BILL ANALYSIS                                                                                                                                                                                                    



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          ASSEMBLY THIRD READING
          AB 53 (Solorio)
          As Amended  January 10, 2012
          Majority vote 

           INSURANCE           7-4         APPROPRIATIONS      12-5        
           
           ----------------------------------------------------------------- 
          |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    |
          |     |                          |     |                          |
           ----------------------------------------------------------------- 
           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

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