BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 601
                                                                  Page  1

          Date of Hearing:   May 6, 2009

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                Kevin De Leon, Chair

                AB 601 (Garrick) - As Introduced:   February 25, 2009

          Policy Committee:                              Insurance  
          Vote:9-0

          Urgency:     No                   State Mandated Local Program:  
          No     Reimbursable:              

           SUMMARY  

          This bill modifies a current law special assessment on car  
          insurance policies. Specifically, this bill:

          1)Extends the sunset of a California Department of Insurance  
            (CDI) annual fee imposed on each car insurance policy sold  
            statewide from July 1, 2010 to January 1, 2015.

          2)Lowers that fee from 30 cents to 20 cents. 

          3)Modifies the ratios of the allocations of the special fund  
            supported by assessments (special fund).

          4)Expresses legislative intent to spend down the balance in the  
            special fund.  
           
          FISCAL EFFECT  

          1)Annual increased special fund revenues of $7.2 million to  
            extend the sunset of the special assessment until 2015. 

          2)Annual reduced special fund revenues of $2.8 million paid into  
            the special fund due to the reduction of the fee from 30 cents  
            to 20 cents per policy.  

          3)Annual reductions in the year-over special fund balance of  
            $1.4 million. 

           COMMENTS  

           1)Rationale  . This bill is sponsored by CDI to extend the sunset  
            on a current law assessment paid on all car insurance policies  
            sold. This assessment was established by SB 940 (Speier),  






                                                                  AB 601
                                                                  Page  2

            Chapter 884, Statutes of 1999. The funds collected support a  
            variety of CDI customer services functions, including consumer  
            protection and education, consumer complaint response on  
            claims practices, investigation of suspected statutory  
            violations, and administrative actions related to insurer  
            misconduct. 

           2)Related Legislation  . AB 1050 (Wright), Chapter 885, Statutes  
            of 1999 created a 50 cent annual assessment on car insurance  
            policies. These funds support car insurance fraud  
            investigation by CDI, local law enforcement, and the  
            California Highway Patrol. 

           Analysis Prepared by  :    Mary Ader / APPR. / (916) 319-2081