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.