BILL ANALYSIS Ó
AB 1072
Page 1
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