BILL ANALYSIS
AB 41
Page 1
ASSEMBLY THIRD READING
AB 41 (Solorio)
As Amended January 25, 2010
Majority vote
INSURANCE 7-4 APPROPRIATIONS 12-5
-----------------------------------------------------------------
|Ayes:|Solorio, Bradford, Coto, |Ayes:|De Leon, Ammiano, |
| |Feuer, Hayashi, Nava, | |Bradford, Charles |
| |Torres | |Calderon, Coto, Davis, |
| | | |Fuentes, Hall, John A. |
| | | |Perez, Skinner, Solorio, |
| | | |Torlakson |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Garrick, Anderson, |Nays:|Conway, Harkey, Miller, |
| |Hagman, Niello | |Nielsen, Audra Strickland |
| | | | |
-----------------------------------------------------------------
SUMMARY : Extends to January 1, 2015, the sunset date on the
requirement that insurers report to the Insurance Commissioner
(IC) information on their 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)Requires insurers to provide the IC with information on their
community development investments by January 1, 2014, rather
than every two years.
2)Extends from January 1, 2011 to January 1, 2015 the sunset
date on the requirement for insurance companies to report
their community development investments to the IC.
3)Requires the IC by May 31, 2014 to provide information on the
California Department of Insurance's (CDI) Internet Web site
on the aggregate insurer community development investments.
4)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.
AB 41
Page 2
5)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.
6)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.
7)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 sunsets on January 1, 2011.
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 : According to the Assembly Appropriations
Committee:
1)One-time, likely minor, fee-supported special fund costs in
2013-14 for CDI to publish insurance industry reports about
community development investments, pursuant to recent
AB 41
Page 3
amendments that delay current law insurer reporting
requirements.
2)Annual fee-supported special fund costs in the range of
$20,000 to publish policy statements by California's largest
insurers.
COMMENTS :
1)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)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:
a) 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;
b) Banks now compete against other institutions in order to
make community development investments because they are
recognized as profitable;
c) A large number of insurance companies have no
investments that would qualify as community development
investments; and,
d) Some insurers have made significant community
development investments while others make only minor
community development investments.
3)In 2008, CDI 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
AB 41
Page 4
significantly increased their community development
investments.
4)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.
Analysis Prepared by : Manny Hernandez / INS. / (916) 319-2086
FN:
0003634