BILL ANALYSIS Ó
AB 1024
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ASSEMBLY THIRD READING
AB 1024 (Hueso)
As Amended May 11, 2011
Majority vote
INSURANCE 12-0 APPROPRIATIONS 17-0
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|Ayes:|Solorio, Hagman, Charles |Ayes:|Fuentes, Harkey, |
| |Calderon, Carter, Feuer, | |Blumenfield, Bradford, |
| |Grove, Hayashi, Miller, | |Charles Calderon, Campos, |
| |Olsen, Skinner, Torres, | |Davis, Donnelly, Gatto, |
| |Wieckowski | |Hall, Hill, Lara, |
| | | |Mitchell, Nielsen, Norby, |
| | | |Solorio, Wagner |
| | | | |
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SUMMARY : Authorizes insurance agents and brokers to sell
low-cost auto insurance through an Internet Web site, and
requires the California Automobile Assigned Risk Plan (CAARP) to
establish or contract with an entity to operate a Web site to
sell low-cost auto insurance policies. Specifically, this bill :
1)Authorizes a CAARP-certified "producer" (i.e., insurance agent
or broker) to accept and process applications to purchase
low-cost automobile insurance policies through an Internet Web
site.
2)Specifies that any consumer information required by this bill
may be accepted by electronic means after the Department of
Insurance (DOI) adopts rules and only if the information is
submitted in accordance with the rules.
3)Requires CAARP to coordinate with the DOI to develop a system
for receiving and assigning policies issued through Internet
Web sites.
4)Authorizes CAARP to request, and the DOI to include in an
annual plan, up to $50,000 from the DOI's existing consumer
outreach fund to be used for the purpose of implementing the
above provisions.
5)Requires CAARP to establish, or to contract with an entity to
establish, an Internet Web site that shall provide the public
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with an option for either of the following:
a) Referral to a list of certified agents or brokers with
an office in the same geographic area as the consumer who
may be contacted to purchase a low-cost automobile
insurance policy; or,
b) Assignment to a randomly selected certified agent or
broker in the same geographic area as the consumer who can
be accessed online to process and accept an application to
purchase a low-cost automobile insurance policy.
6)Authorizes CAARP, with the approval of the Insurance
Commissioner (IC), to authorize the use, for a designated
period, the DOI-owned Internet Web site domain name
http://www.mylowcostauto.com , or any other relevant domain
names the DOI controls.
7)Requires CAARP to ensure that the Internet Web site, does all
of the following:
a) Provides all disclosures and other information required
by law that would otherwise be provided by the producer;
b) Effectively educates consumers about the eligibility
requirements, the benefits, and the limits of the low-cost
automobile insurance policy;
c) Describes or establishes a process to collect documents
that are necessary for determining qualification for the
policy;
d) Establishes a process to electronically certify the
information provided by the consumer;
e) Maintains safeguards to ensure that consumer information
transmitted through the Internet Web site is secure;
f) Provides the physical address of the producer and the
telephone number and email of the producer;
g) Provides the contact information for the Consumer
Services Division of the DOI;
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h) Adheres to any other rules and provides any other
information required by regulations adopted by the DOI to
promote the purposes of this bill; and,
i) Notifies the consumer that if he or she does not qualify
for the low-cost automobile insurance policy, that other
policies may be available from producers and insurers. The
consumer shall be directed to the DOI auto insurance
premium comparison Internet Web page.
8)Requires the Internet Web site to accept payment by credit or
debit card or other form of electronic payment the Department
of Insurance determines to be appropriate. The Web site shall
also provide a mechanism for payment by check.
9)Requires the Internet website to be available in as many
languages as is feasible, but this shall include English and
Spanish.
10)Provides that if CAARP chooses to contract with an entity to
establish the Internet Web site, then CAARP shall solicit the
contract via an open, competitive bid process, once the IC
approves the request.
11)Authorize CAARP to request, and the DOI to include in its
annual plan, up to $100,000 from DOI's existing consumer
outreach fund to be made available for the development of the
Internet Web site.
12)Provides that an applicant shall not be required to provide a
copy of the applicant's or other household members' driver's
licenses if the DOI finds that there is another suitable means
of verifying the drivers' licensure.
EXISTING LAW :
1)Establishes a Low-Cost Automobile Insurance Program within
CAARP that is authorized to operate in all counties of the
state.
2)Requires the low-cost automobile insurance policy to offer
$10,000 coverage for bodily injury or death of each person per
accident, and $20,000 coverage for bodily injury or death of
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all persons per accident, and $3,000 for property damage to
others per accident.
3)Limits the coverage to vehicles with a value of $20,000 or
less.
4)Requires that the rates for policies shall be sufficient to
cover losses incurred under these policies and the necessary
expenses including administrative, underwriting, taxes,
commissions, and claims adjusting costs that are incurred due
to participation in the low-cost automobile insurance program.
5)Specifies the following eligibility requirements in order for
a person to participate in the program:
a) The person resides in a household with a gross income
that does not exceed 250% of the federal poverty level;
b) The person is 19 years of age or older and has been
continuously licensed to drive during the previous three
years;
c) The person does not cause more than one
property-damage-only accident, or have more than a point
for a moving violation, within the previous three years;
d) The person does not have on record within the previous
three years an at-fault accident involving injury or death;
e) The person does not have a felony or misdemeanor
conviction for a violation of the Vehicle Code; and,
f) The person is not a college student claimed as a
dependent of another person for federal or state income tax
purposes.
6)Authorizes an application to participate in the program to be
made through any insurance producer certified by CAARP.
7)Requires each applicant, in order to demonstrate financial
eligibility to purchase a low-cost automobile insurance
policy, to present a copy of their federal or state income tax
return for the previous year or other reliable evidence from a
governmental agency or governmental means-tested program
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pursuant to regulations adopted by the IC.
FISCAL EFFECT : According to the Assembly Appropriations
Committee, one-time costs to the Department of Insurance to
develop the required system and Internet web site are estimated
to be $160,000 payable from the Insurance Fund.
COMMENTS :
1)The Low-Cost Automobile Insurance Program has provided more
than 59,000 Californians with affordable auto insurance since
its inception. There were 11,516 policies in force at the end
of 2010. Current law authorizes agents and brokers to offer
low-cost auto insurance policies in addition to regular auto
policies. The DOI reports that two-thirds of new policies
assigned were to applicants who were uninsured at the time of
the application, and that the predominant vehicle value was
less than $5,000.
The DOI also reports that visitors to the Department's Web site
are provided immediate access to agents or brokers in their
area, while agents and brokers are being encouraged to use an
online application system to reduce application errors.
Additionally, the DOI has established a new Web site at
www.mylowcostauto.com along with paid advertising and related
publicity in targeted areas to promote the program.
2)The author states that while current law permits licensed
brokers to sell low-cost auto insurance, it does not allow
on-line processing or sales of this insurance. This bill
would authorize both the processing and sale of low-cost auto
insurance through an authorized Web site. Consumer Watchdog
states this will not only enable more uninsured drivers attain
the minimum level of coverage required by law, but it will
also help achieve the goal of that law: to reduce the number
of uninsured drivers.
Analysis Prepared by : Manny Hernandez / INS. / (916) 319-2086
FN: 0000924
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