BILL NUMBER: AB 1098	AMENDED
	BILL TEXT

	AMENDED IN SENATE  AUGUST 30, 2012
	AMENDED IN SENATE  AUGUST 7, 2012
	AMENDED IN ASSEMBLY  MARCH 31, 2011

INTRODUCED BY   Assembly Member  Hagman   Carter

    (   Principal coauthor: 
 Assembly Member   Solorio 
 ) 
    (   Principal   coauthors:  
Senators   Negrete McLeod   and Emmerson  
) 
    (   Coauthors:  
Senators   Calderon   
 and Gaines   ) 

                        FEBRUARY 18, 2011

   An act to amend  Section 790.03 of the Insurance Code,
relating to insurance   Sections 11003 and 11005 of the
Revenue and Taxation Code, relating to taxation, making an
appropriation therefor, and declaring the urgency thereof, to take
effect immediately  .



	LEGISLATIVE COUNSEL'S DIGEST


   AB 1098, as amended,  Hagman   Carter  .
 Insurance: unfair methods of competition: automotive
repair.   Vehicle license fees: allocation.  
   Existing law requires that a specified amount of motor vehicle
license fees deposited to the credit of the Motor Vehicle License Fee
Account in the Transportation Tax Fund be allocated by the
Controller, as specified, to the Local Law Enforcement Services
Account in the Local Revenue Fund 2011, for allocation to cities,
counties, and cities and counties.  
   This bill would instead require, on and after July 1, 2012, that
those revenues be distributed first to each city that was
incorporated from an unincorporated territory after August 5, 2004,
in an amount determined pursuant to a specified formula, second to
each city that was incorporated before August 5, 2004, in an amount
determined pursuant to a specified formula, and third to the Local
Law Enforcement Services Account in the Local Revenue Fund 2011, for
allocation to cities, counties, and cities and counties. By
authorizing within the Motor Vehicle License Fee Account in the
Transportation Tax Fund, a continuously appropriated fund, to be used
for a new purpose, the bill would make an appropriation.  
   Existing law requires the Legislature to determine and appropriate
annually an amount for the use of the Department of Motor Vehicles
and the Franchise Tax Board for the enforcement of the Vehicle
License Fee Law.  
   This bill would not allow that amount to be appropriated from the
Motor Vehicle License Fee Account in the Transportation Tax Fund.
 
   This bill would declare that it is to take effect immediately as
an urgency statute.  
   Existing law defines unfair methods of competition and unfair and
deceptive acts or practices in the business of insurance, including
knowingly committing or performing with such frequency as to indicate
a general business practice of various unfair claims settlement
practices, such as not attempting in good faith to effectuate prompt,
fair, and equitable settlements of claims in which liability has
become reasonably clear. If a person engages in any unfair method of
competition or any unfair or deceptive act or practice, that person
may be subject to a civil penalty fixed by the Insurance
Commissioner.  
   This bill would add to the list of unfair claims settlement
practices (1) failing to estimate the cost of automotive repairs in
accordance with accepted trade standards for good and workmanlike
automotive repair, (2) adjusting a claimant's written repair
estimate, if the repair costs will exceed the written repair
estimates, without providing specified information, including edited
copies of either the insurer's estimate or the claimant's auto body
repair shop estimate, and (3) requiring the use of nonoriginal
equipment manufacturer replacement crash parts in the repair of an
automobile. 
   Vote:  majority   2/3  . Appropriation:
 no   yes  . Fiscal committee: yes.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

   SECTION 1.    The Legislature finds and declares all
of the following:  
   (a) It is the intent of the Legislature commencing with the
2012-13 fiscal year to reinstate allocations of motor vehicle license
fees to recently incorporated cities and cities which annexed
inhabited areas, consistent with the allocation formula those
communities relied upon when making the decision to incorporate or
annex the affected territory.  
   (b) It is also the intent of the Legislature to ensure that such
revenues and incentives remain available for other communities
considering incorporation, including unincorporated communities of
East Los Angeles, and annexations of inhabited areas, including
disadvantaged unincorporated communities.  
   (c) Numerous state laws support the policy of furthering orderly
development in compact forms, including the annexation of inhabited
territory and the incorporation of communities consistent with state
laws, the policies of local agency formation commissions, and often
the approval of local voters.  
   (d) The passage of Senate Bill 89 of the 2011-12 Regular Session
(Chapter 35 of the Statutes of 2011) removed critical revenues from
these communities without providing a reasonable opportunity for
input from the affected agencies and the public. 
   SEC. 2.    Section 11003 of the   Revenue
and Taxation Code   is amended to read: 
   11003.   (a)     Subject
to subdivision (b), the   The  Legislature shall
annually determine and appropriate an amount for the use of the
Department of Motor Vehicles and the Franchise Tax Board for the
enforcement of this part.  That amount shall not be appropriated
from the Motor Vehicle License Fee Account in the Transportation Tax
Fund.  
   (b) For the 2011-12 fiscal year, twenty-five million dollars
($25,000,000) shall be deemed to be the cost to the Department of
Motor Vehicles of collecting the motor vehicle license fees that are
collected with the motor vehicle registration fees and other fees.

   SEC. 3.    Section 11005 of the   Revenue
and Taxation Code   is amended to read: 
   11005.  After payment of refunds therefrom and  after
making the deductions authorized by Section 11003 and 
reserving the amount determined necessary by the Pooled Money
Investment Board to meet the transfers ordered or proposed to be
ordered pursuant to Section 16310 of the Government Code, the balance
of all motor vehicle license fees and any other money appropriated
by law for expenditure pursuant to this section, deposited to the
credit of the Motor Vehicle License Fee Account in the Transportation
Tax Fund, and remaining unexpended in that account at the close of
business on the last day of the calendar month, shall be allocated by
the Controller by the 10th day of the following month in accordance
with the following: 
   (a) On and after July 1, 2012:  
   (1) First, to each city that was incorporated from an
unincorporated territory after August 5, 2004, in an amount equal to
the product of the following two amounts:  
   (A) The quotient derived from the following fraction:  
   (i) The numerator is the product of the following two amounts:
 
   (I) Fifty dollars ($50) per year.  
   (II) The fraction determined as the total amount of vehicle
license fee revenue collected during the most recent fiscal year
divided by the total amount of vehicle license fee revenue collected
during the 2004-05 fiscal year.  
   (ii) The denominator is the fraction determined as the actual
population, as defined in subdivision (d) of Section 11005.3, of all
cities during the most recent fiscal year, divided by the actual
population, as defined in subdivision (d) of Section 11005.3, of all
cities in the 2004-05 fiscal year.  
   (B) The city's population determined in accordance with Section
11005.3.  
   (2) Second, to each city that was incorporated before August 5,
2004, in an amount equal to the product of the following two amounts:
 
   (A) The quotient derived from the following fraction:  
   (i) The numerator is the product of the following two amounts:
 
   (I) Fifty dollars ($50) per year.  
   (II) The fraction determined as the total amount of vehicle
license fee revenue collected during the most recent fiscal year
divided by the total amount of vehicle license fee revenue collected
during the 2004-05 fiscal year.  
   (ii) The denominator is the fraction determined as the actual
population, as defined in subdivision (d) of Section 11005.3, of all
cities during the most recent fiscal year, divided by the actual
population, as defined in subdivision (d) of Section 11005.3, of all
cities in the 2004-05 fiscal year.  
   (B) The actual population, as defined in subdivision (d) of
Section 11005.3, residing in areas annexed after August 5, 2004, as
of the date of annexation.  
   (a) On and after July 1, 2011 
    (3)     Third  , to the Local Law
Enforcement Services Account in the Local Revenue Fund 2011, as
established by Section 30025 of the Government Code, for allocation
to cities, counties, and cities and counties. 
   (b) On and after July 1, 2011, and before July 1, 2012, to the
Local Law Enforcement Services Account in the Local Revenue Fund
2011, as established by Section 30025 of the Government Code, for
allocation to cities, counties, and cities and counties. 

   (b) 
    (c)  On or after July 1, 2004, but before July 1, 2011:
   (1) First, to the County of Orange. For the 2004-05 fiscal year,
that county shall be allocated fifty-four million dollars
($54,000,000) in monthly installments. For the 2005-06 fiscal year
and each fiscal year thereafter, that county shall receive, in
monthly installments, an amount equal to the amount allocated under
this section for the prior fiscal year, adjusted for the percentage
change in the amount of revenues credited to the Motor Vehicle
License Fee Account in the Transportation Tax Fund from the revenues
credited to that account in the prior fiscal year. Moneys allocated
to the County of Orange under this subdivision shall be used first
for the service of indebtedness as provided in paragraph (1) of
subdivision (a) of Section 11001.5. Any amounts in excess of the
amount required for this service of indebtedness may be used by that
county for any lawful purpose.
   (2) Second, to each city, the population of which is determined
under Section 11005.3 on August 5, 2004, in an amount equal to the
additional amount of vehicle license fee revenue, including offset
transfers, that would be allocated to that city under Sections 11000
and 11005, as those sections read on January 1, 2004, as a result of
that city's population being determined under subdivision (a) or (b)
of Section 11005.3.
   (3) Third, to each city that was incorporated from an
unincorporated territory after August 5, 2004, in an amount equal to
the product of the following two amounts:
   (A) The quotient derived from the following fraction:
   (i) The numerator is the product of the following two amounts:
   (I) Fifty dollars ($50) per year.
   (II) The fraction determined as the total amount of vehicle
license fee revenue collected during the most recent fiscal year
divided by the total amount of vehicle license fee revenue collected
during the 2004-05 fiscal year.
   (ii) The denominator is the fraction determined as the actual
population, as defined in subdivision (e) of Section 11005.3, of all
cities during the most recent fiscal year, divided by the actual
population, as defined in subdivision (e) of Section 11005.3, of all
cities in the 2004-05 fiscal year.
   (B) The city's population determined in accordance with Section
11005.3.
   (4) Fourth, to each city that was incorporated before August 5,
2004, in an amount equal to the product of the following two amounts:

   (A) The quotient derived from the following fraction:
   (i) The numerator is the product of the following two amounts:
   (I) Fifty dollars ($50) per year.
   (II) The fraction determined as the total amount of vehicle
license fee revenue collected during the most recent fiscal year
divided by the total amount of vehicle license fee revenue collected
during the 2004-05 fiscal year.
   (ii) The denominator is the fraction determined as the actual
population, as defined in subdivision (e) of Section 11005.3, of all
cities during the most recent fiscal year, divided by the actual
population, as defined in subdivision (e) of Section 11005.3, of all
cities in the 2004-05 fiscal year.
   (B) The actual population, as defined in subdivision (e) of
Section 11005.3, residing in areas annexed after August 5, 2004, as
of the date of annexation.
   (5)  Fifth, to the cities and cities and counties of this state in
the proportion that the population of each city or city and county
bears to the total population of all cities and cities and counties
in this state, as determined by the Demographic Research Unit of the
Department of Finance. For the purpose of this subdivision, the
population of each city or city and county shall be determined in
accordance with Section 11005.3.
   SEC. 4.    This act is an urgency statute necessary
for the immediate preservation of the public peace, health, or safety
within the meaning of Article IV of the Constitution and shall go
into immediate effect. The facts constituting the necessity are:
 
   In order to restore critical revenues to recently incorporated
cities and cities that annexed inhabited areas, removed from these
communities as a result of the passage of Senate Bill 89 of the
2011-12 Regular Session (Chapter 35 of the Statutes of 2011) without
providing a reasonable opportunity for input from the affected
agencies and the public, it is necessary that this act take effect
immediately.  
  SECTION 1.    Section 790.03 of the Insurance Code
is amended to read:
   790.03.  The following are hereby defined as unfair methods of
competition and unfair and deceptive acts or practices in the
business of insurance.
   (a) Making, issuing, circulating, or causing to be made, issued or
circulated, any estimate, illustration, circular, or statement
misrepresenting the terms of any policy issued or to be issued or the
benefits or advantages promised thereby or the dividends or share of
the surplus to be received thereon, or making any false or
misleading statement as to the dividends or share of surplus
previously paid on similar policies, or making any misleading
representation or any misrepresentation as to the financial condition
of any insurer, or as to the legal reserve system upon which any
life insurer operates, or using any name or title of any policy or
class of policies misrepresenting the true nature thereof, or making
any misrepresentation to any policyholder insured in any company for
the purpose of inducing or tending to induce the policyholder to
lapse, forfeit, or surrender his or her insurance.
   (b) Making or disseminating or causing to be made or disseminated
before the public in this state, in any newspaper or other
publication, or any advertising device, or by public outcry or
proclamation, or in any other manner or means whatsoever, any
statement containing any assertion, representation, or statement with
respect to the business of insurance or with respect to any person
in the conduct of his or her insurance business, which is untrue,
deceptive, or misleading, and which is known, or which by the
exercise of reasonable care should be known, to be untrue, deceptive,
or misleading.
   (c) Entering into any agreement to commit, or by any concerted
action committing, any act of boycott, coercion, or intimidation
resulting in or tending to result in unreasonable restraint of, or
monopoly in, the business of insurance.
   (d) Filing with any supervisory or other public official, or
making, publishing, disseminating, circulating, or delivering to any
person, or placing before the public, or causing directly or
indirectly, to be made, published, disseminated, circulated,
delivered to any person, or placed before the public any false
statement of financial condition of an insurer with intent to
deceive.
   (e) Making any false entry in any book, report, or statement of
any insurer with intent to deceive any agent or examiner lawfully
appointed to examine into its condition or into any of its affairs,
or any public official to whom the insurer is required by law to
report, or who has authority by law to examine into its condition or
into any of its affairs, or, with like intent, willfully omitting to
make a true entry of any material fact pertaining to the business of
the insurer in any book, report, or statement of the insurer.
   (f) (1) Making or permitting any unfair discrimination between
individuals of the same class and equal expectation of life in the
rates charged for any contract of life insurance or of life annuity
or in the dividends or other benefits payable thereon, or in any
other of the terms and conditions of the contract.
   (2) This subdivision shall be interpreted, for any contract of
ordinary life insurance or individual life annuity applied for and
issued on or after January 1, 1981, to require differentials based
upon the sex of the individual insured or annuitant in the rates or
dividends or benefits, or any combination thereof. This requirement
is satisfied if those differentials are substantially supported by
valid pertinent data segregated by sex, including, but not limited
to, mortality data segregated by sex.
   (3) However, for any contract of ordinary life insurance or
individual life annuity applied for and issued on or after January 1,
1981, but before the compliance date, in lieu of those differentials
based on data segregated by sex, rates, or dividends or benefits, or
any combination thereof, for ordinary life insurance or individual
life annuity on a female life may be calculated as follows: (A)
according to an age not less than three years nor more than six years
younger than the actual age of the female insured or female
annuitant, in the case of a contract of ordinary life insurance with
a face value greater than five thousand dollars ($5,000) or a
contract of individual life annuity; and (B) according to an age not
more than six years younger than the actual age of the female
insured, in the case of a contract of ordinary life insurance with a
face value of five thousand dollars ($5,000) or less. "Compliance
date" as used in this paragraph shall mean the date or dates
established as the operative date or dates by future amendments to
this code directing and authorizing life insurers to use a mortality
table containing mortality data segregated by sex for the calculation
of adjusted premiums and present values for nonforfeiture benefits
and valuation reserves as specified in Sections 10163.1 and 10489.2
or successor sections.
   (4) Notwithstanding the provisions of this subdivision, sex-based
differentials in rates or dividends or benefits, or any combination
thereof, shall not be required for (A) any contract of life insurance
or life annuity issued pursuant to arrangements which may be
considered terms, conditions, or privileges of employment as these
terms are used in Title VII of the Civil Rights Act of 1964 (Public
Law 88-352), as amended, and (B) tax sheltered annuities for
employees of public schools or of tax exempt organizations described
in Section 501(c)(3) of the Internal Revenue Code.
   (g) Making or disseminating, or causing to be made or
disseminated, before the public in this state, in any newspaper or
other publication, or any other advertising device, or by public
outcry or proclamation, or in any other manner or means whatever,
whether directly or by implication, any statement that a named
insurer, or named insurers, are members of the California Insurance
Guarantee Association, or insured against insolvency as defined in
Section 119.5. This subdivision shall not be interpreted to prohibit
any activity of the California Insurance Guarantee Association or the
commissioner authorized, directly or by implication, by Article 14.2
(commencing with Section 1063).
   (h) Knowingly committing or performing with such frequency as to
indicate a general business practice any of the following unfair
claims settlement practices:
   (1) Misrepresenting to claimants pertinent facts or insurance
policy provisions relating to any coverages at issue.
   (2) Failing to acknowledge and act reasonably promptly upon
communications with respect to claims arising under insurance
policies.
   (3) Failing to adopt and implement reasonable standards for the
prompt investigation and processing of claims arising under insurance
policies.
   (4) Failing to affirm or deny coverage of claims within a
reasonable time after proof of loss requirements have been completed
and submitted by the insured.
   (5) Not attempting in good faith to effectuate prompt, fair, and
equitable settlements of claims in which liability has become
reasonably clear.
   (6) Compelling insureds to institute litigation to recover amounts
due under an insurance policy by offering substantially less than
the amounts ultimately recovered in actions brought by the insureds,
when the insureds have made claims for amounts reasonably similar to
the amounts ultimately recovered.
   (7) Attempting to settle a claim by an insured for less than the
amount to which a reasonable person would have believed he or she was
entitled by reference to written or printed advertising material
accompanying or made part of an application.
   (8) Attempting to settle claims on the basis of an application
which was altered without notice to, or knowledge or consent of, the
insured, his or her representative, agent, or broker.
   (9) Failing, after payment of a claim, to inform insureds or
beneficiaries, upon request by them, of the coverage under which
payment has been made.
   (10) Making known to insureds or claimants a practice of the
insurer of appealing from arbitration awards in favor of insureds or
claimants for the purpose of compelling them to accept settlements or
compromises less than the amount awarded in arbitration.
   (11) Delaying the investigation or payment of claims by requiring
an insured, claimant, or the physician of either, to submit a
preliminary claim report, and then requiring the subsequent
submission of formal proof of loss forms, both of which submissions
contain substantially the same information.
   (12) Failing to settle claims promptly, where liability has become
apparent, under one portion of the insurance policy coverage in
order to influence settlements under other portions of the insurance
policy coverage.
   (13) Failing to provide promptly a reasonable explanation of the
basis relied on in the insurance policy, in relation to the facts or
applicable law, for the denial of a claim or for the offer of a
compromise settlement.
   (14) Directly advising a claimant not to obtain the services of an
attorney.
   (15) Misleading a claimant as to the applicable statute of
limitations.
   (16) Delaying the payment or provision of hospital, medical, or
surgical benefits for services provided with respect to acquired
immune deficiency syndrome or AIDS-related complex for more than 60
days after the insurer has received a claim for those benefits, where
the delay in claim payment is for the purpose of investigating
whether the condition preexisted the coverage. However, this 60-day
period shall not include any time during which the insurer is
awaiting a response for relevant medical information from a health
care provider.
   (17) Failing to estimate the cost of automotive repairs in
accordance with accepted trade standards for good and workmanlike
automotive repair. Estimates shall allow for repairs to be made by
auto body repair shops, as defined in Section 9889.51 of the Business
and Professions Code. The estimates shall be based on any of the
following:
   (A) Original equipment manufacturer repair specifications.
   (B) Nationally distributed and periodically updated collision
estimating guides.
   (C) Generally accepted practices by the auto body repair and
insurance industries.
   (18) If the repair costs will exceed the written repair estimates
prepared by or for the insurer, adjusting a claimant's written repair
estimate without providing one of the following:
   (A) An edited copy of the claimant's auto body repair shop
estimate.
   (B) An edited copy of the insurer's estimate.
   (C) A supplemental estimate prepared by the insurer adjusting the
itemized supplemental request from the claimant's auto body repair
shop.
   (19) Requiring the use of nonoriginal equipment manufacturer
replacement crash parts in the repair of an automobile, unless the
insurer specifying the use of nonoriginal equipment manufacturer
replacement crash parts only specified parts that are distributed by
entities that do all of the following:
   (A) Agree to pay the cost of any modifications to the parts that
may be necessary to effect the repair.
   (B) Agree to pay the cost to the auto body repair shop associated
with returning the part, and to replace the part.
   (C) Have in place a program to analyze parts returned with defects
and report the part number, lot number, and nature of each defect to
the manufacturer and any entity that certifies the parts. An insurer
shall obtain from the distributor and report the defect information
identified in this subparagraph to the Department of Insurance upon
request.
   (D) Indemnify the auto body repair shop for any part verified by
the distributor to be defective. For purposes of this paragraph, a
part with a defect rate of 5 percent or greater installed in 1,000 or
more vehicles shall be considered to be defective.
   (i) Canceling or refusing to renew a policy in violation of
Section 676.10.