BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                    AB 1072


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          Date of Hearing:  May 6, 2015


                        ASSEMBLY COMMITTEE ON APPROPRIATIONS


                                 Jimmy Gomez, Chair


          AB  
          1072 (Daly) - As Amended April 28, 2015


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          Urgency:  No  State Mandated Local Program:  NoReimbursable:  No


          SUMMARY:


          This bill requires firefighters' and police officers' benefit  
          and relief associations to file an actuarial opinion with the  
          Insurance Commissioner that meets specified standards, and  
          requires the commissioner to recommend changes in the law if,  








                                                                    AB 1072


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          upon review of the filings, he or she finds the laws governing  
          these associations are inadequate to protect the interests of  
          the members.


          FISCAL EFFECT:


          One-time costs under $100,000 (Insurance Fund) to review filings  
          and develop related recommendations. 


          COMMENTS:


          1)Purpose.  This bill attempts to provide the Insurance  
            Commissioner with information to be able to assess the  
            security of benefits promised to members of firefighters' and  
            police officers' benefit and relief associations  
            (associations).  The sponsors of this bill, Peace Officers  
            Research Association of California (PORAC) and the California  
            Correctional Peace Officers Association (CCPOA), contend  
            associations may be overpromising benefits and that this  
            measure will protect members from situations where  
            associations are not able to make good on their promises.  


          2)Background. Police and firefighter benevolent associations  
            have been codified in California as associations that are  
            exempt from any insurance regulation.  These groups are formed  
            to provide aid and assistance to either injured public safety  
            employees or their dependents.  The potential problem this  
            bill addresses is that the nature of benefits provided by  
            these associations has grown to the point where they resemble  
            sophisticated insurance products, while remaining unregulated.  
             


            Lack of regulation means a lack of oversight as to whether  








                                                                    AB 1072


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            these associations can fulfill solvency requirements and meet  
            their obligations of paying promised benefits - a fundamental  
            requirement for regulated carriers.  This is a concern  
            particularly for long-term care (LTC) benefits. Proponents  
            argue the too-low prices charged for some benefits, including  
            LTC, coupled with the lack of solvency assessment, argues for  
            the transparency measures of this bill.


          Analysis Prepared by:Lisa Murawski / APPR. / (916)  
          319-2081