Amended in Senate June 19, 2014

Amended in Senate June 16, 2014

Amended in Assembly April 2, 2013

California Legislature—2013–14 Regular Session

Assembly Bill No. 1395

Introduced by begin delete Committee on Insurance (Perea (Chair), Hagman (Vice Chair), Bonilla, Bradford, Ian Calderon, Cooley, Frazier, Mitchell, Olsen, Torres, and Wieckowski) end delete begin insert Assembly Member Perea end insert

March 4, 2013

An act to amend Sections 1872.81 and 12975.9 of the Insurance Code, relating to insurance.

LEGISLATIVE COUNSEL’S DIGEST

AB 1395, as amended, begin delete Committee on Insurance end delete   begin insert Perea end insert . Insurance: special assessments: Seismic Safety Account.

Existing law requires a special purpose assessment of $0.25, commencing July 1, 2014, until January 1, 2016, and not exceeding $0.25 thereafter, on each vehicle insured under an insurance policy issued in this state by the insurer. Existing law specifies that, upon appropriation by the Legislature, 2⁄3 of the special purpose assessment be used for the purpose of funding the consumer service functions of the Department of Insurance related to regulating automobile insurers, as provided, and 1⁄3 of the special purpose assessment be used for the purpose of improving consumer functions of the department, related to regulating automobile insurers, as specified. Existing law also authorizes, upon appropriation by the Legislature, to use up to $0.05 of the $0.25 special purpose assessment revenues collected to notify insurers and other members of the public about the existence of any low-cost automobile insurance program.

This bill would raise the amount of the special purpose assessment to $0.26, until January 1, 2016, and not exceeding $0.26 thereafter.

Existing law created the Seismic Safety Account as a special account within the Insurance Fund with the funds to be distributed, upon appropriation by the Legislature, to the Alfred E. Alquist Seismic Safety Commission for the support of the commission and to the department for the actual administrative costs incurred in collecting the assessments. In order to fund the account, an assessment, as specified, is imposed on each person who owns real property, commercial or residential, that is covered by a property insurance policy.

This bill would provide that the insurer is not required to refund any portion of an assessment because the policy or coverage is terminated prior to the expiration date of the policy or coverage.

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 1872.81 of the Insurance Code is
amended to read:

1872.81.  

In addition to the special purpose assessment imposed
pursuant to Section 1872.8, effective July 1, 2014, an insurer doing
business in this state shall, until January 1, 2016, pay to the
commissioner an annual special purpose assessment of twenty-six
cents ($0.26), and thereafter pay to the commissioner an annual
special purpose assessment in an amount not to exceed twenty-six
cents ($0.26), as determined by the commissioner, for each vehicle
insured under an insurance policy it issues in this state, for
expenditure, upon appropriation by the Legislature, as follows:

(a) Two-thirds of the special purpose assessment shall be used
for the purpose of funding the consumer service functions of the
department that are related to regulating automobile insurers,
including those functions performed by the rating and underwriting
service bureau, the claims service bureau, the investigations bureau,
or any successor bureaus of the department that may assume the
consumer service functions of these bureaus, and legal services in
support of these bureaus.

(b) One-third of the special purpose assessment shall be used
for the purpose of improving consumer functions identified in
subdivision (a) of the department that are related to regulating
automobile insurers, including, for improving the ability of the
department to respond to consumer complaints and information
requests through the department’s toll-free telephone number, and
for improving the ability of the department to offer information
about automobile insurance rates to the public.

(c) Upon appropriation by the Legislature, the begin delete Department of
Insurance end delete begin insert department end insert may use up to five cents ($0.05) of the
special purpose assessment revenues collected pursuant to this
section to notify insurers and other members of the public about
the existence of any low-cost automobile insurance program
established pursuant to Section 11629.7 or other statutes that
establish a program of the type identified in Section 11629.7. In
requesting an appropriation for this purpose under its proposed
plan developed pursuant to Section 11629.85, the begin delete Department of
Insurance end delete begin insert department end insert shall explain, with as much specificity as is
reasonably possible, the objectives for the use of the funds and the
quantitative criteria by which the Legislature may evaluate the
effectiveness of the department’s use of the funds.

(d) The commissioner shall include, in the annual report
submitted pursuant to Section 12922, all of the following
information:

(1) The number of opened consumer complaints related to
automobile insurance.

(2) The number of opened investigations related to automobile
insurance.

(3) The number of investigations related to automobile insurance
referred to prosecuting agencies.

(4) The number of administrative or regulatory cases related to
automobile insurance referred to the department’s legal division.

(5) The number of administrative or regulatory enforcement
actions taken in cases related to automobile insurance.

(6) Total aggregate annual assessment revenue and expenditures
pursuant to the assessment.

SEC. 2.  

Section 12975.9 of the Insurance Code is amended to
read:

12975.9.  

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

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

(c) The insurer, upon receipt of an invoice from the department,
shall transmit payment to the department for deposit into the
Seismic Safety Account. The insurer shall recover the assessment
from the insured, unless the insurer elects to pay the assessment
on the insured’s behalf. The insurer may provide a description of
the assessment to the insured as part of its billing statement. The
insurer is not required to refund any portion of an assessment
because the policy or coverage is terminated prior to the expiration
date of the policy or coverage. Any deficiency or excess in the
amount collected in relation to the appropriation authority for the
commission and the department shall be accounted for in the
subsequent annual fee calculation. Any balance remaining in the
Seismic Safety Account at the end of each fiscal year shall be
retained in the account and carried forward to the next fiscal year.

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

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

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

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

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