BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  AB 2406
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          ASSEMBLY THIRD READING
          AB 2406 (Buchanan)
          As Amended  April 23, 2012
          Majority vote 

           INSURANCE           13-0        APPROPRIATIONS      17-0        
           
           ----------------------------------------------------------------- 
          |Ayes:|Solorio, Hagman,          |Ayes:|Fuentes, Harkey,          |
          |     |Bradford,                 |     |Blumenfield, Bradford,    |
          |     |Charles Calderon, Carter, |     |Charles Calderon, Campos, |
          |     |Feuer,                    |     |Davis, Donnelly, Gatto,   |
          |     |Beth Gaines, Hayashi,     |     |Hall, Hill, Lara,         |
          |     |Miller, Olsen, Skinner,   |     |Mitchell, Nielsen, Norby, |
          |     |Torres, Wieckowski        |     |Solorio, Wagner           |
          |     |                          |     |                          |
           ----------------------------------------------------------------- 

           SUMMARY  :  Requires the Insurance Commissioner (commissioner) to 
          publish on the Department of Insurance (DOI) Internet Web site 
          all requests for a finding of eligibility to seek compensation, 
          and all findings of eligibility to be compensated, with respect 
          to parties intervening in rate change request proceedings.

           EXISTING LAW  :

          1)Provides, based on initiative statute (Proposition 103, 
            adopted by the voters at the November, 1988 General Election), 
            for a comprehensive system of rate regulation for 
            property-casualty insurance rates administered by the 
            commissioner.

          2)Provides, based on initiative statute, that a 
            property-casualty insurer may not charge any rate unless and 
            until it has obtained the prior approval of the commissioner.

          3)Specifies, based on initiative statute, when hearings may or 
            must be held by the commissioner on rate change requests, and 
            requires that specified provisions of the Administrative 
            Procedures Act shall apply at these hearings.

          4)Authorizes, based on initiative statute, "Consumer 
            Participation" in these rate change proceedings, specifically 
            authorizing "any person" to intervene in any proceeding 








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            permitted or required by the initiative statute.

          5)Requires, based on initiative statute, the commissioner or a 
            court to award reasonable advocacy and witness fees to a 
            person who demonstrates that he or she represents the 
            interests of consumers and has made a substantial contribution 
            to the adoption of any order, regulation or decision of the 
            commissioner or a court.

          6)Provides, based on regulations adopted by the commissioner, 
            that a proceeding within the meaning of these provisions of 
            law commences with the filing of a rate change request.

          7)Provides, based on regulations adopted by the commissioner, 
            that the right to intervene will be granted to any party that 
            has relevant issues to raise.  The "substantial contribution" 
            which entitles the intervener to compensation is determined at 
            the end of the proceedings.

           FISCAL EFFECT  :  According to the Assembly Appropriations 
          Committee, minor absorbable costs to the DOI to post the 
          information required by the bill on the DOI Internet Web site.

           COMMENTS  :   

           Purpose  .  According to the author, while the right to intervene 
          is contained in statute, virtually all of the details concerning 
          how to request to intervene, what information is required, and 
          how the DOI will evaluate the requests are contained in 
          regulations.  This bill is designed to ensure that the 
          materials, and subsequent determinations by the commissioner, 
          are posted on the DOI Internet Web site to ensure maximum public 
          access to the information.

           Majority vote vs. two-thirds vote  .  As a general rule, 
          initiatives are not amendable by the Legislature unless the 
          initiative itself grants the Legislature that authority.  The 
          law is also clear that an initiative can place conditions on the 
          power of the Legislature to amend the initiative.  On the other 
          hand, the Legislature has plenary authority, subject to various 
          constitutional exceptions, to legislate on a majority vote basis 
          on any matter before it.  Thus, a question can arise whether a 
          particular bill proposal is amending "initiative statute" (and 
          therefore subject to the initiative's restrictions), or whether 








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          the bill proposal is not doing so, and therefore subject to the 
          rules governing the Legislature's plenary authority.

          Proposition 103 contains a provision that limits legislative 
          amendments to the initiative statute by imposing two 
          requirements:  first, the legislative amendment to the 
          initiative statute must be passed by a two-thirds vote of each 
          house; second, any amendment to the initiative statute must 
          further the purposes of the initiative.  (The courts have 
          determined that whether or not a particular amendment furthers 
          the purposes of the initiative is for the courts, and not the 
          Legislature, to determine.)

          Legislative Counsel has determined that the bill's requirement 
          that certain data be posted to the DOI Internet Web site does 
          not constitute an amendment to the initiative statute because 
          the requirement does not change the effect of any provision of 
          the initiative.  As a result, the vote requirement tag is 
          "majority."  Clearly, an amendment to an Insurance Code 
          provision outside of the article adopted by Proposition 103 that 
          materially changes the effect of the initiative statute would 
          result in a two-thirds vote requirement.  Similarly, an 
          amendment within the article adopted by Proposition 103 that 
          effects no change to any provision of law enacted by the 
          initiative statute does not require a two-thirds vote because it 
          does not effect any change to what the voters enacted.  The new 
          subdivision proposed by this bill would be added to an Insurance 
          Code section that is in the article adopted by Proposition 103.

          Despite Legislative Counsel's determination that the bill's 
          provisions do not effect any change to any provision of the 
          initiative statute, Consumer Watchdog objects to the majority 
          vote tag, arguing that any change to the Insurance Code sections 
          adopted by Proposition 103 necessarily constitute an amendment 
          to the initiative statute, requiring compliance with the 
          initiative's two restrictions on legislative amendments.


           Analysis Prepared by  :    Mark Rakich / INS. / (916) 319-2086 


                                                                 FN:  
                                                                 0003613









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