BILL ANALYSIS                                                                                                                                                                                                    




                    Appropriations Committee Fiscal Summary
          
                                           708 (Speier)
          
          Hearing Date:  5/31/01          Amended: 5/01/01
                                                                       
                   & LCR 14507                
          Consultant:  Maureen Brooks         Policy Vote: Insurance  
          5-1
                                                                       
                                        Judiciary 4-2  
          ____________________________________________________________ 
          ___
          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
                                                 ---potentially offset by  
          insurer fees----           General

          Increased fines                      ------------unknown  
          revenue---------------     General
          
          STAFF COMMENTS:  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.   
          Proposed author's amendments provide that the mediation  
          program will only begin if funded through the Budget Act  
          and those costs will be repaid by fees paid by the insurer.
          
          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  
          $7,500.

          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.