BILL ANALYSIS
AB 41
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Date of Hearing: January 6, 2010
ASSEMBLY COMMITTEE ON INSURANCE
Jose Solorio, Chair
AB 41 (Solorio) - As Amended: January 4, 2010
SUBJECT : Community Development Investments by Insurers
SUMMARY : Extends to January 1, 2015, the sunset date on the
requirement that insurers biennially provide to the Insurance
Commissioner (IC) information on community development
investments, and requires major California insurers to develop
and file with the IC their company's policy statement regarding
community development investments. Specifically, this bill :
1)Extends from January 1, 2011 to January 1, 2015 the sunset
date on the requirement that insurers biennially provide to
the IC information on community development investments.
2)Requires insurers writing $100 million or more annually in
premiums in California to develop and file with the IC a
policy statement that expresses the goals of the company
regarding community development investments.
3)Requires the IC to establish a link on its Internet website
that provides access to the public of the contents of each
insurer's policy statement and the data on community
development investments made by each insurer writing $100
million or more in premiums annually in California.
4)Allows insurers that are members of a holding company system
to file community development investment data through a single
filing, provided the data accurately reflects the investments
made by each of the affiliated insurers.
5)Allows insurers to report community development investment
data through a filing made by a Community Development
Financial Institution when specified conditions are met.
EXISTING LAW :
1)Requires insurance companies to provide information biennially
to the IC on all community development investments they make
in the state. This requirement will sunset on January 1,
2011.
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2)Defines a community development investment as one in which all
or a portion of the investment has the primary purpose of
community development or that it directly benefits low-income
or moderate-income people in California. Qualifying
investments include community facilities, economic development
that includes job creation, affordable housing, commercial
properties located in designated areas, and infrastructure
investments for community development.
3)Requires the IC to provide information biennially on the
Department of Insurance's Internet website on the aggregate
insurer community development investments.
FISCAL EFFECT : Negligible state costs.
COMMENTS :
1)Purpose of bill. The purpose of this bill is to encourage
insurance companies to increase the amount of community
development investments made in California in order to improve
the livability and prosperity of communities while improving
the bottom line of insurers.
2)Background. In 2007, the Assembly Insurance Committee held an
informational hearing on investments in urban and economically
disadvantaged communities. The Committee obtained data and
heard testimony from representatives of the banking, public
utilities, and insurance industries. Among the findings from
that hearing were:
Banks and public utilities make more community
development investments than insurers but banks and
utilities initially resisted making these investments as
they did not realize the benefits of these investments.
Banks now compete against other institutions in order to
make community development investments because they are
recognized as profitable.
A large number of insurance companies have no
investments that would qualify as community development
investments.
Some insurers have made significant community
development investments while others make only minor
community development investments.
1)Survey Findings. In 2008, the Department of Insurance
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released the findings from a survey of insurers that found
that only 54 of 485 insurance Companies had adopted a policy
regarding community development investments. An important
finding from that survey is that insurance companies with a
comprehensive plan and/or specific goals have significantly
increased their community development investments.
2)Clarifying Amendment: The Association of California Life and
Health Insurance Companies (ACLHIC) has expressed concern with
the provision of the bill regarding the definition of "policy
statement." The concern is that the bill could require
specific numeric goals and quantitative measures. The
following amendment (on page 5, line 31 of the bill) addresses
this concern:
The policy statement may include general goals or specific
investment goals, but it is not required to contain
specific investment goals or thresholds .
3)Prior Legislation. This bill is nearly identical to AB 1910
(Coto) of the 2007-08 Session. AB 1910 was approved by the
Legislature then subsequently vetoed by the Governor. The
Governor's veto message said: "The historic delay in passing
the 2008-09 State Budget has forced me to prioritize the bills
sent to my desk at the end of the year's legislative session.
Given the delay, I am only signing bills that are the highest
priority for California. This bill does not meet that
standard and I cannot sign it at this time." That was a
generic veto message sent in connection with a significant
number of bills in 2008.
REGISTERED SUPPORT / OPPOSITION :
Support
The Greenlining Institute
Opposition
None received.
AB 41
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Analysis Prepared by : Manny Hernandez / INS. / (916) 319-2086