BILL ANALYSIS Ó
SENATE COMMITTEE ON INSURANCE
Senator Richard Roth, Chair
2015 - 2016 Regular
Bill No: AB 2885 Hearing Date: June 22,
2016
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|Author: |Committee on Insurance |
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|Version: |February 25, 2016 Introduced |
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|Urgency: |No |Fiscal: |No |
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|Consultant:|Hugh Slayden |
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Subject: Insurance: low-cost automobile insurance program
SUMMARY Eliminates obsolete language from the statutes governing the
Low-Cost Automobile Insurance Program (LCAP).
DIGEST
Existing law
1. Requires personal automobile owners and drivers to carry
minimum levels of auto liability insurance, with some
exceptions, of at least $15,000 for bodily injury or death for
each person, up to $30,000, and $5,000 for property damage for
each accident ("financial responsibility requirements").
2. Establishes the California Automobile Assigned Risk Plan
(CAARP) to provide coverage to consumers who are otherwise
unable to purchase insurance.
3. Establishes the LCAP within CAARP to provide low-cost auto
liability policies to qualified individuals and families.
4. Establishes the 15-member CAARP Advisory Committee to assist
the Insurance Commissioner (IC) in implementing CAARP.
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5. Requires the CAARP Advisory Committee, by January 1, 2016, to
report to the IC on specified proposals to expand consumer
access to the LCAP.
6. Limits the jurisdiction of the court to consider the
constitutionality of the pilot program to actions filed no later
than February 1, 2000.
This bill
1. Repeals statutes establishing the LCAP as a pilot program
and replaces it with language establishing the LCAP as a
statewide program.
2. Repeals the report due from the advisory committee by
January 1, 2016.
3. Repeals the statute specifying that constitutional
challenges must be filed by February 1, 2000.
COMMENTS
1. Purpose of the bill According to the author, the LCAP was
established to address the problem of uninsured drivers by
making cheaper insurance policies available to low-income
drivers with good driving records. This bill cleans up the
Insurance Code provisions related to the LCAP program. As
the program has evolved many of the provisions enacted to
allow its startup have become obsolete and should be
updated.
2. Background The California Automobile Assigned Risk Plan
(CAARP) was originally created in 1947 to provide insurance
to those who could not purchase coverage due to a poor
driving record. In 2000, two LCAP pilot programs were
established within CAARP in Los Angeles and San Francisco
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Counties. This program provides insurance "as a last
resort" offering inexpensive coverage but with relatively
low levels of coverage. These slimmed-down policies are
deemed compliant with California financial responsibility
requirements and provide liability coverage of $10,000 for
bodily injury or death for each person, up to $20,000, and
$3,000. Since its inception, the program has been expanded
to all counties. According to LCAPS's 2016 Report to the
Legislature & Consumer Education and Outreach Plan, 15,404
LCAP policies were in force at the end of 2015.
LCAP is overseen by the IC with the assistance of a
15-member advisory board. The Legislature enacted SB 1273
(Lara) in 2013 to expand access to the program and
eliminated a statutory eligibility requirement that
applicants have three years of driving experience. In an
effort to consider other ways to expand access, that bill
also directed the advisory committee to consider and submit
proposals to the IC that would eliminate other barriers.
The advisory board's activities are described in LCAP's
2106.
3. Prior and Related Legislation
Chapter 487, Statutes of 2014 (SB 1273, Lara) extended LCAP
until January 1, 2020; expanded eligibility criteria to
include drivers with less than three years of continuous
driving experience; and makes other changes designed to
increase participation.
Chapter 321, Statutes of 2013 (AB 1391, Assembly Insurance
Committee) authorized the IC, under certain conditions, to
approve changes to the plan of operations without having to
comply with the full rulemaking provisions of the
Administrative Procedure Act.
Chapter 435, Statutes of 2005 (SB 20, Escutia) extended LCAP
until January 1, 2011, and also expanded it to specified
counties with additional expansion of the program subject to
the discretion of the IC (the program was extended to all
counties after this bill).
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Chapter 742, Statutes of 2002 (SB 1427, Escutia) extended
LCAP to 2007, reduced the premium, and broadened
eligibility.
Chapter 807, Statutes of 1999 (SB 527, Speier) established a
pilot LCAP in San Francisco County until January 1, 2004.
Chapter 794, Statutes of 1999 (SB 171, Escutia) established
a pilot LCAP in Los Angeles County until January 1, 2004.
POSITIONS
Support
None received
Oppose
None received
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