BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 1395|
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THIRD READING
Bill No: AB 1395
Author: Perea (D)
Amended: 6/19/14 in Senate
Vote: 21
SENATE INSURANCE COMMITTEE : 10-0, 6/25/14
AYES: Monning, Corbett, Correa, DeSaulnier, Lieu, Mitchell,
Nielsen, Roth, Torres, Vidak
NO VOTE RECORDED: Gaines
ASSEMBLY FLOOR : 75-0, 5/9/13 (Consent) - See last page for vote
SUBJECT : Insurance: Seismic Safety Account
SOURCE : Author
DIGEST : This bill increases the special purpose assessment on
each auto insurance policy to fund consumer protection
activities at the California Department of Insurance (CDI) from
$0.25 to $0.26; and provides that an insurer is not required to
refund any portion of the annual Seismic Safety Account special
assessment collected on a residential or commercial property
insurance policy because the policy is cancelled prior to the
end of the policy term.
ANALYSIS :
Existing law:
1. Imposes an annual $0.25 special purpose assessment on each
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auto insurance policy until January 1, 2016, and no more than
$0.25 thereafter, to fund consumer protection activities at
the CDI.
2. Specifies that, upon appropriation, two-thirds of the special
purpose assessment be used for the purpose of funding the
consumer service functions of CDI related to regulating
automobile insurers, as provided, and one-third of the
special purpose assessment be used for the purpose of
improving consumer functions of CDI, related to regulating
automobile insurers, as specified.
3. Authorizes CDI, 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.
4. Establishes the Seismic Safety Account as a special account
within the Insurance Fund, to be distributed upon
appropriation by the Legislature, to the Alfred E. Alquist
Seismic Safety Commission.
5. Imposes an annual assessment of $0.15 until August 1, 2017,
and no more than $0.15 thereafter, on all property insurance
policies in the state to fund the Seismic Safety Account.
This bill
1. Raises the special purpose assessment for consumer protection
activities to $0.26 until January 1, 2016, and no more than
$0.26 thereafter.
2. Provides that an insurer is not required to refund any
portion of the Seismic Safety Account special assessment
because the policy is cancelled prior to the end of the
policy term.
Background
Auto insurers doing business in California must pay an annual
special purpose assessment for each insured vehicle to fund CDI
research into consumer auto-related unfair claim practice
complaints; investigation and prosecution of auto-related
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producer licensee violations; auto-related educational materials
for consumers; and outreach activities for the California Low
Cost Automobile Insurance Program. Insurers may recoup the
assessment via an insurance policy premium surcharge. Until
last year, the assessment was $0.30, and was scheduled to sunset
in 2015. Last year the Legislature passed SB 476 (Steinberg,
Chapter 347, Statutes of 2013) that, among other provisions,
reduced this assessment from $0.30 to $0.25 per year until
January 1, 2016, and not exceeding $0.25 thereafter. According
to the insurance industry, $0.25 is a computer nightmare for
standard 6 months policies, so they have requested that the
$0.25 assessment be changed to $0.26.
Prior/Related Legislation
SB 476 (Steinberg, Chapter 347, Statutes of 2013) eliminated the
sunset dates for the Auto Consumer Assessment, Organized
Automobile Fraud Activity Interdiction Assessment, and the Life
and Annuity Consumer Protection Fund, lowered the maximum
assessment of the Auto Consumer Assessment from $0.30 to $0.25,
and expanded application of the Life and Annuity Consumer
Protection Fund to include life insurance and annuity products
valued at less than $15,000.
AB 98 (Assembly Budget Committee, Chapter 27, Statutes of 2013)
created a Seismic Safety Fund within the Insurance Fund, and
imposed an annual assessment for each residential and commercial
property insurance policy not to exceed $0.15 to fund the
Seismic Safety Commission.
FISCAL EFFECT : Appropriation: No Fiscal Com.: No Local:
No
SUPPORT : (Verified 6/27/14)
Personal Insurance Federation of California
ARGUMENTS IN SUPPORT : According to the Personal Insurance
Federation of California, this bill solves two technical issues
associated with insurance industry-collected fees. This bill is
necessary because a portion of the annual Auto Fraud fee was
adjusted down in SB 476 (Steinberg) to $0.25 per policy,
however, insurance company systems cannot evenly divide that sum
between the two six-month auto policy periods.
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ASSEMBLY FLOOR : 75-0, 5/9/13
AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Bigelow, Bloom,
Blumenfield, Bocanegra, Bonilla, Bonta, Bradford, Brown,
Buchanan, Ian Calderon, Campos, Chau, Chávez, Chesbro, Conway,
Cooley, Dahle, Daly, Dickinson, Eggman, Fong, Fox, Frazier,
Beth Gaines, Garcia, Gatto, Gomez, Gordon, Gorell, Gray,
Grove, Hagman, Hall, Harkey, Roger Hernández, Jones,
Jones-Sawyer, Levine, Linder, Lowenthal, Maienschein, Mansoor,
Medina, Melendez, Mitchell, Morrell, Mullin, Muratsuchi,
Nazarian, Nestande, Olsen, Pan, Patterson, Perea, V. Manuel
Pérez, Quirk, Quirk-Silva, Rendon, Salas, Skinner, Stone,
Ting, Torres, Wagner, Weber, Wieckowski, Wilk, Williams,
Yamada, John A. Pérez
NO VOTE RECORDED: Donnelly, Holden, Logue, Waldron, Vacancy
AL:d 7/1/14 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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