AB 1868 Summary

• Voids and makes unenforceable any policy provision that reserves discretionary authority to insurers to determine benefit eligibility, interpret policy terms, or provide review standards that are inconsistent with California law.

• Defines "discretionary authority" as policy provisions that grant insurers discretion to determine benefit entitlement or interpret policy language in ways that could lead to deferential court review standards.

• Requires the Insurance Commissioner to disapprove any disability policy containing discretionary authority provisions inconsistent with state law, effective January 1, 2011.

• Permits insurers to include provisions explaining routine application of contract terms for eligibility and benefit determinations, provided such provisions do not create deferential court review standards.

• Applies to all life and disability insurance policies offered, issued, delivered, or renewed for California residents, regardless of where the policy is issued.