BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 2327
                                                                  Page  1

          Date of Hearing:   May 19, 2010

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                Felipe Fuentes, Chair

                     AB 2327 (Harkey) - As Amended:  May 4, 2010 

          Policy Committee:                              Insurance  
          Vote:11-0
                       Housing & Community Development             7-0
                       
          Urgency:     No                   State Mandated Local Program:  
          No     Reimbursable:              

           SUMMARY  

          This bill creates a framework by which private affordable  
          housing entities are able to join a multi-state risk pool for  
          the purposes of procuring liability coverage. Specifically, this  
          bill:

          1)Defines affordable housing.

          2)Establishes financial requirements for the risk pooling.

          3)Specifies these risk pooling arrangements are not insurance  
            and not subject to regulation by the California Department of  
            Insurance. 

          4)Requires any pool established pursuant to this bill to furnish  
            a copy of the pool's annual audited financial statement to the  
            California Secretary of State within 180 days of the close of  
            the pool's fiscal year.

           FISCAL EFFECT  

          Unknown, likely absorbable workload to the California Secretary  
          of State to review pool annual audited financial information. 

           COMMENTS  

           1)Rationale  . This bill is sponsored by the Housing Authorities  
            Risk Retention Pool, a self-insurance pool of 90 public  
            housing authorities from California, Oregon, Washington, and  
            Nevada. This bill broadens definitions and requirements to  
            authorize non-public housing authorities to enter into risk  
            pooling arrangements for the provision of tort, employee  






                                                                  AB 2327
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            injury, board member, and physical property liability  
            coverage. 

           2)Recommended Amendment  . This bill was recently amended to  
            provide information to a California-based entity because the  
            risk pool addressed by this bill may be administered from  
            outside of California and the bill prohibits regulation of the  
            risk pool by the California Department of Insurance. 

          Committee staff recommends annual audited financial statements  
            be submitted to the Assembly Housing and Community Development  
            Committee and the Senate Transportation and Housing Committee,  
            rather than the Secretary of State. 

          3)  Background  . The Housing Authority Risk Retention Pool (HARRP)  
            was established in 1987 as a response to rapidly escalating  
            insurance costs. The mission of HARRP is to pool risk  
            associated with housing authorities administered by public  
            agencies and to provide claims administration, risk  
            management, financial services, and underwriting in-house.  
            HARRP insures its members for $2 million for each liability  
            and property loss. Excess coverage is purchased in the  
            commercial insurance market. This bill enables private  
            affordable housing entities to join HARRP to take advantage of  
            the risk pooling arrangements and services. 

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