BILL NUMBER: AB 2002	INTRODUCED
	BILL TEXT


INTRODUCED BY   Assembly Member Huffman

                        FEBRUARY 17, 2010

   An act to amend Section 923.5 of, and to repeal Section 11558 of,
the Insurance Code, relating to reserve requirements.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 2002, as introduced, Huffman. Reserve requirements.
   Existing law requires the Insurance Commissioner to promulgate
regulations for the computation of the amount of reserves to be
maintained by each insurer transacting business in this state. Under
existing law, the minimum reserve requirement prescribed by the
commissioner pursuant to those regulations cannot be less than 60% of
certain liability insurer's earned premiums during each year less
the amount already paid for related incidental losses and expenses,
as specified.
   This bill would remove the 60% reserve requirement for those
liability insurers and allow the Insurance Commissioner to prescribe
the minimum reserve requirement by regulation.
   Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 923.5 of the Insurance Code is amended to read:

   923.5.  Each insurer transacting business in this state shall at
all times maintain reserves in an amount estimated in the aggregate
to provide for the payment of all losses and claims for which the
insurer may be liable, and to provide for the expense of adjustment
or settlement of losses and claims.
   The reserves shall be computed in accordance with regulations made
from time to time by the commissioner. The promulgation of the
regulations by the commissioner, or any changes thereto or amendments
thereof, shall be in accordance with the procedure provided in
Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3
of Title 2 of the Government Code. The commissioner shall make the
regulations upon reasonable consideration of the ascertained
experience and the character of such kinds of business for the
purpose of adequately protecting the insured and securing the
solvency of the insurer. 
   With respect to liability and common carrier liability, the
regulations shall be consistent with Section 11558. 
   The commissioner may prescribe the manner and form of reporting
pertinent information concerning the reserves provided for in this
section.
   This section shall not apply to life insurance, title insurance,
disability insurance, mortgage insurance, or mortgage guaranty
insurance.
  SEC. 2.  Section 11558 of the Insurance Code is repealed. 
   11558.  The minimum reserve requirements prescribed by the
commissioner in regulations promulgated pursuant to Section 923.5 for
outstanding losses and loss expenses for each of the most recent
three years for coverages included in the lines of business described
in the annual statement as liability other than automobile bodily
injury, and for automobile liability bodily injury, shall be not less
than 60 percent of earned premiums during each year less the amount
already paid for losses and expenses incidental thereto incurred
during each such year.
   The commissioner may prescribe the manner and form of reporting
pertinent information concerning the reserves provided for in this
section.