BILL ANALYSIS
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THIRD READING
Bill No: AB 41
Author: Solorio (D)
Amended: 6/22/10 in Senate
Vote: 21
SENATE BANKING, FINANCE, AND INS. COMMITTEE : 7-2, 6/16/10
AYES: Calderon, Florez, Kehoe, Liu, Lowenthal, Padilla,
Price
NOES: Cogdill, Runner
NO VOTE RECORDED: Correa, Cox
SENATE APPROPRIATIONS COMMITTEE : 6-2, 7/15/10
AYES: Kehoe, Corbett, Leno, Price, Wolk, Yee
NOES: Emmerson, Walters
NO VOTE RECORDED: Alquist, Wyland, Vacancy
ASSEMBLY FLOOR : 44-28, 1/27/10 - See last page for vote
SUBJECT : Insurance: community development investments
SOURCE : Author
DIGEST : This bill extends the sunset on the law
requiring reporting of community development investments
and community development infrastructure investments by
insurers, revises methods of compliance with the reporting
requirement, and imposes modified duties on large insurers.
ANALYSIS :
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Existing law
1. Defines a community development financial institution
for purposes of the California Organized Investment
Network (COIN) law.
2. Defines 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, and commercial properties
located in designated areas, and infrastructure
investments for community development.
3. Requires California admitted insurers to provide
information biennially to the Insurance Commissioner on
all community development investments and community
development infrastructure investments they make in the
state. This requirement will sunset on January 1, 2011.
4. Requires the Insurance Commissioner to provide on the
Department of Insurance (DOI) Web site on a biennial
basis information on insurer investments in the
aggregate and provides that insurers making investments
that are innovative, responsive to community or having
other notable hallmarks shall be individually
identified. The DOI is also required to provide
information on the Department's Web site biennially
regarding the aggregate amount of California public debt
purchased by insurers as reported in the NAIC annual
statement filings and other aggregated investment data
reported to the NAIC, these requirements sunset on
January 1, 2011.
This bill extends until January 1, 2015, the sunset date on
the requirement that insurers report to the Insurance
Commissioner information on their community development
investments and community development infrastructure
investments, and requires major California insurers to
develop and file with the Insurance Commissioner a policy
statement regarding community development investments and
community development infrastructure investments.
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Specifically, this bill:
1. State legislative findings and declarations regarding
the California Organized Investment Network and the
desirability of encouraging additional insurer
investments in community development investments in
traditionally underserved communities.
2. Requires insurers to provide the Insurance Commissioner
with information on their community development
investments and community development infrastructure
investments by January 1, 2014, rather than every two
years.
3. Clarifies that an insurer which is a member of an
insurance holding company system can comply through a
single filing on behalf of the entire group of
affiliated companies, provided the data so filed
accurately reflects the investments made by each of the
affiliates, and accurately attributes, by NAIC number or
other means, which of the investments were made by each
affiliated company.
4. Clarifies that a community development financial
institution may make the required filing on an insurer's
behalf if all the following criteria are met:
A. The insurer has no less than a 10 percent
ownership interest in a COIN-certified community
development financial institution.
B. The insurer makes community development
investments in and through the community
development financial institution.
C. The community development financial institution
accurately files the information required by
paragraph (1) with the commissioner on behalf of
the insurer and accurately attributes, by NAIC
number or other means required by the commissioner,
which investments, including the dollar amounts of
the investments, were made by each insurer on whose
behalf the community development financial
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institution is reporting.
5. 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
Insurance Commissioner.
6. Requires the Insurance Commissioner by May 31, 2014 to
provide information on the DOI Internet Web site on the
aggregate insurer community development investments and
community development infrastructure investments.
7. Requires insurers writing $100 million or more annually
in premiums in California to develop and file with the
Insurance Commissioner no later than July 1, 2011 a
policy statement that expresses the goals of the company
regarding community development investments and
community development infrastructure investments during
the current and the following calendar year.
8. Provides that such large insurers are to review the
policy statement on community development investments
and community development infrastructure investments
every two years and, if the insurer revises or changes
its policy statement, submit the new policy statement to
the commissioner no later than July 1 of each
odd-numbered year and would specify these filings shall
be public information.
9. Provides that for these purposes, "policy statement"
means a statement of principle intended to influence a
decision or action and provides such statement may
include general goals or specific investment goals, but
is not required to do so.
10.Requires the Insurance Commissioner 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 and community development infrastructure
investments made by each insurer writing $100 million or
more in premiums annually in California.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
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Local: No
According to the Senate Appropriations Committee analysis:
Fiscal Impact (in thousands)
Major Provisions 2010-11 2011-12
2012-13 Fund
CDI oversight minor and
absorbable Special*
*Insurance Fund
SUPPORT : (Verified 8/2/10)
California Department of Insurance
California Reinvestment Coalition
Consumers Union
Greenlining Institute
ARGUMENTS IN SUPPORT : According to the author's office,
in 2007, the Assembly Insurance Committee held a hearing on
investments in urban and economically disadvantaged
communities. 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.
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 currently 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,
and (b) in 2008, the DOI 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. According to the Author, 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.
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ASSEMBLY FLOOR :
AYES: Ammiano, Arambula, Beall, Block, Blumenfield,
Bradford, Brownley, Buchanan, Caballero, Charles
Calderon, Chesbro, Coto, Davis, De La Torre, Eng, Evans,
Feuer, Fong, Fuentes, Furutani, Galgiani, Hayashi,
Hernandez, Hill, Huber, Huffman, Jones, Lieu, Bonnie
Lowenthal, Ma, Mendoza, Monning, Nava, John A. Perez,
Portantino, Ruskin, Salas, Saldana, Skinner, Solorio,
Swanson, Torres, Torrico, Yamada
NOES: Adams, Anderson, Bill Berryhill, Tom Berryhill,
Blakeslee, Conway, Cook, DeVore, Emmerson, Fletcher,
Fuller, Gaines, Garrick, Gilmore, Hagman, Harkey,
Jeffries, Knight, Logue, Miller, Nestande, Niello,
Nielsen, Silva, Smyth, Audra Strickland, Tran, Villines
NO VOTE RECORDED: Carter, De Leon, Hall, V. Manuel Perez,
Torlakson, Bass
JJA:do 8/3/10 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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