BILL ANALYSIS
AB 1193
Page 1
Date of Hearing: May 2, 2001
ASSEMBLY COMMITTEE ON INSURANCE
Thomas M. Calderon, Chair
AB 1193 (Steinberg) - As Amended: April 30, 2001
SUBJECT : Insurers: hate crimes: cancellation or refusal to
renew.
SUMMARY : Prohibits insurers from canceling or refusing to
renew a policy of a place of worship or nonprofit organization
solely on the basis that one or more claims has been made that
are the result of a hate crime. Specifically, this bill :
1)Prohibits insurers from canceling or refusing to renew a
policy of a church, synagogue, temple, or other place of
worship, or a nonprofit entity organized for religious,
charitable, educational, health, or welfare purposes solely on
the basis that one or more claims has been made as a result of
a hate crime committed against the person or property of the
insured during the preceding five years.
2)Provides that whether an act constitutes a hate crime is
determined by a law enforcement officer or agency.
3)Defines "hate crime" as it is defined in Section 422.6 of the
Penal Code.
4)Requires insurers to report to the Insurance Commissioner the
cancellation or non-renewal of a policy after an insured has
submitted a claim resulting from a hate crime. This bill also
requires insurers to provide the commissioner with any related
information required by the commissioner pursuant to
regulations adopted by the commissioner.
5)Provides that a violation of these provisions is an unfair
practice in the business of insurance.
6)Clarifies that insurers are not precluded from canceling or
refusing to renew a policy based on valid, lawful criteria.
7)Amends Section 790.03 of the Insurance Code to include that
canceling or refusing to renew a policy in violation of the
above provisions constitutes an unfair method of competition
and unfair and deceptive act or practice in the business of
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insurance.
EXISTING LAW :
1)Imposes limitations on insurers relative to cancellation or
non-renewal of policies protecting against certain
residential, liability, and commercial risks, including
policies held by victims of domestic violence.
2)Provides that certain actions constitute unfair methods of
competition and unfair and deceptive acts or practices in the
business of insurance, and specifies certain penalties and
powers of the commissioner relative to these actions.
3)Defines "hate crime" to mean doing any of the following:
a) By force or threat of force, willfully injure,
intimidate, interfere with, oppress, or threaten any other
person in the free exercise or enjoyment of any right or
privilege secured to him or her by the Constitution or laws
of this state or by the Constitution or laws of the United
States because of the other person's race, color, religion,
ancestry, national origin, disability, gender, or sexual
orientation, or because he or she perceives that the other
person has one or more of those characteristics. However,
the foregoing offense does not include speech alone, except
upon a showing that the speech itself threatened violence
against a specific person or group of persons and that the
defendant had the apparent ability to carry out the threat.
b) Knowingly, deface, damage, or destroy the real or
personal property of any other person for the purpose of
intimidating or interfering with the free exercise or
enjoyment of any right or privilege secured to the other
person by the Constitution of laws of this state or by the
Constitution or laws of the United States, because of the
other person's race, color, religion, ancestry, national
origin, disability, gender, or sexual orientation, or
because he or she perceives that the other person has one
or more of those characteristics. (Penal Code 422.6).
FISCAL EFFECT : Unknown
COMMENTS :
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During the early morning hours of June 19, 1999, the library and
sanctuary of Temple B'Nai Israel in Sacramento was severely
damaged in a fire started by self-proclaimed white supremacists.
Temple B'Nai Israel's insurer renewed its policy 11 days after
the attack, but on May 31, 2000, the insurer informed the temple
that its policy would not be renewed for "Underwriting Reasons."
In the wake of a hate crime and dealing with extensive damage
and the need to rebuild, the temple had to search for a new
insurer.
This bill was introduced to protect victims of hate crimes from
discrimination by insurers. The author believes that a victim
of a hate crime, who is often still trying to recover from the
crime, is punished twice when the victim's insurer cancels or
refuses to renew the policy, forcing the victim to seek a new
insurance policy, usually at a much higher rate than its
previous policy. The author has also pointed out that under
current law, victims of domestic violence are protected from
adverse insurance consequences based on their status as victims
of domestic violence.
This bill would not prevent insurance companies from raising
rates in connection with hate crimes. Overall, hate crimes were
linked to 1,329 incidents of violence and 633 property losses in
California in 1999, according to the state attorney general's
office.
The Association of California Insurance Companies (ACIC) opposes
this bill because it believes that this bill "react[s] to that
rare incident" where a policy is non-renewed subsequent to a
hate crime by imposing a requirement on insurers that is
detrimental to future policyholders. Specifically, ACIC
contends that this bill will prevent insurers from divesting
themselves of risks, thereby increasing the cost of insurance
and discouraging insurers from undertaking the risk in the first
place. ACIC also asserts that any increase in the severity of
claims will increase premiums across-the-board for all
policyholders, not just those policyholders protected by this
bill. Finally, ACIC fears that this bill creates a dangerous
precedent because it elevates hate crimes above any other crime.
However, ACIC would be neutral on this bill if it were amended
to (1) allow an insurer to cancel or non-renew a policy if there
have been three or more hate crime related claims made by the
insured in a five-year period; (2) allow an insurer to cancel or
AB 1193
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non-renew a policy if the insured does not file a police report
immediately following the commission of the alleged hate crime;
and (3) allow the an insurer's claim adjusters to decide whether
a loss is the result of a hate crime.
Nationwide Insurance Company is also opposed to this bill.
Nationwide Insurance Company feels that this bill is an
unnecessarily broad response to the circumstances which gave
rise to this measure, and that this bill will make it more
difficult and expensive to obtain property insurance in the
future. Further, Nationwide Insurance Company believes that
this bill's provision relating to the reporting requirement and
the Insurance Commissioner's authority to develop regulations
with respect to the cancellation or nonrenewal of policies is
unnecessary and could have unanticipated and far-reaching
consequences. To address its concerns, Nationwide Insurance
Company suggests that this bill be amended to limit its
application to property insurance covering churches, synagogues,
temples, or other places of worship; limit an insurer from
non-renewing or canceling a policy for a period of three years
after a loss resulting from a hate crime; and delete the
provisions requiring a report to the commissioner and the
adoption of regulations to implement this bill.
The Alliance of American Insurers has expressed concern
regarding this bill. Specifically, members of the Alliance of
American Insurers are concerned that they may not know a "hate
crime" has occurred prior to nonrenewing or canceling a policy.
The members also believe that this bill imposes upon insurers
the burden of proving a hate crime has not occurred if the
policyholder alleges otherwise. Finally, the members worry that,
after a loss by a hate crime, policyholders will not take steps
required under the policy to protect the remaining property.
REGISTERED SUPPORT / OPPOSITION :
Support
California Alliance for Pride and Equality
California Labor Federation, AFL-CIO
Personal Insurance Federation
State of California Department of Insurance
Opposition
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Association of California Insurance Companies
Nationwide Insurance Company
Concern
Alliance of American Insurers
Analysis Prepared by : M. Christine Iway / INS. / (916)
319-2086