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Life Health > Life Insurance

Calif. Bill Could Speed Up VL Changes

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NU Online News Service, April 8, 7:25 p.m. – The California Assembly is considering A.B. 2778, a bill that could speed up state regulators’ reviews of changes to variable life insurance contracts.

Life insurers issuing variable life contracts would still have to show the California insurance commissioner that they were healthy and operating in a safe manner. The issuers would also have to notify the commissioner of “material changes” in variable life contracts, such as additions to mutual fund investment options.

But, if A.B. 2778 passes, notification “shall not be subject to the commissioner’s approval prior to implementation,” according to the bill text.

Under existing law, the California Department of Insurance can hold up approval of a change in a variable life contract until the insurance commissioner believes the change is “not hazardous” for the public or the insurer’s policyholders.

Another section of A.B. 2778 would change the rules for reviewing disability insurance policies.

If the bill passes, insurers would still have to file new and amended disability forms, policies and contracts with the California department. But insurers could use the new policies immediately, and the California department would have to act within 90 days to reject the policies or ask for changes.

If the department asked for changes within the 90-day limit, it could ask the insurer to add riders or endorsements to policies already in force.

But, if the department missed the 90-day deadline, the policy would be “deemed approved by the department,” according to the bill text.

Under existing law, insurers usually must wait at least 30 days after filing disability policies to use the policies.

The Assembly Insurance Committee approved the current, heavily amended version of the bill April 4. Assembly Member Thomas Calderon, D-Montebello, Calif., introduced a “placeholder” version Feb. 25 and also introduced the amendments.

Copies of both versions of the bill are available at

The Association of California Life and Health Insurance Companies, Sacramento, Calif., helped bring the text of the bill to Calderon’s attention, according to ACLHIC President Brad Wenger.

Officials at the California department seem to want to speed up the policy review process, but “getting products and forms through the department has been a huge problem, and it gets worse each year,” Wenger says.

A.B. 2778 should speed up the reviews and make the California review process more like the process used in other states, Wenger says.

Wenger concedes that expanding the California department’s staff would also help. “But, right now, the state budget is in dire straits,” Wenger says. “Funding is hard to come by.”


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