BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 1597
                                                                  Page  1

          Date of Hearing:   April 28, 2010

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                Felipe Fuentes, Chair

                   AB 1597 (Jones) - As Amended:  April 13, 2010 

          Policy Committee:                              Insurance  
          Vote:11-0

          Urgency:     No                   State Mandated Local Program:  
          No     Reimbursable:              

           SUMMARY  

          This bill extends the sunset of the California Low Cost  
          Automobile Insurance Program from January 1, 2011 to January 1,  
          2016. This bill makes several changes to the administration of  
          the program, including the elimination of a notice requirement  
          for San Francisco and Los Angeles, the elimination of the most  
          recent annual report requirement, and modifies the notice and  
          effective dates of coverage provisions. 

           FISCAL EFFECT  

          Minor and absorbable costs to the California Department of  
          Insurance to modify reporting requirements and to continue  
          oversight of the Low Cost Automobile Insurance Program (LCAP) 

           COMMENTS  

           1)Rationale  .  This bill is sponsored by the California  
            Department of Insurance to extend the sunset of the LCAP and  
            to modify reporting and notice requirements. According to the  
            author this bill enables good drivers to purchase insurance  
            with lower coverage requirements and premiums than are  
            available on the open market. The LCAP has provided  
            approximately 50,000 policies since its inception, and had  
            11,439 policies in force during the last reporting period  
            (December 31, 2009).

           2)Background  . The LCAP is designed to reduce the number of  
            uninsured drivers on California's roads and make insurance  
            available to more consumers. The program was established in  
            1999 for drivers in Los Angeles and San Francisco and was made  








                                                                  AB 1597
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            statewide in 2007. Annual auto insurance premiums are set by  
            county and currently range from $161 to $368 per year.  The  
            premium rates are set by a public rate-setting process.  

           3)Related Legislation  . SB 171 (Escutia), Chapter 794, Statutes  
            of 1999 and SB 527 (Speier), Chapter 807, Statutes of 1999  
            established the LCAP pilot program in 2000. 



           Analysis Prepared by  :    Mary Ader / APPR. / (916) 319-2081