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California Keeps Electronic Disclosures Alive

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California life and health insurers can continue to communicate with policyholders through e-mail and other electronic transmissions.

California Gov. Gavin Newsom, D, has signed Assembly Bill 1065 — a bill that extends the state’s Uniform Electronic Transactions Act.

(Related: What You Need to Know About E-Signatures)

The original law was set to sunset Jan. 1, 2021, and some insurers had said they were reluctant to invest in electronic communications systems to fit a law that was on track to expire in the near future.

The law update makes electronic notice transmission authorization permanent.

The new law also uses a new approach to compliance enforcement.

Under the old version of the law, the California Department of Insurance could suspend a life insurer or other licensee from using electronic transmission systems if the company repeatedly failed to comply with state rules.

Under the new law, state insurance commissioner must hold a hearing on the alleged violations. The commissioner can impose a fine of up to $250,000 if the commissioner finds that electronic transmissions violations “have occurred with such frequency as to constitute a general business practice.”

The new law requires the commissioner to report on how insurer use of electronic transmissions systems is going by Jan. 1, 2022.

— Read EBSA Releases Electronic Disclosure Policy, on ThinkAdvisor.

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