industry. In 2012, the Commissioner promulgated regulations that prohibit and prevent the denial of coverage or denial of claims for medical services based upon an insured or prospective insured’s actual or perceived gender identity. Prior to his election as Insurance Commissioner, then Assembly member Jones authored legislation (Assembly Bill 119, in 2009) to prohibit gender-based discrimination in the pricing of health insurance. Thanks to that law, California eliminated gender-based pricing in health insurance before that became the national standard under the Affordable Care Act.

The Commissioner’s Gender Non-Discrimination in Automobile Insurance Rating Regulation mandates that all automobile insurance companies operating in California file a revised class plan that eliminates the use of gender as a rating factor. 

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FOR IMMEDIATE RELEASE: January 2, 2019
MEDIA INQUIRIES ONLY: 916-492-3566   EMAIL INQUIRIES: cdipress@insurance.ca.gov

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$10 million penalty in Wells Fargo case - Wells Fargo agrees to exit personal insurance business after investigation found it signed up 1,500 consumers for insurance without consent

SACRAMENTO, Calif. - Wells Fargo has agreed to pay a $10 million penalty as part of a settlement agreement with the California Department of Insurance. This settlement resolves the department's accusation alleging improper insurance sales practices related to Wells Fargo's online insurance referral program. The improper practices resulted in consumers being signed up and charged for insurance products without their consent.

"The Department of Insurance's investigation found that Wells Fargo was signing up and charging customers for insurance without their consent," said Insurance Commissioner Dave Jones. "Banks and other financial institutions should never be allowed to prey on their customers' trust without being held accountable."

Wells Fargo has agreed to not transact any new business during the remaining term of its two insurance licenses, which expire in July and September 2020, respectively. The company also agreed to not apply for a license for at least two years following the expiration of their current licenses.

$5 million of the penalty is due immediately. If the company ever seeks to return to the California insurance marketplace, it will then pay the remaining $5 million penalty. The Department may also decline to issue a new license.

In November 2017, the department served on Wells Fargo an accusation seeking revocation of Wells Fargo's insurance license for improper insurance sales practices. The accusation was the result of an investigation opened at the direction of Insurance Commissioner Dave Jones, which found that from 2008 to 2016, Wells Fargo customers were issued approximately 1,500 insurance policies without their knowledge or permission. In some cases, employees told consumers to enter their personal information on a policy application merely to receive a quote, but Wells Fargo employees later submitted the application to the insurer to purchase the policy without the consumer's permission.

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MEDIA NOTE:

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FOR IMMEDIATE RELEASE: November 29, 2018
MEDIA INQUIRIES ONLY: 916-492-3566   EMAIL INQUIRIES: cdipress@insurance.ca.gov #139

Commissioner approves rate reduction to save earthquake policyholders more than $16 million

SACRAMENTO, Calif. - Insurance Commissioner Dave Jones has approved a rate reduction for California Earthquake Authority (CEA) residential earthquake policyholders that will bring millions of dollars in premium savings for tens of thousands of homeowners and renters in California.

"The department's Rate Regulation Branch staff reviewed CEA's rate filing and determined that the proposed rates should be lowered," said Insurance Commissioner Dave Jones. "Department staff worked with CEA staff to arrive at approved rates that will result in an estimated total premium savings of $16.3 million to California consumers over a three-year period. Once again, Californians have benefited from the insurance commissioner's rate regulation authority."

The initial proposal in CEA's rate filing was for a 0.4 percent increase. However, following the department's actuarial review and recommendations, CEA submitted an amended filing, requesting a rate reduction of 1.7 percent. The proposed effective date is July 1, 2019.

The rate reduction is for CEA's residential earthquake policy that can cover your home up to a certain amount, personal items in your home, such as furniture, TVs, and computers, and temporary and extra costs to live somewhere else while your area is evacuated or your home is being repaired.  

Since Commissioner Jones took office in 2011, the department has reviewed more than 54,000 rate filings and saved consumers and businesses over $3.4 billion through rate reductions. Whether a particular policyholder as a result of this rate filing approval receives a rate reduction and how much, depends on their individual policy and CEA territory.

To make a home more earthquake resistant, the department encourages California homeowners to consider retrofitting their home. A verified retrofit may also allow homeowners to receive additional discounts on their homeowners and earthquake insurance policies. The California Residential Mitigation Program (CRMP) was established in 2011 to help Californians strengthen their homes against damage from earthquakes. CRMP established Earthquake Brace + Bolt to offer up to $3,000 to help California homeowners retrofit their house to reduce potential damage from earthquakes.


Insurance commissioner calls on industry to ease inventory requirement for 2018 wildfire survivors

News: 2018 Press Release

For Release: October 4, 2018

Media Calls Only: 916-492-3566

Email Inquiries: cdipress@insurance.ca.gov

Insurance commissioner calls on industry to ease inventory requirement for  2018 wildfire survivors

In a formal notice, Jones requests insurers voluntarily provide up to 100 percent of contents coverage limits without requiring an onerous detailed home inventory

SACRAMENTO, Calif. — Due to the staggering losses suffered by thousands of residents from the 2018 wildfires, Insurance Commissioner Dave Jones is asking insurers to assist overwhelmed wildfire survivors by voluntarily easing detailed personal property home inventory requirements and following the lead of other insurers providing at least 75 percent and up to 100 percent of contents (personal property) coverage limits without the submission of a detailed inventory.
 
The notice issued today, acknowledges that the department is aware of and applauds the efforts of certain insurers that have already gone above and beyond the Voluntary Expedited Claims Handling Procedures and have made significant efforts to assist and accommodate survivors by offering, in some cases, up to 100 percent contents limits payment without a personal property inventory.
 
However, due to the massive scale of these wildfires Jones is requesting all other property insurers follow suit by providing similar accommodations and is asking insurers to notify the department by October 31, 2018 whether they will comply and what percentage they will provide. Those insurers offering an amount less than 100 percent should allow policyholders the ability to recover additional benefits, if the policyholder subsequently completes a full inventory. 
 
“The Carr and Mendocino Complex fires rank among the most destructive wildfires in California’s history,” said Insurance Commissioner Dave Jones. “Entire communities were decimated with residents suffering staggering losses of not only property, but tragically loss of life and injuries. I’m asking property insurers to ease the burden on traumatized survivors by voluntarily providing at least 75 percent of contents coverage without the onerous requirement of a detailed home inventory, so survivors may get on with patching their lives back together.”

The commissioner’s request applies to all insured homes that suffered a total loss, unless the insurer has reason to believe the home was not furnished. The department advises policyholders already working with a claims adjuster to develop a settlement plan that best serves their needs, which may include taking the time to complete a personal property home inventory.

 The California Department of Insurance, established in 1868, is the largest consumer protection agency in California. Insurers collect $310 billion in premiums annually in California. Since 2011 the California Department of Insurance received more than 1,000,000 calls from consumers and helped recover over $469 million in claims and premiums. Please visit the Department of Insurance website at www.insurance.ca.gov. Non-media inquiries should be directed to the Consumer Hotline at 800.927.4357. Telecommunications Devices for the Deaf (TDD), please dial 800.482.4833

California Insurance Commissioner OKs Workers’ Comp Rating Bureau Filing

October 15, 2018

  • California Insurance Commissioner Dave Jones has approved a filing from the Workers’ Compensation Insurance Rating Bureau’s that makes amendments to uniform statistical reporting and experience rating.

The WCIRB submitted a regulatory filing and ensuing amendments to the filing in Aug. 1 which was followed by a public hearing was held on Aug. 3.

Jones’ decision Oct. 12 decision includes:

  • Proposed amendments to Classifications 8868 and 9101 and the proposed establishment of Classifications 8869, 8871, 8872, 8873, 8874, 8876 and 9102 were not approved.

  • All other proposed amendments to the California Workers’ Compensation Uniform Statistical Reporting Plan—1995, Miscellaneous Regulations for the Recording and Reporting of Data—1995, and California Workers’ Compensation Experience Rating Plan—1995 effective Jan. 1, 2019 were approved as filed.

  • The proposed amendments to the California Workers’ Compensation Uniform Statistical Reporting Plan—1995 effective January 1, 2020 were approved as filed.

  • The WCIRB’s proposed Jan. 1, 2019 expected loss rates by classification were approved with the exception of the proposed expected loss rates for Classifications 8868, 8869, 8871, 8872, 8873, 8874, 8876, 9101 and 9102. The Expected Loss Rates for Classifications 8868 and 9101 will be modified in accordance with the commissioner’s decision.

  • The Jan. 1, 2019 eligibility threshold based on the approved January 1, 2019 expected loss rates is $10,000.

The WCIRB is in the process of updating the Uniform Statistical Reporting Plan, Miscellaneous Regulations and Experience Rating Plan to reflect the regulatory changes approved by the commissioner.

The WCIRB is expected to begin calculating 2019 experience modifications within the next several days.

The commissioner’s October 12, 2018 decision pertains only to the WCIRB’s 2019 Regulatory Filing and does not address the proposed changes to the 2019 advisory pure premium rates.

 

California’s Data Privacy Law a Concern, Opportunity for Insurance Industry

California is on track to have what will be the nation’s most far-reaching law to give consumers more control over their personal data. The new law may be both a big concern, as well as a new and important opportunity, for the insurance industry.

Assembly Bill 375, authored by Assemblyman Ed Chau, D-Arcadia, was signed by Gov. Jerry Brown last week, hours after lawmakers passed it with no dissenting votes in a last-minute effort to convince a San Francisco real estate developer to remove a similar initiative from consideration for the November ballot ahead of a deadline. Many saw AB 375, the California Consumer Privacy Act of 2018, as being more favorable than a voter-enacted initiative, which is more difficult to alter than laws passed through the legislative process.

The developer withdrew the initiative shortly after the law was signed. The new law follows massive data breaches in recent years at companies like Target and Equifax, while Facebook also has faced scrutiny amid revelations that consulting firm Cambridge Analytica collected data from millions of Facebook users without their knowledge.

The law requires companies to report to customers upon their request what personal data they’ve collected, why it was collected and what third-parties have received it. The law doesn’t take effect until Jan. 1, 2020, but it’s already gotten the attention of people who are warning of potential liabilities for companies that don’t take the time to understand the law, or decide not to obey it. This law is similar to Europe’s General Data Protection Regulation. GDPR data privacy regulations took effect in May. Those regulations also aim to give consumers greater control over use of their data.

GDPR overhauls data protection laws in the European Union, and foresees fines of up to 4 percent of global revenues for companies that break the rules. GDPR forces companies to implement data storage, processing and marketing best practices, and enables consumers to request to be forgotten – meaning companies must remove all their data.

“The California privacy bill is a natural progression of GDPR,” said Jeff Brown, vice president of Imprezzio, a technology software company that serves the insurance industry. “We believe this measure was accelerated by (Facebook founder and CEO Mark) Zuckerberg’s Congressional testimony on the use of consumers data and the strong desire by consumers to understand and control their data – it is a social rights issue.”

Joan D’Ambrosio, a partner in San Francisco-based law firm Clyde & Co., who focuses on technology, media and privacy for insurers, is urging the insurance sector to watch this new law closely. From an insurance perspective it certainly creates the potential for more liability for companies and therefore for their insurers,” D’Ambrosio said. “There’s no question it will create potential liability.”

The new California law provides for its enforcement by the state attorney general, and provides a private right of action “in connection with certain unauthorized access and exfiltration, theft, or disclosure of a consumer’s nonencrypted or nonredacted personal information.” It also creates a Consumer Privacy Fund with in the state’s General Fund to be used to support the purposes of the bill and its enforcement.

Companies that violate the law could not only face penalties, but lawsuits as well, D’Ambrosio said. “The potential exposure would be down the line if companies deviate from the requirements,” she added. The new law lays out numerous consumer rights, including that consumers will have the right to request that a business that collects personal information about them must disclose to the consumer the following:

  • The categories of personal information it has collected about that consumer.

  • The categories of sources from which the personal information is collected.

  • The business or commercial purpose for collecting or selling personal information.

  • The categories of third parties with whom the business shares personal information.

  • The specific pieces of personal information it has collected about that consumer.

The law also requires a business that collects personal information about consumers to disclose the categories of personal information it has collected about them, the categories of sources from which the personal information is collected, the purpose for collecting or selling personal information, the categories of third parties with which the business shares personal information and the specific pieces of personal information the business has collected about that consumer.

D’Ambrosio believes the law will undergo further modifications as the state works out how to enact and enforce it. “A lot of the details now are to be fleshed out,” she said. “But there is going to be a much higher level of accountability about the collection and usage of the information.”

The law also creates an opportunity for the insurance industry to sell more cyber policies, said Joshua Motta, CEO of Coalition, who was quick to point out that there are key differences between the new California law and GDPR. “Under GDPR fines and penalties are not insurable,” he said, noting that in most EU states, only defense costs are insurable under the regulation. “With California, all of the fines and penalties are insurable.” He added, “It’s a significant tailwind to purchase the insurance.”

San Francisco, Calif.-based Coalition was co-founded by Motta and fellow technology entrepreneur John Hering. Licensed as an insurance producer, the managing general agent offers customers free cybersecurity tools, and business customers can acquire up to $10 million of insurance coverage. Motta said the firm fielded numerous calls from brokers after GDPR went into effect, and he expects more of the same following the new California law.

The law calls for fines of up to $7,500 per record loss, which will serve as a loud wakeup call for businesses without cyber liability coverage. “Companies aggregating data, they now have just a massive, massive loss exposure if that data is breached,” Motta said. “That is an unforeseen business expense that can be catastrophic, it can be company ending. It’s getting to the point where businesses cannot afford to be uninsured.”

The law covers a broad array of companies. It includes any for-profit company doing business in California that has revenues greater than $25 million, that receives more than 50,000 unique personal records per year or that derives more than 50 percent of its annual revenue from selling personal information. Motta noted that something as simple as the IP addresses of a website’s visitors from California may be considered personal information.

“If you have 50,000 or more IP addresses, then you are subject this new law,” he said. “This has a very wide-ranging impact on businesses across the country.” Brown is advising companies that collect data in California or in Europe to consider creating a new position, which he calls a data protection officer, to help companies deal with the new law.

“Make sure this person has the expertise you need,” Brown advised. “They can help you redesign what consent and disclosure looks like for your customers. Consumers will need to check a box (or its equivalent) for every single use-case you have for their data. They need to be able to select those they agree with and decline those they don’t, and you need to be able to comply and track their preferences in your systems. He also advises that companies consider what third-party providers are doing as well.

“Remember, if a third-party is not able to prove their GDPR compliance, the work they do for your EU data is illegal,” he said. “Audit your third-party providers and re-evaluate service level agreements.” California’s position as the nation’s most populous state already makes the new law of nationwide interest, however D’Ambrosio expects other states to follow California’s lead with data privacy. “There are a lot of people who are drawing analogies with GDPR with this particular act that it’s likely to cause a cascade of legislation around the country trying to meet privacy standards,” she said. “It’s very likely that these standards will continue to change.”

By Don Jergler | July 3, 2018 -Insurance Journal