BILL ANALYSIS Ó
SENATE COMMITTEE ON INSURANCE
Senator Richard Roth, Chair
2015 - 2016 Regular
Bill No: AB 2161 Hearing Date: June 22,
2016
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|Author: |Quirk |
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|Version: |April 13, 2016 |
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|Urgency: |No |Fiscal: |No |
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|Consultant:|Erin Ryan |
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Subject: Parking lots: design: insurance discount
SUMMARY Allows an insurer to consider the installation of
vehicle barriers as a safety measure for purposes of providing
or offering a discount on the property owner's commercial
property insurance; and requires any such discounts to be
determined to be actuarially sound and approved by the Insurance
Commissioner (IC) prior to their use.
DIGEST
Existing law
1. Requires specified insurance rates to be approved by the IC
prior to their use under the Insurance Rate Reduction and Reform
Act (Proposition 103, as approved by the voters in 1988) (Prop.
103);
2. Specifies that no rate shall be approved or remain in effect
which is excessive, inadequate, unfairly discriminatory or
otherwise in violation of statute;
3. Provides that the insurer has the burden of proving that a
requested rate change is justified;
4. Requires a rate change application to include specified
information including, but not limited to premiums written,
premiums earned, unearned premiums, the dollar amount of claims
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paid, the number of outstanding claims, losses incurred as a
percentage of premiums earned, and expenses incurred including
loss adjustment expense, commission and brokerage expense, other
acquisition expense and general expense;
5. Establishes the California Building Standards Commission (CBSC)
within the Department of General Services, and requires any
building standards adopted or proposed by state agencies to be
submitted to, and approved by, the CBSC prior to codification
into the California Standards Code;
6. Requires the CBSC to adopt, approve, codify and publish
building standards providing the minimum standards for the
design and construction of state buildings, as specified.
This bill
1. Allows an insurer to consider the installation of vehicle
barriers as a safety measure for purposes of providing or
offering a discount on the property owner's commercial
property insurance;
2. Requires any discounts to be determined to be actuarially
sound and approved by the IC prior to their use;
3. Defines a vehicle barrier for this purpose as a device that
meets the vehicle impact protection standards as provided by
the State Fire Marshal and adopted by the CBSC and that is
installed to protect persons located within, in, or on the
property of, buildings from collisions into those buildings
by motor vehicles.
COMMENTS
1. Purpose of the bill To prevent storefront crashes by
encouraging the adoption of protective barrier standards
when considering building occupant safety options for
buildings and parking lots, and to authorize an insurer to
consider these barriers as a safety measure eligible for
discounted commercial property insurance rates.
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2. Background According to the author, vehicle-into-building
crashes have been reported to occur as many as 60 times per
day, with more than 3,600 pedestrians, store patrons, and
employees seriously injured each year, nationwide.
Sometimes called "storefront crashes," these accidents are
often caused by driver error. Most of these accidents can
be prevented with simple and inexpensive steps, including
the installation of vehicle barriers that can be taken in
either the design phase or as part of a retrofit.
According to the Texas A&M Transportation 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. TTI notes,
however, that simple, preventative measures can protect
pedestrians, store employees, and patrons from being injured
or killed when the 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, 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.
Although this bill draws attention to the safety aspects of
vehicle barriers, insurers already consider the condition
and safety features of a commercial property when writing a
commercial insurance policy. Prop. 103, however, generally
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requires historical loss-based actuarial data to justify a
discount in insurance premiums paid by an insured. The
development of standards and ability to evaluate barrier
effectiveness provided by this bill may make it easier for
insurers to assess the extent to which their risk and
exposure is reduced as a result of the installation of such
barriers, and provide an actuarial justification in a rate
filing subject to IC prior approval so a discount specific
to vehicle barriers could be offered.
3. Support The Personal Insurance Federation supports AB 2161
because it could help prevent damage and injury in
storefront crashes by encouraging adoption of protective
barrier standards and authorize an insurer to consider the
barriers as a safety measure eligible for discounted
building insurance rates.
4. Opposition None received.
5. Prior and Related Legislation AB 764 (Quirk, 2015) was
very similar to this bill, but included a requirement for
the CBSC, in collaboration with the State Architect and the
State Fire Marshall, to consider standards, at each model
code adoption review, for installation of vehicle barriers
in the design of any new building. Like this bill, it also
allowed an insurer to consider the installation of a vehicle
barrier a safety measure and provide or offer a discount on
the property insurance of a commercial property owner who
installs such a vehicle safety barrier, if actuarially sound
and approved by the IC. AB 764 was vetoed by the Governor.
His veto message stated:
"This bill would require the Building Standards Commission
to consider standards for installation of vehicle barriers
in the design of any new building.
Local governments have jurisdiction over local commercial
buildings and may impose additional building standards. I
believe it would be more prudent to leave the matter of
vehicle barrier installation to the building owners and
local authorities."
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POSITIONS
Support
Personal Insurance Federation of California
Oppose
None received
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