Amended in Senate June 11, 2013

California Legislature—2013–14 Regular Session

Assembly BillNo. 98


Introduced by Committee on Budget (Blumenfield (Chair), Bloom, Bonilla, Chesbro, Daly, Dickinson, Gordon, Jones-Sawyer, Mitchell, Mullin, Muratsuchi, Nazarian, Rendon, Stone, and Ting)

January 10, 2013


begin deleteAn act relating to the Budget Act of 2013. end deletebegin insertAn act to add Section 12975.9 to the Insurance Code, relating to property insurance, and declaring the urgency thereof, to take effect immediately.end insert

LEGISLATIVE COUNSEL’S DIGEST

AB 98, as amended, Committee on Budget. begin deleteBudget Act of 2013. end deletebegin insertProperty insurance: Seismic Safety Account. end insert

begin insert

Existing law provides for the Alfred E. Alquist Seismic Safety Commission in the State and Consumer Services Agency, which consists of 15 members appointed by the Governor and confirmed by the Senate. The commission is responsible for certain aspects of earthquake hazard mitigation, including, but not limited to, setting goals and priorities in the public and private sectors, encouraging research, and helping to coordinate the earthquake safety activities of government at all levels.

end insert
begin insert

This bill would create the Seismic Safety Account as a special account within the Insurance Fund with the funds to be distributed, upon appropriation, to the commission for the support of the commission and to the Department of Insurance for the actual administrative costs incurred in collecting the assessments. In order to fund the account, the bill would impose an assessment on each person who owns real property, commercial or residential, that is covered by a property insurance policy. The bill would require the department to calculate the annual assessment, as specified, not to exceed $0.15 per property exposure. The insurer, upon receipt of an invoice from the department, would be required to transmit payment to the department for deposit into the account, and to collect the assessment from the insured, unless the insurer elects to pay the assessment on the insured’s behalf. The bill would also make the insurer responsible for any collected assessment that was not remitted to the department, and the department would be authorized to charge a late fee of 1.5%, per month, of the balance due compounded monthly, for any payment not paid within 45 days of the invoice date. The insurer would not be obligated to take legal action to enforce the collection of the assessment. The bill would require the department to report by December 1 of each year to the Legislature, the commission, and the Department of Finance on the assessment calculation methodology employed.

end insert
begin insert

This bill would declare that it is to take effect immediately as an urgency statute.

end insert
begin delete

This bill would express the intent of the Legislature to enact statutory changes relating to the Budget Act of 2013.

end delete

Vote: begin deletemajority end deletebegin insert23end insert. Appropriation: no. Fiscal committee: begin deleteno end deletebegin insertyesend insert. State-mandated local program: no.

The people of the State of California do enact as follows:

P2    1begin insert

begin insertSECTION 1.end insert  

end insert

begin insertSection 12975.9 is added to the end insertbegin insertInsurance Codeend insertbegin insert,
2to read:end insert

begin insert
3

begin insert12975.9.end insert  

(a) The Seismic Safety Account is hereby created as
4a special account within the Insurance Fund. Moneys in the
5account are available, upon appropriation by the Legislature, for
6the purposes of this section to fund the department and the Alfred
7E. Alquist Seismic Safety Commission.

8(b) There is hereby imposed an assessment on each person who
9owns real property, commercial or residential, that is insured by
10a property insurance policy. The department shall calculate the
11annual assessment to be charged to each commercial and
12residential earned property exposure. The assessment shall be set
13annually every August 1, beginning August 1, 2014, for all
14commercial and residential earned property exposures reported
15during the previous calendar year. The annual assessment shall
16be set at fifteen cents ($0.15) per earned property exposure for the
P3    1first three years of the implementation of this section. Each year
2thereafter, the annual assessment shall be based upon the number
3of earned property exposures from both commercial and residential
4insurance policies, the amount required for the support of the
5Alfred E. Alquist Seismic Safety Commission, the actual collection
6and administrative costs of the department, and the maintenance
7of an adequate reserve, but shall not exceed fifteen cents ($0.15)
8per earned property exposure.

9(c) The insurer, upon receipt of an invoice from the department,
10shall transmit payment to the department for deposit into the
11Seismic Safety Account. The insurer shall recover the assessment
12from the insured, unless the insurer elects to pay the assessment
13on the insured’s behalf. The insurer may provide a description of
14the assessment to the insured as part of its billing statement. Any
15deficiency or excess in the amount collected in relation to the
16appropriation authority for the commission and the department
17shall be accounted for in the subsequent annual fee calculation.
18Any balance remaining in the Seismic Safety Account at the end
19of each fiscal year shall be retained in the account and carried
20forward to the next fiscal year.

21(d) Funds in the Seismic Safety Account shall be distributed,
22upon appropriation by the Legislature, to the Alfred E. Alquist
23Seismic Safety Commission for the support of the commission and
24to the department for the actual administrative costs incurred in
25collecting the assessments.

26(e) Any assessment collected from an insured that has not been
27remitted to the department shall be a debt owed to the state by the
28insurer. This part does not impose any obligation upon an insurer
29to take any legal action to enforce the collection of the assessment
30imposed by this section.

31(f) Payment of the assessment shall be considered delinquent if
32not paid within 45 days of the invoice date. The department is
33authorized to charge a late fee of 1.5 percent per month of the
34balance due, compounded monthly, for any amount not paid within
35this period in accordance with Section 12995.

36(g) (1) Notwithstanding Section 10231.5 of the Government
37Code, the department shall report by December 1 of each year,
38beginning on December 1, 2014, to the Legislature, the Alfred E.
39Alquist Seismic Safety Commission, and the Department of Finance
40on the assessment calculation methodology employed.

P4    1(2) A report to be submitted to the Legislature pursuant to this
2subdivision shall be submitted in compliance with Section 9795
3of the Government Code.

end insert
4begin insert

begin insertSEC. 2.end insert  

end insert
begin insert

This act is an urgency statute necessary for the
5immediate preservation of the public peace, health, or safety within
6the meaning of Article IV of the Constitution and shall go into
7immediate effect. The facts constituting the necessity are:

end insert
begin insert

8In order to protect the public from the continuing threat of loss
9of life and property damage due to earthquakes, it is necessary
10that this act take effect immediately.

end insert
begin delete
11

SECTION 1.  

It is the intent of the Legislature to enact statutory
12changes relating to the Budget Act of 2013.

end delete


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