BILL NUMBER: AB 1597 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY MARCH 8, 2010
INTRODUCED BY Assembly Member Jones
( Coauthors: Assembly Members
Blumenfield, Conway, Coto,
Nielsen, Portantino, Salas, and
Torres )
( Coauthor: Senator Wiggins
)
JANUARY 4, 2010
An act to amend Section 11629.84 Sections
11620, 11622.5, 11629.84, and 11629.85 of the Insurance Code,
relating to automobile insurance.
LEGISLATIVE COUNSEL'S DIGEST
AB 1597, as amended, Jones. Low-cost automobile
insurance. Automobile insurance: assigned risk plans:
low-cost automobile insurance.
(1) Existing law provides for the formation of the California
Automobile Assigned Risk Plan for automobile bodily injury and
property damage liability insurance.
The Insurance Commissioner, after a public hearing, is required to
approve or issue a reasonable plan for the equitable apportionment,
among insurers admitted to transact liability insurance, of those
applicants for automobile bodily injury and property damage liability
insurance who are, in good faith, entitled to but are unable to
procure that insurance through ordinary methods. Notice of the public
hearing is required to be published at least 60 days prior to the
hearing or close of the public comment period on the adoption,
amendment, or repeal of a regulation, in 2 newspapers of general
circulation, one published in the City and County of San Francisco,
and the other published in the City of Los Angeles.
This bill would delete the notice requirement.
Existing law requires the assigned risk plan to provide for
effective dates of coverage, consistent with the required elements,
including execution of the application forms and an electronic
effective date procedure established by the plan. The insurance
application form is also required to include a disclosure regarding
the effective date of coverage.
This bill would modify the notice and the effective dates of
coverage requirements, as provided.
Existing
(2) Existing law establishes,
within the California Automobile Assigned Risk Plan, a low-cost
automobile insurance program. Existing law establishes the low-cost
automobile insurance program in several specified counties and makes
the expansion to all other counties in California subject to a
determination of need made by the Insurance Commissioner
commissioner following a public meeting, as
specified. Existing law provides for the issuance of automobile
liability policies pursuant to this program under specified terms and
conditions, and provides that a policy so issued satisfies specified
requirements regarding financial responsibility. Existing law
provides that the low-cost automobile insurance program shall remain
in effect only until January 1, 2011.
This bill would provide that the low-cost automobile insurance
program would remain in effect until January 1, 2016.
Existing law requires the commissioner, on or before March 1 of
each year, to prepare and propose a plan to the Senate Committee on
Banking, Finance, and Insurance and the Assembly Committee on
Insurance setting forth the methods the commissioner intends to
implement to inform households eligible for the program about the
availability of low-cost automobile insurance. The plan is required
to contain specified information, including the most recent annual
report to the Legislature on the status of the low-cost automobile
insurance program from the California Automobile Assigned Risk Plan.
This bill would delete the most recent annual report to the
Legislature on the status of the low-cost automobile insurance
program from the California Automobile Assigned Risk Plan from the
information required to be contained in the plan.
(3) This bill would make conforming changes and delete obsolete
provisions.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 11620 of the
Insurance Code i s amended to read:
11620. (a) The commissioner, after a public hearing, shall
approve or issue a reasonable plan for the equitable apportionment,
among insurers admitted to transact liability insurance, of those
applicants for automobile bodily injury and property damage liability
insurance who are in good faith entitled to but are unable to
procure that insurance through ordinary methods. The commissioner
shall require the payment of five hundred ninety dollars ($590), in
advance, as a fee for the filing of amendments to the plan with the
commissioner. The commissioner may approve or issue reasonable
amendments to the plan if he or she first holds a public hearing to
determine whether the amendments are in keeping with the intent and
purpose of this section. All such insurers shall subscribe to the
plan and its amendments and , subject to Section 11621,
participate therein participate in the plan .
(b) Notice of the public hearings required by this section shall
be published at least 60 days prior to the hearing or close of the
public comment period on the adoption, amendment, or repeal of a
regulation, in two newspapers of general circulation, one published
in the City and County of San Francisco, and the other published in
the City of Los Angeles.
(c)
(b) Judicial review of rate revision proceedings shall
be in accordance with Section 1858.6.
SEC. 2. Section 11622.5 of the
Insurance Code is amended to read:
11622.5. The plan shall provide for effective dates for coverage
consistent with all of the following:
(a) Except as provided in this section, in no event shall coverage
be effective prior to the date and time of execution of the
application forms. Postage meter or United States Postal Service
postmarks shall not be recognized by the plan as establishing
effective dates.
(b) (1) Beginning July 1, 1995, when When
the applicant requires that coverage be effective immediately,
the effective date and time shall be established using an electronic
effective date procedure established by the plan. The plan shall
establish a future effective date using the electronic effective date
procedure. The future effective date option shall be available upon
request by an applicant. An applicant may request a future effective
date of 15 45 days or less from the date
of application completion.
(2) The manager of the plan shall establish and maintain
a toll-free telephone number ensure access at no cost
to the user as part of the electronic effective date procedure.
The manager shall maintain sufficient capacity to service, in a
timely manner, applications received by means of the electronic
effective date procedure.
(3) The electronic effective date procedure shall be available
only to producers of record who are certified by the plan and
shall include a procedure to prevent fraudulent applications .
(4) A producer of record shall have a duty to comply with the
requirements of this section within 24 hours of the date and time the
application is completed and executed.
(c) Coverage for vehicles shall become effective at the date and
time the application is transmitted through the plan's electronic
effective date procedure if and only if all of the following
requirements are met:
(1) The producer of record and the applicant certify under penalty
of perjury on the application the date and time that the application
forms were completed and executed.
(2) The producer of record uses the electronic effective date
procedure adopted pursuant to subdivision (b) and inserts
the reference number or other required verification code on the
application .
(3) The application forms and required deposit are mailed
submitted to the plan manager no later than two
working days following the date the application forms are completed
and executed. The mailing date is established by the United
States Postal Service postmark on the envelope enclosing the
application in accordance with the procedure
established by the plan .
(d) If the application is made without using the electronic
effective date procedure or if there is not compliance with the
provisions of subdivision (c), coverage shall be effective
as of in accordance with an alternative
procedure established by the plan, but not later than 12:01
a.m. on the date following receipt of the application in the plan
office unless a later date is requested.
(e) If the applicant desires coverage on a date later than that
which would otherwise be fixed pursuant to this section, the
applicant shall indicate that date and the plan manager shall fix the
effective date of coverage as of 12:01 a.m. on the desired date of
coverage. However, no date shall be later than 45 days after the date
of application.
(f) The effective date for coverage for an additional vehicle to
be added to an in-force policy or for other coverage to be added to
an in-force policy shall not be subject to the requirements of this
section, but shall be governed by the terms of the policy and other
applicable laws and regulations.
(g) In order to provide evidence of a requested effective date,
the producer of record shall maintain plan
shall establish a procedure for the maintenance of appropriate
records of all risks for which he or she the
producer of record has designated the time and date of
coverage. That evidence shall be in the form of completed
applications, eligibility certification forms, a mail log, a check
copy, a check register, a receipt, and other records created
contemporaneously with the application, and shall permit inspection
or photocopying of those records by the plan manager or the assigned
insurer. The inspection or photocopying shall be limited to
situations where the effective date is an issue.
(h) Where the plan's electronic effective date procedure is
disrupted due to failure of transmission or receiving equipment due
to fire, earthquake, explosion, civil unrest, or similar disaster or
emergency, the producer of record may bind coverage up to one day
prior to the time the application forms and required deposit are
mailed to the plan manager, as established by the United States
Postal Service postmark on the envelope in which the application was
enclosed.
(i) Notwithstanding any other provision of this section, where the
producer of record discovers a material error in an application, the
producer of record shall be authorized to rescind coverage bound for
a period up to 24 hours after the date and time established pursuant
to the plan's electronic effective date procedure.
(j) To ensure compliance with the electronic effective date
procedure, application forms shall contain the following statement in
12-point boldface type:
IMPORTANT NOTICE
THIS POLICY IS NOT EFFECTIVE UNTIL YOUR APPLICATION IS ELECTRONICALLY
TRANSMITTED TO THE PLAN BY YOUR AGENT OR BROKER. THE FOLLOWING
CONDITIONS MUST ALSO BE MET:
(1) BOTH YOU AND YOUR AGENT OR BROKER MUST SIGN AND DATE A PROPERLY
COMPLETED APPLICATION.
(2) YOUR AGENT OR BROKER MUST MAIL TRANSMIT
YOUR APPLICATION TO THE PLAN WITHIN TWO DAYS OF ITS COMPLETION.
YOU MAY REQUEST THAT YOUR AGENT OR BROKER TRANSMIT THE DOCUMENTS IN
YOUR PRESENCE TO ENSURE IMMEDIATE COVERAGE, PROVIDED THE ABOVE
REQUIREMENTS ARE MET.
IF THE ABOVE REQUIREMENTS ARE NOT MET, THE EFFECTIVE DATE OF
YOUR COVERAGE WILL TAKE EFFECT THE DAY AFTER THE PLAN
OFFICE RECEIVES YOUR APPLICATION. YOU MAY REQUEST THAT YOUR AGENT OR
BROKER NOTIFY YOU WHEN YOUR COVERAGE IS EFFECTIVE MAY
BE DELAYED .
SECTION 1. SEC. 3. Section 11629.84
of the Insurance Code is amended to read:
11629.84. This article shall remain in effect only until January
1, 2016, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2016, deletes or extends
that date.
SEC. 4. Section 11629.85 of the
Insurance Code is amended to read:
11629.85. (a) On or before March 1 of each year, the commissioner
shall prepare and propose a plan to the Senate Committee on Banking,
Finance, and Insurance and the Assembly Committee on Insurance
setting forth the methods the commissioner intends to implement to
inform households eligible for the program about the availability of
low-cost automobile insurance. To be eligible for funding through the
budget process, the plan shall be reviewed by the Senate Committee
on Banking, Finance, and Insurance and the Assembly Committee on
Insurance. The information required under subdivision (c) shall also
be provided to the Senate Committee on Transportation and Housing and
the Assembly Committee on Transportation.
(b) The plan shall include, at a minimum, a brief description of
methods proposed to be used, anticipated costs, sources of revenue,
goals, targets, objectives, and a justification of the proposed
methods. The plan shall also explain how the department proposes to
work in cooperation with the California Automobile Assigned Risk
Plan, the social service departments in eligible counties, the
Department of Motor Vehicles, and community-based organizations in
order to inform eligible households of the existence of the program.
(c) The plan shall also include all of the following:
(1) The commissioner's determination regarding whether the program
has been successful, based on the criteria specified in subdivision
(d), and an explanation regarding that success or lack thereof.
(2) In cooperation with the California Automobile Assigned Risk
Plan, structural characteristics of the program that may require
statutory revision in order for the program to succeed or to improve
upon existing success.
(3) Impediments to success of the program that can reasonably be
overcome by revision to the strategies adopted by the department.
(4) A detailed explanation of the department's use for the program
of funds assessed pursuant to Section 1872.81.
(5) For the previous calendar year, a list of the total low-cost
auto premium for each county in which the program was available.
(6) The most recent annual report to the Legislature on the status
of the low-cost automobile insurance program from the California
Automobile Assigned Risk Plan.
(d) The program is successful if the following occur:
(1) The program generated sufficient premiums to cover losses
incurred under policies issued under the program, and expenses
incurred by the program, as calculated pursuant to subdivision (c) of
Section 11629.72.
(2) The program served the public purpose of offering access to
automobile insurance to otherwise underserved communities in the
program areas.
(3) The program offered access to automobile insurance to
previously uninsured motorists seeking affordable coverage in the
program areas.
(e) Any written or oral advertisements, including, but not limited
to, paid or unpaid commercial or noncommercial advertising, by the
department with reference to the low-cost automobile insurance
program shall reference the department and shall not reference the
commissioner by name or office, or include the commissioner's voice,
image, or likeness. The department shall not participate with any
nongovernmental entity that produces or intends to produce
advertisements or educational material that include the name of the
commissioner or his or her voice, image or likeness, and that are
intended to make eligible households aware of the existence of
low-cost automobile insurance.