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<ns0:ActionText>INTRODUCED</ns0:ActionText>
<ns0:ActionDate>2026-01-06</ns0:ActionDate>
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<ns0:SessionYear>2025</ns0:SessionYear>
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<ns0:AuthorText authorType="LEAD_AUTHOR">Introduced by Senator Pérez</ns0:AuthorText>
<ns0:AuthorText authorType="COAUTHOR_ORIGINATING">(Coauthor: Senator Allen)</ns0:AuthorText>
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<ns0:Legislator>
<ns0:Contribution>LEAD_AUTHOR</ns0:Contribution>
<ns0:House>SENATE</ns0:House>
<ns0:Name>Pérez</ns0:Name>
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<ns0:Name>Allen</ns0:Name>
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<ns0:Title> An act to add Article 15.6 (commencing with Section 1078) to Chapter 1 of Part 2 of Division 1 of the Insurance Code, relating to insurance. </ns0:Title>
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<ns0:Subject>Insurance business practices.</ns0:Subject>
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<html:p>Existing law creates the Department of Insurance, headed by the Insurance Commissioner, and generally regulates the business of insurance in the state. Existing regulations prescribe specified deadlines by which an insurer is required to, among other things, respond to a notice of claim, accept or deny a claim, in whole or in part, and, upon acceptance of a claim in whole or in part, tender payment or otherwise take action to perform its obligation, as specified.</html:p>
<html:p>This bill, with respect to fire insurance claims arising after January 1, 2027, would codify specified provisions of the regulations prescribing the deadlines above. The bill would also make an insurer that does not comply with the deadlines liable to the insured for interest on the amount of the accepted claim, in whole or in part, at the rate of 20% per year as damages, together with
reasonable and necessary attorney’s fees, in addition to the amount the insured is entitled to under the policy.</html:p>
<html:p>This bill would require, by January 2028, and quarterly thereafter, an insurer to provide a prompt-payment compliance data report in accordance with the above-described provisions to the department, as provided. The bill would require a corporate officer of the insurer to sign the report under penalty of perjury. By expanding the crime of perjury, this bill would impose a state-mandated local program. Commencing July 1, 2028, the bill would require the department to compile the information and publish a quarterly report on its internet website that details each insurer’s prompt-payment compliance data, as specified. </html:p>
<html:p>The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for
making that reimbursement.</html:p>
<html:p>This bill would provide that no reimbursement is required by this act for a specified reason.</html:p>
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<ns0:Preamble>The people of the State of California do enact as follows:</ns0:Preamble>
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<ns0:Num>SECTION 1.</ns0:Num>
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Article 15.6 (commencing with Section 1078) is added to Chapter 1 of Part 2 of Division 1 of the
<ns0:DocName>Insurance Code</ns0:DocName>
, to read:
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<ns0:Num>15.6.</ns0:Num>
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<ns0:LawHeadingText>Prompt-Payment Compliance</ns0:LawHeadingText>
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<ns0:Num>1078.</ns0:Num>
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(a)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
By January 2028, and quarterly thereafter, an insurer shall provide a prompt-payment compliance data report to the department, including all of the following:
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
Total number of claims received.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
The number of claims handled in compliance with the deadlines provided in Section 1078.1.
</html:p>
<html:p>
(C)
<html:span class="EnSpace"/>
The number of claims that were not handled in compliance with the deadlines provided in Section 1078.1, including the dates on which those claims were handled.
</html:p>
<html:p>
(D)
<html:span class="EnSpace"/>
The number of days late that the insurer responded to an individual
claim pursuant to subdivision (a) of Section 1078.1.
</html:p>
<html:p>
(E)
<html:span class="EnSpace"/>
Total dollar amount of late payments.
</html:p>
<html:p>
(F)
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Total dollar amount of interest paid pursuant to Section 1078.1.
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<html:p>
(2)
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Each quarterly report shall provide prompt-payment compliance data from the same quarter of the preceding year.
</html:p>
<html:p>
(b)
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The report submitted to the department pursuant to subdivision (a) shall include all of the following:
</html:p>
<html:p>
(1)
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The report shall be signed under penalty of perjury by a corporate officer.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
The name and title of the corporate officer signing the report.
</html:p>
<html:p>
(3)
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Certification by the
corporate officer signing the report that the report is accurate and complete.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
The department shall compile the information received under subdivision (a) and publish a quarterly report on its internet website that details each insurer’s prompt-payment compliance data. The data shall be displayed in a manner that is specific to each insurer. The department shall publish the first quarterly report by July 1, 2028, and shall publish an updated report every three months thereafter.
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<ns0:Num>1078.1.</ns0:Num>
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<html:p>
(a)
<html:span class="EnSpace"/>
Upon receiving notice of a fire insurance claim, every insurer shall immediately, but in no event more than 15 calendar days later, do the following unless the notice of claim received is a notice of legal action:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
Acknowledge receipt of the notice to the claimant unless payment is made within that period of time.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
Provide the claimant with the necessary forms, instructions, and reasonable assistance, including, but not limited to, specifying the information the claimant is required to provide for proof of claim.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
Begin any necessary investigation of the claim.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
Upon receiving proof of a fire insurance claim, an insurer shall immediately, but in no event more than 40 calendar days later, accept or deny the claim, in whole or in part. The amounts accepted, denied, and undetermined shall be clearly documented in writing to the claimant.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
If more than 40 days is required to determine whether a claim will be accepted or denied, in whole or in part, the insurer shall provide the claimant with written notice of the need for additional time within 40 days. The written notice shall specify any additional information the insurer requires in order to make a determination and state any continuing factual reasons for the insurer’s inability to make a determination. Thereafter, written notice shall be provided every 30 calendar days until a determination is made or notice of legal action is served. If the determination
cannot be made until some future event occurs, then the insurer may comply with this continuing notice requirement by advising the claimant of the situation and providing an estimate as to when the determination can be made.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
Any amount not identified by the insurer as accepted, denied, or undetermined shall be deemed accepted. Payment deadlines shall apply and late payment interest shall accrue.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
Upon acceptance of a fire insurance claim, in whole or in part, an insurer shall immediately, but in no event more than 30 calendar days later, tender payment or otherwise take action to perform its claim obligation. The amount of the claim to be tendered is the amount that has been accepted by the insurer.
</html:p>
<html:p>
(d)
<html:span class="EnSpace"/>
An insurer that does not comply with subdivision (b) or (c) shall be liable to the insured for interest on
the amount of the accepted claim, in whole or in part, at the rate of 20 percent per annum as damages, together with reasonable and necessary attorney’s fees, in addition to the amount the insured is entitled to under the policy.
</html:p>
<html:p>
(e)
<html:span class="EnSpace"/>
This section does not prevent the award of prejudgment interest on the amount of the claim, as provided by law.
</html:p>
<html:p>
(f)
<html:span class="EnSpace"/>
The obligations on fire insurers in this section are in addition to the fair claims settlement regulations that apply to all insurers.
</html:p>
<html:p>
(g)
<html:span class="EnSpace"/>
If the commissioner promulgates regulations shortening the timelines in this section, the shorter timelines shall apply.
</html:p>
<html:p>
(h)
<html:span class="EnSpace"/>
This section applies only to a claim that arises on or after January 1, 2027.
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<ns0:Num>SEC. 2.</ns0:Num>
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<html:p>
No reimbursement is required by this act pursuant to Section 6 of Article XIII
<html:span class="ThinSpace"/>
B of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIII
<html:span class="ThinSpace"/>
B of the California Constitution.
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