BILL NUMBER: AB 1054 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY JANUARY 11, 2010
AMENDED IN ASSEMBLY APRIL 13, 2009
INTRODUCED BY Assembly Member Coto
FEBRUARY 27, 2009
An act to amend Section 1861.05 of the Insurance Code, relating to
insurance rates.
LEGISLATIVE COUNSEL'S DIGEST
AB 1054, as amended, Coto. Motor vehicle insurance: rates.
Existing law provides that rates set by the commissioner
regulations require the Insurance Commissioners to
calculate an efficiency standard, or defined in connection with
setting insurance rates pursuant to Proposition 103 of
the 1988 , approved by voters in the November 8, 1988,
statewide general election may be judicially
challenged for various reasons, as specified .
This bill would provide that any rate filing, as defined,
approved by the commissioner may be challenged, as provided. The
bill would prohibit any retrospective adjustment of an approved
filing from being awarded unless the insurer has not complied with
the terms of the approval. This bill would exclude expenses
paid to credit card issuers by the insurer as a result of premiums
paid made by credit card from the calculation to
determine the insurer's efficiency standard.
This bill would find and declare that this act furthers the
purposes of Proposition 103, and would make supporting and related
findings and declarations.
Because this bill would amend Proposition 103, it would require a
2/3 vote of each house of the Legislature for enactment.
Vote: 2/3. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 1861.05 of the Insurance Code is amended to
read:
1861.05. Approval of Insurance Rates. (a) No rate shall be
approved or remain in effect which is excessive, inadequate, unfairly
discriminatory or otherwise in violation of this chapter. In
considering whether a rate is excessive, inadequate or unfairly
discriminatory, no consideration shall be given to the degree of
competition and the commissioner shall consider whether the rate
mathematically reflects the insurance company's investment income.
(b) Every insurer which desires to change any rate shall file a
complete rate application with the commissioner. A complete rate
application shall include all data referred to in Sections 1857.7,
1857.9, 1857.15, and 1864 and such other information as the
commissioner may require. The applicant shall have the burden of
proving that the requested rate change is justified and meets the
requirements of this article.
(c) The commissioner shall notify the public of any application by
an insurer for a rate change. The application shall be deemed
approved 60 days after public notice unless (1) a consumer or his or
her representative requests a hearing within 45 days of public notice
and the commissioner grants the hearing, or determines not to grant
the hearing and issues written findings in support of that decision,
or (2) the commissioner on his or her own motion determines to hold a
hearing, or (3) the proposed rate adjustment exceeds 7 percent of
the then applicable rate for personal lines or 15 percent for
commercial lines, in which case the commissioner must hold a hearing
upon a timely request. In any event, a rate change application shall
be deemed approved 180 days after the rate application is received by
the commissioner (A) unless that application has been disapproved by
a final order of the commissioner subsequent to a hearing, or (B)
extraordinary circumstances exist. For purposes of this section,
"received" means the date delivered to the department.
(d) For purposes of this section, extraordinary circumstances
include the following:
(1) Rate change application hearings commenced during the 180-day
period provided by subdivision (c). If a hearing is commenced during
the 180-day period, the rate change application shall be deemed
approved upon expiration of the 180-day period or 60 days after the
close of the record of the hearing, whichever is later, unless
disapproved prior to that date.
(2) Rate change applications that are not approved or disapproved
within the 180-day period provided by subdivision (c) as a result of
a judicial proceeding directly involving the application and
initiated by the applicant or an intervenor. During the pendency of
the judicial proceedings, the 180-day period is tolled, except that
in no event shall the commissioner have less than 30 days after
conclusion of the judicial proceedings to approve or disapprove the
application. Notwithstanding any other provision of law, nothing
shall preclude the commissioner from disapproving an application
without a hearing if a stay is in effect barring the commissioner
from holding a hearing within the 180-day period.
(3) The hearing has been continued pursuant to Section 11524 of
the Government Code. The 180-day period provided by subdivision (c)
shall be tolled during any period in which a hearing is continued
pursuant to Section 11524 of the Government Code. A continuance
pursuant to Section 11524 of the Government Code shall be decided on
a case by case basis. If the hearing is commenced or continued during
the 180-day period, the rate change application shall be deemed
approved upon the expiration of the 180-day period or 100 days after
the case is submitted, whichever is later, unless disapproved prior
to that date.
(e) In calculating an insurer's expenses for purposes of
determining its efficiency standard, the commissioner shall not
include expenses paid to credit card issuers by the insurer as a
result of premium payments made by credit card as defined in
subdivision (a) of Section 1747.02 of the Civil Code.
(f) Any rate filing approved by the commissioner may be challenged
as provided in this chapter. However, no retrospective adjustment of
an approved rate filing may be awarded unless the person challenging
the rate filing establishes that the insurer has not complied with
the approval. "Rate filing" includes the filed rates, premiums, and
rating.
SEC. 2. The Legislature finds and declares that this act furthers
the purposes of Proposition 103 of the November 8, 1988, statewide
general election. Specifically, the Legislature finds and declares
all of the following:
(a) Allowing insureds to use credit cards to pay the premiums on
insurance coverage they are legally required to carry is an important
option for insureds in this difficult economy.
(b) Insurers that allow insureds to use credit cards to pay
premiums are generally absorbing the costs charged to the insurer for
the use of the credit card.
(c) Including expenses paid by the insurer as a result of an
insured's use of a credit card in the calculation to determine an
insurer's efficiency standard may discourage insurers from accepting
credit card payments from insureds to pay premiums in full.
(d) By excluding expenses paid to credit card issuers by an
insurer as a result of premiums paid made by credit card, this act
furthers the purpose of Proposition 103 by ensuring that insurance is
fair, available, and affordable to all consumers during this
difficult economy.
(e) Current law provides specific steps for rate approval,
including liberal provision for consumer participation both before
and after an approval.
(f) Insurers whose rates have been approved pursuant to
subdivision (c) of Section 1861.01 and subdivision (c) of Section
1861.05 are subject to harsh penalties under Sections 1859.1 and
1861.14 for failing to comply strictly with the terms of the
approvals, including potential loss of their certificates of
authority.
(g) While preserving all existing rights to challenge an approval,
this act also protects reasonable reliance on the commissioner's
rate approval process by ensuring that an insurer is not held
retrospectively liable for a return of premium provided that the
insurer has met the terms of the commissioner's final order as
embodied in a lawfully secured rate approval.
(h) This act furthers the purpose of Proposition 103 by providing
certainty to insurers and consumers following the commissioner's rate
approval and by ensuring that the insurance commissioner is held
accountable.