BILL ANALYSIS
AB 601
Page 1
ASSEMBLY THIRD READING
AB 601 (Garrick)
As Amended June 1, 2009
Majority vote
INSURANCE 9-0 APPROPRIATIONS 17-0
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|Ayes:|Coto, Garrick, Blakeslee, |Ayes:|De Leon, Nielsen, |
| |Carter, Feuer, Hayashi, | |Ammiano, |
| |Nava, Niello, Torres | |Charles Calderon, Davis, |
| | | |Duvall, Fuentes, Hall, |
| | | |Harkey, Miller, |
| | | |John A. Perez, Price, |
| | | |Skinner, Solorio, Audra |
| | | |Strickland, Torlakson, |
| | | |Krekorian |
|-----+--------------------------+-----+--------------------------|
| | | | |
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SUMMARY : Extends the sunset date from January 1, 2010 to
January 1, 2015 on a special assessment on automobile insurers
that pays for consumer services provided by the California
Department of Insurance (CDI).
EXISTING LAW :
1)Requires insurers to pay the CDI an annual special purpose
assessment of 30 cents for each vehicle insured in this state
to be expended as follows:
a) 20 cents of the assessment shall be used to pay for
consumer service functions of the California Department of
Insurance (CDI) that are related to automobile insurance.
These include services to consumers through the rating and
underwriting services bureau, the claims services bureau,
the investigations bureau, and legal services in support of
those bureaus.
b) 10 cents of the assessment shall be used to improve the
consumer functions of CDI related to automobile insurance,
including the rating and underwriting services bureau, the
claims services bureau, the investigations bureau, legal
services to support these bureaus, and to respond to
AB 601
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consumer complaints and information requests through the
department's toll-free telephone number, and to offer
information about automobile insurance rates to the public.
c) Provides that the CDI and the Department of Motor
Vehicles may propose to the budget committees of the
Legislature that 5 cents of the 10 cents assessment (noted
above) be used to inform consumers about the existence of
California's low-cost automobile insurance program. This
expenditure requires budget approval.
2)Sunsets the authority for the 30 cents per insured vehicle
special assessment on January 1, 2010.
FISCAL EFFECT : Annual increased special fund revenues of $7.2
million to extend the sunset of the special assessment until
2015. These funds are used to support a variety of consumer
protection activities.
COMMENTS :
1)Current law requires each insurer doing business in California
to pay an annual special purpose assessment of 30 cents for
each vehicle it insures in the state. The statute provides
that insurers may pass along the assessment to policyholders
as a surcharge.
2)The funds collected from this assessment enable the California
Department of Insurance (CDI) to carry out auto
insurance-related consumer protection and education activities
including responding to consumer complaints of alleged unfair
claims practices, investigating suspected violations of law,
pursuing administrative actions against licensees for
misconduct, developing and disseminating informational
materials and conducting outreach efforts for the California
Low Cost Automobile Insurance Program. The assessment is
scheduled to sunset on January 1, 2010.
3)When the assessment was originally established in 1999 (SB 940
(Speier), Chapter 884, Statutes of 1999), the highest priority
was for CDI to use the funds to eliminate an existing backlog
of auto insurance-related cases in the Investigations
Division. The funds were also to be used to improve program
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functions for responding to consumer complaints and providing
auto insurance rate information. In 2005, AB 1183 (Vargas),
Chapter 717, Statutes of 2005, made it possible for the CDI to
use 5 cents toward informing consumers about the state's
low-cost auto insurance program.
4)According to the author and the sponsor, the CDI, this bill is
needed to extend the life of a program that provides vital
auto insurance-related consumer protection and education
activities.
Analysis Prepared by : Manny Hernandez / INS. / (916) 319-2086
FN: 0001238