BILL ANALYSIS
SENATE COMMITTEE ON INSURANCE
Senator Jackie Speier, Chair
AB 1193 (Steinberg) Hearing Date: June 20,
As Amended: June 13, 2001
Fiscal: Yes
Urgency: No
VOTES:Asm. Insurance (5/2/01): 15-0
Asm. Appropriations (5/23/01): 21-0
Asm. Floor (5/29/01): 71-0
SUMMARY
The bill would prohibit an insurer from canceling or refusing to
renew a policy held by a religious or educational organization
or other nonprofit, as defined by federal tax rules, based
solely on the fact that the policyholder has filed more than one
claim in five years for damage resulting from a hate crime.
DIGEST
Existing law
1. Imposes limitations on insurers regarding cancellation or
non-renewal of policies offering protection against certain
residential, liability and commercial risks, including
policies held by domestic violence victims.
2. Provides for penalties for unfair or deceptive practices in
the business of insurance
This bill
1. Would prohibit an insurer from canceling or refusing to
renew a policy held by a specified nonprofit organization
based solely on the fact that the policyholder has filed
more than one claim in five years for damage resulting from
a hate crime, and would declare that such action constitutes
an unfair method of competition and an unfair and deceptive
act or practice in the business of insurance.
AB 1193, Page 2
2. Would only apply to nonprofit organizations that meet
Internal Revenue Service definitions that allow an
individual to claim a charitable deduction made to a
religious or educational organization or to a nonprofit that
receives a substantial portion of its funding from a
government unit, or the general public, and that is
organized for a religious, charitable or educational
purpose.
3. Would list, but not limit, those crimes that may be
determined by law enforcement to be hate crimes.
4. Would require insurers to report to the Insurance
Commissioner any cancellation or non-renewal of a policy
held by a specified nonprofit organization when the action
is the result of a claim submitted due to damage caused by a
hate crime.
5. Would clarify that this Act does not prevent an insurer from
canceling or refusing to renew a policy based on valid,
lawful criteria.
COMMENTS
1. Purpose of the bill . The author points to a June 1999 arson
attack at Temple B'Nai Israel, Sacramento, that gutted a
library, Temple offices and a sanctuary. Two other area
synagogues were also struck that night by the arsonists who
were eventually arrested and charged with murdering a gay
couple in Redding. The FBI later determined that B'Nai
Israel was the victim of a hate crime. B'Nai Israel's
renewed its insurance policy 11 days after the attack. But
in May 2000, shortly prior to the annual renewal date, the
carrier informed Temple officials that it would not renew
the policy for "underwriting reasons." The insurer broke the
arson attack into multiple claims and, as such, premiums
were increased to reflect multiple claims that led to
underwriting difficulties. Several carriers contacted by
Temple officials declined to offer coverage based on the
claim history, according to the author. The author also
AB 1193, Page 3
states that in 1999, hate crimes were linked to 1,329
incidents of violence and 633 property losses in California.
2. Support . The Personal Insurance Federation of California
(PIFC) supports the bill, noting that it is not aware of any
insurer that currently makes it a practice to violate the
intent of this bill. While PIFC expresses concern about
government restrictions on the underwriting judgment, it
considers the firebomb attack on B'nai Israel "one of the
most heinous acts" in Sacramento history, and, therefore, it
views this bill as part of the community healing process.
POSITIONS
Support
Personal Insurance Federation of California
Department of Insurance (via telephone)
Consumer Attorneys of California
Oppose None Reported to the Committee
Consultant: Richard Steffen