BILL ANALYSIS                                                                                                                                                                                                    




                   Senate Appropriations Committee Fiscal Summary
                           Senator Christine Kehoe, Chair

                                           601 (Garrick)
          
          Hearing Date:  8/17/2009        Amended: 6/1/2009
          Consultant: Katie Johnson       Policy Vote: B., F., I.  11-0
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          ____
          BILL SUMMARY:  AB 601 would extend the operation date of the  
          special purpose assessment imposed by an insurer on each vehicle  
          insured by an insurance policy it issues from January 1, 2010,  
          to January 1, 2015.
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          ____
                            Fiscal Impact (in thousands)

           Major Provisions         2009-10      2010-11       2011-12     Fund
           
          Assessment Revenue     ($8,800)   ($8,900)    ($8,900)**Special*

          CDI consumer services  $6,900     $6,900      $6,900**  Special*
          expenditures                                            

          *Insurance Fund
          **Revenue would likely continue to grow slightly through FY  
          2015-2016; expenditures would continue to be $6 - 8 million  
          through FY 2015-2016
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          ____

          STAFF COMMENTS: 

          Existing law, until January 1, 2010, requires the California  
          Department of Insurance (CDI) to impose on an auto insurer a  
          $0.30 special purpose assessment for each vehicle insured under  
          an insurance policy it issues. Existing law provides that the  
          assessment be expended as follows: 1) $0.20 pays for CDI  
          consumer service functions related to automobile insurance, and  
          2) $0.10 pays for the improvement of consumer functions of CDI  
          related to automobile insurance. 

          Existing law also permits the use of $0.05 of the $0.10  
          mentioned above to inform consumers about the existence of any  
          state low-cost automobile insurance program. Currently, that  
          $0.05 is used to inform consumers about the California Low-Cost  










          Automobile Insurance Program (CLCA). To be eligible for CLCA, a  
          motorist must be 19 years of age, qualify as a good driver, have  
          a vehicle valued at $20,000 or less, and meet certain income  
          requirements.

          This bill would extend the sunset on this assessment until  
          January 1, 2015. 

          In FY 2007-2008, this assessment raised $8.8 million for the  
          department and CDI expended $6.5 million. With the passage of  
          this bill, CDI could expect annual revenues of approximately  
          $8.8 - $9 million through January 1, 2015, to cover the cost of  
          about $7 million in annual expenditures. Currently, the fund has  
          a balance of $7.9 million; it is projected to grow each year.  
          Expenditures are projected to remain roughly the same through FY  
          2015-2016.