NOTE:  As provided in LFC policy, this report is intended only for use by the standing finance committees of the legislature.  The Legislative Finance Committee does not assume responsibility for the accuracy of the information in this report when used for other purposes.

 

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F I S C A L   I M P A C T   R E P O R T

 

 

SPONSOR:

Park

 

DATE TYPED:

03/16/03

 

HB

44/aHBIC/aHJC/aSCORC/SJC

 

SHORT TITLE:

Insurance Policy in English and Spanish

 

SB

 

 

 

ANALYST:

Valenzuela

 

APPROPRIATION

 

Appropriation Contained

Estimated Additional Impact

Recurring

or Non-Rec

Fund

Affected

FY03

FY04

FY03

FY04

 

 

 

NFI

 

 

 

 

 

 

 

 

 

 

(Parenthesis ( ) Indicate Expenditure Decreases)

 

SOURCES OF INFORMATION

 

Legislative Finance Committee files

 

Responses Received From

Public Regulation Commission

 

SUMMARY

 

      Synopsis of SJC Amendment

 

The Senate Judiciary Committee (SJC) amendment makes two clarifications to the SCORC amendment. The first revision adds commercial “surplus lines insurance” under the list of exempt insurance plans required to provide policy declaration pages in both English and Spanish. The second revision corrects the language from the word “declarant” to “declarations” page.  Declarant has a specific meaning, that is a person who has signed a declaration of intention of becoming a U.S. citizen.

 

 

     Synopsis of SCORC Amendment

 

The Senate Corporations and Transportation Committee (SCORC) amendment to House Bill 44 rewrites language that provides for the English and Spanish language requirement to all insurance contracts, except workers’ compensation, commercial multiple peril, or commercial general liability insurance policies. The amendment also adds the following language as a disclaimer, “The provisions provided in Spanish shall not govern the rights and responsibilities of the parties but are provided for information only.”

 

     Synopsis of HJC Amendment

 

The House Judiciary Committee (HJC) amendment to House Bill 44 strikes the HBIC amendment and clarifies which declaration page is required to be provided to consumers in both Spanish and English. According to the PRC, policy declaration pages are classified differently among insurance product lines. This amendment ensures that English/Spanish language issue applies to

these different product lines. The amendment further pushes back the effective date to January 1, 2004.

 

     Synopsis of HBIC Amendment

 

The House Business and Industry Committee (HBIC) amendment to House Bill 44 adds language that requires insurance companies to provide an English or Spanish version of the policy declaration page, only if requested by the client.

 

     Synopsis of Original Bill

 

House Bill 44 amends the New Mexico Insurance Code to require insurance policy declarations be written in both English and Spanish languages.

 

     Significant Issues

 

Several state agencies provide insurance contracts to retirees, public school or higher education employees, and state employees. However, the state is self insured and may be exempt from the Insurance Code. HB 44 does not address this issue.

 

FISCAL IMPLICATIONS

 

HB 44 does not carry an appropriation. Enactment of the bill could have a minor administrative or fiscal impact on the Insurance Division of the Public Regulation Commission as a result of insurance companies submitting its revised policy declaration provisions. Although, the division likely would be able to absorb this minor increased workload with its existing resources.

 

 TECHNICAL ISSUES

 

PRC reports the following technical issues: 1) which portion of the contracts are involved and 2) should both commercial and personal lines be included. First, the bill as drafted requires the “policy declaration provisions” be written in both English and Spanish. While the term policy declarations has meaning in property and casualty insurance contracts, these contracts usually contain a policy declaration page, not policy declaration provisions.  Life insurance, health insurance and annuity contracts use different terms to refer to this page.  Most contracts have a page with basic data concerning the coverage. Second, the bill as drafted would place this dual language requirement on contracts issued to both individuals and corporations.

 

POSSIBLE QUESTIONS

 

Would state agencies, who provide insurance contracts to retirees or state employees, be required to comply with this law ?

MFV/prr