BILL NUMBER: AB 2406	INTRODUCED
	BILL TEXT


INTRODUCED BY   Assembly Member Buchanan

                        FEBRUARY 24, 2012

   An act to amend Section 1861.05 of the Insurance Code, relating to
insurance.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 2406, as introduced, Buchanan. Insurance: rates.
   Existing law, the Insurance Rate Reduction and Reform Act (enacted
by Proposition 103, as approved by the voters at the November 8,
1988, statewide general election), prohibits a rate from being
approved or remaining in effect which is excessive, inadequate,
unfairly discriminatory, or otherwise in violation of the applicable
provisions of law.
   This bill would make technical, nonsubstantive changes to those
provisions.
   Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.


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

  SECTION 1.  Section 1861.05 of the Insurance Code is amended to
read:
   1861.05.  Approval of Insurance Rates.  (a)  No 
 A  rate shall  not  be approved or remain in
effect  which   that  is excessive,
inadequate, unfairly discriminatory  ,  or otherwise in
violation of this chapter. In considering whether a rate is
excessive, inadequate  ,  or unfairly discriminatory,
 no  consideration shall  not  be given to
the degree of competition  ,  and the commissioner shall
consider whether the rate mathematically reflects the insurance
company's investment income.
   (b) Every insurer  which   that  desires
to change any rate shall file a complete rate application with the
commissioner. A complete rate application shall include all data
referred to in Sections 1857.7, 1857.9  , 1857.15  ,
and 1864 and  such  other information as the
commissioner may require. The applicant shall have the burden of
proving that the requested rate change is justified and meets the
requirements of this article.
   (c) The commissioner shall notify the public of any application by
an insurer for a rate change. The application shall be deemed
approved  sixty   60  days after public
notice unless (1) a consumer or his or her representative requests a
hearing within  forty-five   45  days of
public notice and the commissioner grants the hearing, or determines
not to grant the hearing and issues written findings in support of
that decision, or (2) the commissioner on his or her own motion
determines to hold a hearing, or (3) the proposed rate adjustment
exceeds  7%   7 percent  of the then
applicable rate for personal lines or  15%   15
percent  for commercial lines, in which case the commissioner
 must   shall  hold a hearing upon a timely
request. In any event, a rate change application shall be deemed
approved 180 days after the rate application is received by the
commissioner (A) unless that application has been disapproved by a
final order of the commissioner subsequent to a hearing, or (B)
extraordinary circumstances exist. For purposes of this section,
"received" means the date delivered to the department.
   (d) For purposes of this section, extraordinary circumstances
include the following:
   (1) Rate change application hearings commenced during the 180-day
period provided by subdivision (c). If a hearing is commenced during
the 180-day period, the rate change application shall be deemed
approved upon expiration of the 180-day period or 60 days after the
close of the record of the hearing, whichever is later, unless
disapproved prior to that date.
   (2) Rate change applications that are not approved or disapproved
within the 180-day period provided by subdivision (c) as a result of
a judicial proceeding directly involving the application and
initiated by the applicant or an intervenor. During the pendency of
the judicial proceedings, the 180-day period is tolled, except that
in no event shall the commissioner have less than 30 days after
conclusion of the judicial proceedings to approve or disapprove the
application. Notwithstanding any other provision of law, nothing
shall preclude the commissioner from disapproving an application
without a hearing if a stay is in effect barring the commissioner
from holding a hearing within the 180-day period.
   (3) The hearing has been continued pursuant to Section 11524 of
the Government Code. The 180-day period provided by subdivision (c)
shall be tolled during any period in which a hearing is continued
pursuant to Section 11524 of the Government Code. A continuance
pursuant to Section 11524 of the Government Code shall be decided on
a case by case basis. If the hearing is commenced or continued during
the 180-day period, the rate change application shall be deemed
approved upon the expiration of the 180-day period or 100 days after
the case is submitted, whichever is later, unless disapproved prior
to that date.