BILL ANALYSIS
Appropriations Committee Fiscal Summary
708 (Speier)
Hearing Date: 5/21/01 Amended: 5/01/01
Consultant: Maureen Brooks Policy Vote: Insurance
5-1
Judiciary 4-2
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BILL SUMMARY:
SB 708 increases fines for unfair claims practices, expands
the earthquake mediation program to include automotive and
residential insurance claims, prohibits the Insurance
Commissioner from declining to investigate complaints
because the insured is represented by an attorney, and
makes several other changes with regard to insurers.
Fiscal Impact (in thousands)
Major Provisions 2001-02 2002-03
2003-04 Fund
DOI admin costs $886 $1.4 mill
$1.4 mill Insurance
Increased fines ------------unknown
revenue--------------- General
STAFF COMMENTS: This bill meets the criteria to be placed
on the Suspense file.
The Department of Insurance indicates the need for
seventeen additional PY's in varying levels to comply with
the mediation expansion and other provisions of this bill.
SB 708 also requires the Department of Insurance to adopt
regulations setting training standards for insurance
adjusters in the area of earthquake damage by December 31,
2004. After that date, insurers using adjusters for
earthquake claims who have not received such training will
submit those names and information about earthquake claims
they have adjusted to the Department.
The earthquake mediation program was established in 1995
for disputes between claimants and insurers arising out of
the Northridge Earthquake of 1994, and will expire on
January 1, 2005. SB 708 expands the mediation program to
apply to claims for residential real and personal property
damage, or from automobile coverage where the claims exceed
$5,000.
The bill increases the civil penalty for unfair claims
practices from $5,000 to $7,500, or, for willful conduct
the fine is increased from $10,000 to $15,000.