Regulatory Report

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

This information is current as of October 24, 2019.  Additional information about any of the below proposals may be obtained by clicking here.

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

There are three California Department of Insurance (CDI) regulations currently under review by the Office of Administrative Law (OAL):

• Workers Compensation Classification/Rating Rules – OAL File #2019-1010-02

Routine updating of the rules for classifying employment and determining rates.  These are regulations, but they are exempt from APA adoption procedures or OAL review.  

Recent Office of Administrative Law Actions on Department of Insurance Regulations

OAL has approved one CDI rulemaking submission in the past 45 days. 

• CAARP– Plan of Operation: OAL File #2019-0923-01. 

Routine changes in the plan of operation for the California Auto Assigned Risk Program. 

Currently Proposed Department of Insurance Regulations

The following regulations have been proposed by CDI pursuant to regular APA rulemaking. 

• Special Investigative Units: CDI File # REG 2018-00023 These proposed regulations clarify requirements of an insurer’s unit or division responsible for investigating possible fraudulent claims by insureds or persons making claims.  A hearing on this proposal was held on September 5, 2019

California Consumer Privacy Act

The most significant current regulatory action which will affect insurers is the rulemaking proposal by the Attorney General to implement the California Consumer Privacy Act (CCPA, CA Civil Code § 1798.100 et seq).  Implementation of the CCPA will be hugely disruptive and difficult, not only for insurers but for all businesses that collect and maintain information about consumers.  Detailed information about the Attorney General’s proposed regulations is available by clicking here.   

The CCPA becomes operative on January 1, 2020.  It is virtually impossible for the regulations to be adopted by that date.  The statute and the regulations become enforceable on July 1, 2020, whether or not the regulations have been adopted.  Complicating implementation further is that major exemptions to the CCPA extend only through 2020, thus ensuring that they must be revisited in the Legislature next year.  At least one provision of the Attorney General’s proposed regulation is contrary to an amendment to the CCPA statutes that will become effective on January 1, 2020.  The proposed regulations will therefore have to be amended at least once to address this inconsistency.  

Comments on the regulations are due to the Attorney General by December 6, 2019.  Hearings on the proposed regulations will be held in Sacramento (December 2, 2019), Los Angeles (December 3, 2019), San Francisco (December 4, 2019) and Fresno (December 5, 2019).  APA hearings are generally nothing more than opportunities to offer verbal testimony.  Agency staff do not respond to public testimony offered at a hearing.  The Attorney General’s initial public hearings on the CCPA, held earlier this year, were structured this way.  Testimony was taken but Attorney General staff gave no response to the testimony.   Testimony provided at an APA hearing, therefore, is legally indistinguishable from written comment.

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