BILL ANALYSIS Ó
AB 53
Page 1
ASSEMBLY THIRD READING
AB 53 (Solorio)
As Amended January 10, 2012
Majority vote
INSURANCE 7-4 APPROPRIATIONS 12-5
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|Ayes:|Solorio, Charles |Ayes:|Fuentes, Blumenfield, |
| |Calderon, Carter, Feuer, | |Bradford, Charles |
| |Hayashi, Torres, | |Calderon, Campos, |
| |Wieckowski | |Chesbro, Gatto, Hall, |
| | | |Hill, Ammiano, Mitchell, |
| | | |Solorio |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Hagman, Grove, Miller, |Nays:|Harkey, Donnelly, |
| |Olsen | |Nielsen, Norby, Wagner |
| | | | |
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SUMMARY : Requires major California insurers to submit a report
explaining its procurement practices with respect to women,
minority, and disabled veteran business enterprises (WMDVBEs).
Specifically, this bill :
1)Declares it the policy of this state to aid the interests of
WMDVBEs in order to preserve reasonable and just prices and a
free competitive enterprise, to ensure that a fair proportion
of the total purchases and contracts or subcontracts for
commodities, supplies, technology, property, and services for
regulated insurance providers are awarded to WMDVBEs, and to
maintain and strengthen the overall stability and growth of
the state's economy.
2)Requires each admitted insurer, with California written
premiums of $100 million or more, to biennially submit a
report to the Insurance Commissioner (IC) detailing its
practices with respect to WMDVBEs during the reporting period.
3)Defines these businesses as ones that are at least 51% owned
by women, minorities, or disabled veterans.
4)Requires the IC to maintain a link on the Department of
Insurance's Web site that provides access to the insurer's
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reports.
5)Provides for civil penalties for the failure to file the
required report of up to $5,000, or up to $10,000 if the
violation is willful.
EXISTING LAW :
1)Requires admitted insurers to provide information to the IC on
community development investments in California. A "community
development investment" is defined as one in which all or a
portion of the investment has the primary purpose of community
development or that it directly benefits low-income or
moderate-income people in California.
2)Requires each admitted insurer that writes $100 million or
more in premium annually to develop and file with the
Insurance Commissioner a policy statement on community
development investments that expresses the insurer's goals for
these investments during the current and following year.
3)Requires the Public Utilities Commission (PUC) to require each
electrical, gas, water, wireless telecommunications service
provider, and telephone corporation with gross annual revenues
exceeding $25 million, and their PUC-regulated subsidiaries,
to annually submit a detailed and verifiable plan for
increasing procurement from WMDVBEs including renewable
energy, wireless telecommunications, broadband, smart grid,
and rail projects.
4)Provides that any person or corporation which falsely
represents a business as a women or minority business
enterprise in the procurement of contracts from these service
providers or corporations shall be punishable by a fine of up
to $5,000 or by imprisonment in jail for up to one year or in
the state prison, or both. If any person or corporation
falsely represents a business as a disabled veteran business
in these procurements, the punishment may be up to a $30,000
fine for the first offense or up to $50,000 fine for the
second or subsequent offense, plus up to six months in the
county jail, or both.
FISCAL EFFECT : According to the Assembly Appropriations
Committee, on-going costs of approximately $100,000 (Insurance
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Fund) for the Department of Insurance to process and post the
annual reports and collect the required data every two years.
COMMENTS : The bill specifies its purposes:
1)To encourage greater economic opportunity for WMDVBEs in the
$90 billion California insurance market.
2)To promote competition among the suppliers of regulated
insurance providers in order to enhance economic efficiency in
the procurement of insurance industry contracts.
3)To clarify and expand the program for the procurement by
regulated insurance providers of technology, equipment,
supplies, services, materials, and construction work from
WMDVBEs.
The proponents, including The Greenlining Institute and multiple
ethnic chambers of commerce, state that insurance products are
purchased out of necessity by most Californians and insurance is
already closely regulated by the Department of Insurance to
address consumer protection issues. The Consumer Federation of
California states that during this economic recession, it is
critical that the insurance market be cost-effective and that
minority, women, and disabled veterans enterprises receive an
equal opportunity to compete for business.
The current version of the bill has caused a number of insurers
to withdraw their opposition, although the Association of
California Insurance Companies remains "opposed unless amended"
and is still developing its amendment proposals.
Analysis Prepared by : Mark Rakich / INS. / (916) 319-2086
FN: 0003052