SB 618

This bill exempts renewals of insurance policies, including policies that provide

worker's compensation insurance, in an affiliate from certain requirements if certain

other requirements are satisfied. The bill also specifies certain restrictions on the

use of certificates of insurance.

Current law provides that, with certain exceptions, such as for substantial

contractual breaches, a policyholder has the right to have an insurance policy

renewed at the end of a term for an additional period of time that is the same as the

expiring term, unless the insurer gives the policyholder at least 60 days' notice that

the policy will not be renewed. Exceptions to this notice requirement include if the

policyholder has insured elsewhere, has accepted replacement coverage, or has

requested or agreed to nonrenewal, or if the policy is expressly designated as

nonrenewable.

Under the bill, an insurer is not required to comply with those renewal

requirements if the insurer renews a property or casualty insurance policy in an

affiliate and certain other requirements are satisfied, including that the affiliate is

authorized to write the type of policy being renewed, that all of the stock of, interest

in, or control of the affiliate is held by one or more persons in the same insurance

holding company system that includes the insurer, and that the insurer, at least 60

days before the renewal date, sends the policyholder notice of the renewal in the

affiliate. The notice must provide the affiliate's name, contact information, and A.M.

Best or similar rating if lower than the insurer's rating and must specify that there

will be no interruption of coverage, that, except for the rates, the terms and

conditions will be substantially the same as the current policy's terms and

conditions, and that the premiums will be determined according to the affiliate's

rating plan.

The bill specifies that a certificate of insurance or other document used for

evidence of insurance (certificate of insurance) is subject to certain restrictions with

regard to its use and the information it contains. Under current law, an insurer, the

insurer's agent or employee, and other certain specified persons are prohibited from

providing any false or misleading information relating to an insurance contract.

Current law prohibits an insurance intermediary, such as a person who negotiates

for insurance on behalf of an insurer, from providing a misleading certificate of

insurance. Current law also provides that a person who prepares, makes, or

subscribes to a false or fraudulent document, such as a certificate of insurance,

knowing that the document may be presented or used in support of an insurance

claim is guilty of a Class A misdemeanor if the value of the claim does not exceed

$2,500 and a Class I felony if the value of the claim exceeds $2,500.

The bill specifies that a certificate of insurance may not warrant that the

certificate fulfills an insurance or indemnity requirement in a specific contract.

Under the bill, no person may issue or require a certificate of insurance that contains