BILL ANALYSIS Ó AB 764 Page 1 Date of Hearing: April 22, 2015 ASSEMBLY COMMITTEE ON INSURANCE Tom Daly, Chair AB 764 (Quirk) - As Amended April 16, 2015 SUBJECT: Parking lots: design: insurance discount SUMMARY: Encourages insurers to provide discounts to property owners who install protective vehicle barriers in parking lots. Specifically, this bill: 1)Authorizes the California Building Standards Commission (CBSC) to adopt building standards to require that the installation of vehicle barriers be added to the list of considerations in the design of any new commercial property parking lot. 2)Authorizes an insurer to consider providing discounts to property owners that install vehicle barriers. 3)Provides that any discount that an insurer wishes to provide must be consistent with the requirements of Proposition 103. 4)Defines "vehicle barrier" as a short vertical post placed to protect buildings or pedestrians from collisions by motor vehicles. AB 764 Page 2 EXISTING LAW: 1)Establishes the CBSC within the Department of General Services, and requires any building standard adopted or proposed by state agencies to be submitted to, and approved by, the CBSC prior to codification into the California Building Standards Code (CBC). 2)Establishes, by initiative statute, a comprehensive rate regulation system implemented by the insurance commissioner that governs the property and liability insurance rates that insurers charge commercial property owners FISCAL EFFECT: Undetermined. COMMENTS: 1)Purpose. According to the author, this bill "seeks to provide awareness of storefront crashes and encourage the use of safety bollards in building design. A bollard is a vertical pillar or safety device most often made of steel and concrete and is installed in a footing in the ground and placed in a line?to block a vehicle from crossing into a pedestrian, shopping or seating area, or into a building. Specifically, AB 764 would add bollard installation to this list of considerations in the design of any new commercial property parking lot. Additionally, it would authorize an insurer to consider these bollards as a safety measure eligible for discounted building insurance rates. By doing this, AB 764 will reduce the number of storefront crashes." 2)Background. According to the Texas A&M Transportation AB 764 Page 3 Institute (TTI), "With 500 people reportedly killed each year by vehicles crashing into retail stores, sidewalk cafes, hair salons and other businesses, low speed barrier crashes have been called 'one of the largest unaddressed safety issues in the country." According to TTI, these accidents occur most frequently when a driver is entering or leaving a parking space perpendicular to a building, and even at relatively low speeds, can cause serious injury or death. However, TTI notes that simple, preventative measures can protect pedestrians, store employees, and patrons from being injured or killed when thee accidents occur. In recognition of the safety risks posed by errant vehicles and the increasingly important use of protective barriers as a way to prevent or minimize the damages from these types of accidents, the American Society for Testing and Materials International (ASTM), an international standards development organization, in conjunction with the researchers at TTI, recently approved a test standard, known as the Test Method for Low Speed Barriers for Errant Vehicles, to set parameters for bollards, barriers, and other devices most often seen protecting storefronts and high-traffic pedestrian areas to help standardize the use of protective barriers. Prior to the adoption of this standard, there was no objective way to evaluate the effectiveness of vertical pipes, decorative planters, and other devices that could serve to protect a business from damages caused by a vehicle-into-building collision. 3)Insurance incentives. There are a range of financial incentives that might induce a business to invest in safety-related capital expenditures, and insurance discounts can be one of them. However, Proposition 103, as implemented by the insurance commissioner, generally requires historical loss-based actuarial data to justify a "discount" in insurance premiums paid by an insured. To the extent that this bill seeks to encourage insurance incentives as an inducement for capital expenditures to construct safety features, it must be recognized that insurers would be required to provide an actuarial justification in a rate filing subject to the AB 764 Page 4 commissioner prior approval authority before a discount could be offered. REGISTERED SUPPORT / OPPOSITION: Support Storefront Safety Council Opposition None received Analysis Prepared by:Mark Rakich / INS. / (916) 319-2086