BILL ANALYSIS                                                                                                                                                                                                    



                                                                  SB 708
                                                                  Page  1

          Date of Hearing:   August 29, 2001

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                              Carole Migden, Chairwoman

                   SB 708 (Speier) - As Amended:  August 20, 2001 

          Policy Committee:                               
          InsuranceVote:10-4
                        Judiciary                              7-3

          Urgency:     No                   State Mandated Local Program:  
          No     Reimbursable:              

           SUMMARY  

          This bill enacts several new requirements for the Department of  
          Insurance (DOI).  Specifically, this bill: 

          1)Creates new training and accreditation requirements for  
            insurance adjusters regarding evaluations of earthquake  
            damage.  Further requires insurers to train and accredit  
            adjusters on             or before December 31, 2004, or, if  
            using unaccredited adjusters, to submit the names of those  
            adjusters to DOI, along with the claim numbers of all claims  
            adjusted by unaccredited adjusters.

          2)Expands the DOI's earthquake mediation program to include  
            automotive claims, subject to funding in the State Budget, and  
            makes other changes to this program.

          3)Prohibits the DOI from refusing to investigate a complaint  
            because the insured is represented by an attorney in a dispute  
            with the insurer and under other specified circumstances. 

          4)Requires DOI to make public any letter or legal opinion signed  
            by the Insurance Commissioner or DOI's chief counsel that is  
            prepared in response to an inquiry from an insured and that  
            discusses the application of the Insurance Code or the IC's  
            regulations in general or in connection with specific facts. 

          5)Limits the authority of DOI to enter into settlement  
            agreements referencing the existence of  extraordinary  
            circumstances for a period of more than six months.









                                                                  SB 708
                                                                  Page  2

           FISCAL EFFECT  

          1)DOI estimates first-year costs of $115,000 in 2001-02 and  
            ongoing annual costs of  $198,000 thereafter from the  
            Insurance Fund, mostly to provide assistance to insureds who  
            are represented by counsel.

          2)Expansion of the mediation program would result in first-year  
            costs of $886,000 and ongoing costs of $1.4 million, subject  
            to a Budget Act appropriation.

           


          COMMENTS  

           Rationale  .  This bill seeks to implement several recommendations  
          of  the Senate Insurance Committee regarding complaints relating  
          to the 1994 Northridge earthquake.  The bill imposes new  
          requirements regarding the training of insurance adjusters to  
          evaluate earthquake damage; expands a successful mediation  
          program to claims on personal automotive policies (contingent  
          upon a Budget Act appropriation); bars DOI from refusing to  
          investigate complaints simply because the complaint is also the  
          subject of litigation or because the policyholder is represented  
          by counsel; and requires DOI to make public letters and legal  
          opinions interpreting the law or DOI regulations.


           Analysis Prepared by  :    Stephen Shea / APPR. / (916) 319-2081