Insurance Regulatory Report

The following regulatory information may be of interest to attorneys practicing insurance law. 

This information is current as of January 12, 2021.  Additional information about any of the below proposals may be obtained by clicking here.

Department of Insurance Regulations Currently Under Review by the Office of Administrative Law

The Office of Administrative Law (OAL) has two California Department of Insurance (CDI) rulemaking files pending approval. These enact changes to the plans of operation for the California Low Cost Auto Insurance program and the California Auto Assigned Risk program. Both rulemakings are noncontroversial, and they are exempt from substantive review by OAL. They are submitted to OAL only for publication in the Code of Regulations.

Office of Administrative Law Actions on Department of Insurance Regulations

OAL has not acted upon any substantive CDI rulemaking submissions during the past 45 days.  Regulations making non-substantive changes to the Credit for Reinsurance regulations were recently approved (OAL File # 2020-1102-01).

Currently Proposed Department of Insurance Regulations

On January 8, 2021, CDI issued a revised Notice of Proposed Emergency Action to adopt emergency regulations dealing with the “Summary of Dental Benefits and Coverage Disclosure Matrix.” The regulations apply to all insurers that issue health insurance that provides dental benefits. The regulations implement SB 1008 of 2018. These regulations qualify as emergency regulations pursuant to Insurance Code 10603.04(f)(1). Because these are emergency regulations, public comments may be submitted directly to OAL. The regulations will take effect immediately upon approval by OAL. The regulations were submitted to OAL on January 19, 2021. OAL must review and act upon the regulations by January 29, 2021. 

Department of Insurance Bulletin

On December 31, 2020, CDI issued Bulletin 2020-13 on the subject of “Mandatory Moratorium on Cancellations and Non-Renewals of Policies of Residential Property Insurance After the Declaration of a State of Emergency.”  The bulletin is addressed to all insurers, both admitted and nonadmitted, writing residential property insurance in California. It advises recipients of the requirements of Cal. Insurance Code § 675.1(b)(1), which limits the flexibility of insurers to cancel or nonrenew residential property insurance for properties located in or adjacent to ZIP codes which are subject to a declared state of emergency.

The bulletin quotes the statute accurately, but it may overstate the effect of the statute. It says “Therefore, due to the Governor’s November 18, 2020 declaration, for one year from November 18, 2020, no admitted or non-admitted insurer shall issue a notice of cancellation or non-renewal, for any policies of residential property insurance due to wildfire risk in” six listed ZIP codes. Section 675.1 does not prohibit all cancellations or nonrenewals of residential property insurance in affected ZIP codes. It prohibits only cancellation or nonrenewal “based solely on the fact that the insured structure is located in an area in which a wildfire has occurred.” There is nothing in the statutory language that prohibits cancellation or nonrenewal of policies in these ZIP codes based upon reasons other than the fact that the insured structure is located in an area in which a wildfire has occurred, such as for nonpayment of premium or the insurer’s withdrawal from the California market. 

A copy of the bulletin may be obtained by clicking here.

This e-Bulletin was prepared by Bill Gausewitz, Shareholder in the Sacramento office of Greenberg Traurig. Mr. Gausewitz is the Regulatory Advisor to, and former Chair of, the Insurance Law Standing Committee of the Business Law Section of the California Lawyers Association.