BILL NUMBER: AB 2746 ENROLLED
BILL TEXT
PASSED THE SENATE AUGUST 18, 2010
PASSED THE ASSEMBLY AUGUST 20, 2010
AMENDED IN SENATE JUNE 15, 2010
AMENDED IN ASSEMBLY APRIL 8, 2010
INTRODUCED BY Assembly Member Blakeslee
FEBRUARY 19, 2010
An act to amend Section 10089.7 of the Insurance Code, relating to
insurance.
LEGISLATIVE COUNSEL'S DIGEST
AB 2746, Blakeslee. California Earthquake Authority: mitigation
officer.
Existing law provides for the California Earthquake Authority
(CEA) governed by a 3-member governing board consisting of the
Governor, the Treasurer, and the Insurance Commissioner. The Speaker
of the Assembly and the Chairperson of the Senate Committee on Rules
serve as nonvoting, ex officio members of the board. The CEA is
vested with certain powers and duties, including, but not limited to,
the authorization to contract for services of a chief executive
officer, a chief financial officer, and an operations manager, each
of whom is required to file financial disclosure statements with the
Fair Political Practices commission.
This bill would authorize the CEA to contract for the services of
a chief mitigation officer, and the chief mitigation officer would be
required to file financial disclosure statements with the Fair
Political Practices Commission. The board would be required to
establish the duties of, and give direction to, the chief mitigation
officer to support and enhance the CEA's efforts to create and
maintain specified mitigation activities. The bill would also
authorize the CEA to accept grants and gifts of property and services
for the Earthquake Loss Mitigation Fund or the related residential
retrofit program from federal, state, and local government sources
and private sources.
The Political Reform Act of 1974, an initiative measure, provides
that the Legislature may amend the act to further the act's purposes
upon a 2/3 vote of each house and compliance with specified
procedural requirements. A violation of the filing duties of the act
is a misdemeanor.
This bill would declare that it furthers the purposes of the act.
The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
This bill would provide that no reimbursement is required by this
act for a specified reason.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 10089.7 of the Insurance Code is amended to
read:
10089.7. (a) The authority shall be governed by a three-member
governing board consisting of the Governor, the Treasurer, and the
Insurance Commissioner, each of whom may name designees to serve as
board members in their place. The Speaker of the Assembly and the
Chairperson of the Senate Committee on Rules shall serve as
nonvoting, ex officio members of the board, and may name designees to
serve in their place.
(b) The board shall be advised by an advisory panel whose members
shall be appointed by the Governor, except as provided in this
subdivision. The advisory panel shall consist of four members who
represent insurance companies that are licensed to transact fire
insurance in the state, two of whom shall be appointed by the
commissioner, two licensed insurance agents, one of whom shall be
appointed by the commissioner, and three members of the public not
connected with the insurance industry, at least one of whom shall be
a consumer representative. In addition, the Speaker of the Assembly,
and the Chairperson of the Senate Committee on Rules may each appoint
one member of the public not connected with the insurance industry.
Panel members shall serve for four-year terms, which may be staggered
for administrative convenience, and panel members may be
reappointed. The commissioner shall be a nonvoting, ex officio member
of the panel and shall be entitled to attend all panel meetings,
either in person or by representative.
(c) The board shall have the power to conduct the affairs of the
authority and may perform all acts necessary or convenient in the
exercise of that power. Without limitation, the board may: (1) employ
or contract with officers and employees to administer the authority;
(2) retain outside actuarial, geological, and other professionals;
(3) enter into other obligations relating to the operation of the
authority; (4) invest the moneys in the California Earthquake
Authority Fund; (5) obtain reinsurance and financing for the
authority as authorized by this chapter; (6) contract with
participating insurers to service the policies of basic residential
earthquake insurance issued by the authority; (7) issue bonds payable
from and secured by a pledge of the authority of all or any part of
the revenues of the authority to finance the activities authorized by
this chapter and sell those bonds at public or private sale in the
form and on those terms and conditions as the Treasurer shall
approve; (8) pledge all or any part of the revenues of the authority
to secure bonds and any repayment or reimbursement obligations of the
authority to any provider of insurance or a guarantee of liquidity
or credit facility entered into to provide for the payment of debt
service on any bond of the authority; (9) employ and compensate bond
counsel, financial consultants, and other advisers determined
necessary by the Treasurer in connection with the issuance and sale
of any bonds; (10) issue or obtain from any department or agency of
the United States or of this state, or any private company, any
insurance or guarantee of liquidity or credit facility determined to
be appropriate by the Treasurer to provide for the payment of debt
service on any bond of the authority; (11) engage the commissioner to
collect revenues of the authority; (12) issue bonds to refund or
purchase or otherwise acquire bonds on terms and conditions as the
Treasurer shall approve; and (13) perform all acts that relate to the
function and purpose of the authority, whether or not specifically
designated in this chapter.
(d) The authority shall reimburse board and panel members for
their reasonable expenses incurred in attending meetings and
conducting the business of the authority.
(e) (1) There shall be a limited civil immunity and no criminal
liability in a private capacity, on account of any act performed or
omitted or obligation entered into an official capacity, when done or
omitted in good faith and without intent to defraud, on the part of
the board, the panel, or any member of either, or on the part of any
officer, employee, or agent of the authority. This provision shall
not eliminate or reduce the responsibility of the authority under the
covenant of good faith and fair dealing.
(2) In any claim against the authority based upon an earthquake
policy issued by the authority, the authority shall be liable for any
damages, including damages under Section 3294 of the Civil Code, for
a breach of the covenant of good faith and fair dealing by the
authority or its agents.
(3) In any claim based upon an earthquake policy issued by the
authority, the participating carrier shall be liable for any damages
for a breach of a common law, regulatory, or statutory duty as if it
were a contracting insurer. The authority shall indemnify the
participating carrier from any liability resulting from the authority'
s actions or directives. The board shall not indemnify a
participating carrier for any loss resulting from failure to comply
with directives of the authority or from violating statutory,
regulatory, or common law governing claims handling practices.
(4) No licensed insurer, its officers, directors, employees, or
agents, shall have any antitrust civil or criminal liability under
the Cartwright Act (Part 2 (commencing with Section 16600) of
Division 7 of the Business and Professions Code) by reason of its
activities conducted in compliance with this chapter. Further, the
California Earthquake Authority shall be deemed a joint arrangement
established by statute to ensure the availability of insurance
pursuant to subdivision (b) of Section 1861.03.
(5) Subject to the provisions of Section 10089.21, nothing in this
chapter shall be construed to limit any exercise of the commissioner'
s power, including enforcement and disciplinary actions, or the
imposition of fines and orders to ensure compliance with this
chapter, the rules and guidelines of the authority, or any other law
or rule applicable to the business of insurance.
(6) Except as provided in paragraph (3) and by any other provision
of this chapter, there shall be no liability on the part of, and no
cause of action shall be permitted in law or equity against, any
participating insurer for any earthquake loss to property for which
the authority has issued a policy unless the loss is covered by an
insurance policy issued by the participating insurer. A policy issued
by the authority shall not be deemed to be a policy issued by a
participating insurer.
(f) The Attorney General, in his or her discretion, shall provide
a representative of his or her office to attend and act as antitrust
counsel at all meetings of the panel. The Attorney General shall be
compensated for legal service rendered in the manner specified in
Section 11044 of the Government Code.
(g) The authority may sue or be sued and may employ or contract
with that staff and those professionals the board deems necessary for
its efficient administration.
(h) (1) The authority may contract for the services of a chief
executive officer, a chief financial officer, a chief mitigation
officer, and an operations manager, and may contract for the services
of reinsurance intermediaries, financial market underwriters,
modeling firms, a computer firm, an actuary, an insurance claims
consultant, counsel, and private money managers. These contracts
shall not be subject to otherwise applicable provisions of the
Government Code and the Public Contract Code, and for those purposes,
the authority shall not be considered a state agency or other public
entity. Other employees of the authority shall be subject to civil
service provisions. The total number of authority employees subject
to civil service provisions shall not exceed 25.
(2) When the authority hires multiple private money managers to
manage the assets of the California Earthquake Authority Fund, other
than the primary custodian of the securities, the authority shall
consider small California-based firms who are qualified to manage the
money in the fund. The purpose of this provision is to prevent the
exclusion of small qualified investment firms solely because of their
size.
(i) Members of the board and panel, and their designees, and the
chief executive officer, the chief financial officer, the chief
mitigation officer, and the operations manager of the authority shall
be required to file financial disclosure statements with the Fair
Political Practices Commission. The appointing authorities for
members and designees of the board and panel shall, when making
appointments, avoid appointing persons with conflicts of interest.
Section 87406 of the Government Code, the Milton Marks Postgovernment
Employment Restrictions Act of 1990, shall apply to the authority.
Members of the board, the chief financial officer, the chief
executive officer, the chief operations manager, the chief counsel,
and any other person designated by the authority shall be deemed to
be designated employees for the purpose of that act. In addition, no
member of the board, nor the chief financial officer, the chief
executive officer, the chief operations manager, and the chief
counsel, shall, upon leaving the employment of the authority, seek,
accept, or enter into employment or a consulting or other contractual
arrangement for the period of one year with any employer or entity
that entered into a participating agreement, or a reinsurance,
bonding, letter of credit, or private capital markets contract with
the authority during the time the employee was employed by the
authority, which that member or employee had negotiated or approved,
or participated in negotiating. A violation of these provisions shall
be subject to enforcement pursuant to Chapter 11 (commencing with
Section 91000) of Title 9 of the Government Code.
(j) The board shall establish the duties of, and give direction
to, the chief mitigation officer, to support and enhance the
authority's appropriate efforts to create and maintain all of the
following:
(1) Program activities that mitigate against seismic risks, for
the benefit of homeowners, other property owners, including landlords
with smaller holdings, and the general public of the state.
(2) Collaboration with academic institutions, nonprofit entities,
and commercial business entities in joint efforts to conduct
mitigation-related research and educational activities, and conduct
program activities to mitigate against seismic risk.
(3) Programs to provide financial assistance in the form of loans,
grants, credits, rebates, or other financial incentives to further
efforts to mitigate against seismic risk, including, but not limited
to, structural and contents retrofitting of residential structures.
(4) Collaborations and joint programs with subdivisions and
programs of local, state, and federal governments and with other
national programs that may further California's disaster
preparedness, protection, and mitigation goals.
(5) Other programs, support efforts, and activities deemed
appropriate by the board to further the authority's appropriate
mitigation and mitigation-related goals.
(k) The authority may accept grants and gifts of property, real or
personal, tangible and intangible, and services for the Earthquake
Loss Mitigation Fund, created pursuant to Section 10089.37, or the
related residential retrofit program from federal, state, and local
government sources and private sources.
(l) The Bagley-Keene Open Meeting Act (Article 9 (commencing with
Section 11120) of Chapter 1 of Part 1 of Division 3 of Title 2 of the
Government Code) applies to meetings of the board and the panel.
SEC. 2. The Legislature finds and declares that this bill furthers
the purposes of the Political Reform Act of 1974 within the meaning
of subdivision (a) of Section 81012 of the Government Code.
SEC. 3. No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of the
Government Code, or changes the definition of a crime within the
meaning of Section 6 of Article XIII B of the California
Constitution.