BILL ANALYSIS Ó AB 2064 Page 1 Date of Hearing: May 7, 2014 ASSEMBLY COMMITTEE ON APPROPRIATIONS Mike Gatto, Chair AB 2064 (Cooley) - As Amended: April 21, 2014 Policy Committee: InsuranceVote:13-0 Urgency: No State Mandated Local Program: No Reimbursable: No SUMMARY This bill updates existing statutory notice requirements related to earthquake insurance, and clarifies and loosens existing statutory limits on spending on operating expenses by the California Earthquake Authority (CEA). FISCAL EFFECT Minor one-time costs to the California Department of Insurance to review and approve proposed earthquake insurance forms. COMMENTS 1)Purpose . According to the author, homeowners have the right to purchase earthquake insurance but very few Californians take advantage of that right. The author states current law requires insurers to make the offer of earthquake insurance in a form that is written at a twelfth grade reading level, uses insurance industry jargon, and intimidates many consumers. An updated offer that is written in a more consumer-friendly fashion may encourage more consumers to buy earthquake insurance. In addition, existing statute limiting CEA operating expenses is unclear and is preventing the CEA from being more effective in reaching out to Californians who don't have earthquake insurance. 2)California Earthquake Authority . The CEA was formed through legislation in 1996 to address an insurance-availability crisis that followed the 1994 Northridge earthquake. The CEA is a privately funded, publicly managed not-for-profit organization that provides catastrophic residential earthquake AB 2064 Page 2 insurance. The Governor, State Treasurer, and Insurance Commissioner serve as the CEA's governing board voting members. The CEA is funded through sales of earthquake policies, and investments. Analysis Prepared by : Lisa Murawski / APPR. / (916) 319-2081