BILL ANALYSIS
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THIRD READING
Bill No: AB 601
Author: Garrick (R)
Amended: 06/01/09 in Assembly
Vote: 21
SENATE BANKING, FINANCE, AND INS. COMMITTEE : 11-0, 7/9/09
AYES: Calderon, Cogdill, Correa, Cox, Florez, Kehoe, Liu,
Lowenthal, Padilla, Price, Runner
NO VOTE RECORDED: Harman
SENATE APPROPRIATIONS COMMITTEE : 12-0, 8/17/09
AYES: Kehoe, Cox, Corbett, Denham, Hancock, Leno, Oropeza,
Price, Runner, Walters, Wolk, Yee
NO VOTE RECORDED: Wyland
ASSEMBLY FLOOR : 75-0, 6/2/09 - See last page for vote
SUBJECT : Motor vehicle insurance
SOURCE : Department of Insurance
DIGEST : This bill extends the sunset on a 30 cent per
vehicle insured in California from January 1, 2010 to
January 1, 2015 to support a variety of consumer protection
functions of the Department of Insurance and to support
public outreach concerning California's low-cost automobile
insurance program.
ANALYSIS :
CONTINUED
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Existing law:
1. Requires insurers to pay the Department of Insurance
(DOI) 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 DOI 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 DOI 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 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 DOI and the Department of Motor
Vehicles (DMV) may propose to the Budget Committees of
the Legislature that 5 cents of the 10 cents assessment
described in item B), above be used to inform consumers
about the existence of California's low-cost automobile
insurance program. This expenditure requires budget
approval.
D. Sunsets the authority for the 30 cents per insured
vehicle special assessment on January 1, 2010.
2. Authorizes insurers to pass the assessment to their
policyholders as a surcharge.
This bill:
1. Extends the sunset on the annual special purpose
assessment on automobile insurers from January 1, 2010,
until January 1, 2015.
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2. Makes numerous minor and non-substantive changes
reformatting the statute.
Prior Legislation
SB 940 (Speier), Chapter 884, Statutes of 1999 , established
the 30 cents assessment through January 1, 2007, and
provided for the DOI to use the funds to support its
consumer activities relating to automobile insurance.
Specifically, 20 cents for consumer services activities
(investigation and enforcement) and 10 cents to improve its
consumer functions activities. Under SB 940, the highest
priority for DOI to use the funds was to eliminate the
then-existing backlog of the auto insurance-related cases
in the Investigation Division. The funds were also to be
used to improve program functions for responding to
consumer complaints and providing auto insurance rate
information.
AB 1183 (Vargas), Chapter 717, Statutes of 2005 , extended
the sunset date to January 1, 2010, and modified the
permissible uses for the 10 cents portion of the
assessment. Specifically, the DOI may expend up to five
cents for informing consumers about the low cost auto
insurance program. And, from January 1, 2006 to January 1,
2009, the DOI is to use five cents also toward consumer
services activities. (If the low cost auto insurance
program is not fully appropriated at five cents, the
difference is to be used to improve the DOI's consumer
functions.)
AB 2143 (de Leon), Chapter 445, Statutes of 2008 , extended
the sunset date on the special assessment on insurers of 50
cents for each vehicle insured under an insurance policy to
fund the Department of Insurance's Fraud Division and
Organized Automobile Fraud Activity Interdiction Program.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee:
Fiscal Impact (in thousands)
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Major Provisions 2009-10 2010-11
2011-12 Fund
Assessment Revenue ($8,800) ($8,900)
($8,900)**Special*
DOI consumer services $6,900 $6,900$6,900Special*
*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
SUPPORT : (Verified 8/19/09)
Department of Insurance (source)
ARGUMENTS IN SUPPORT : The Department of Insurance, which
is the sponsor of this bill, states it supports
continuation of this surcharge because it "uses the funds
to carry out vital auto insurance-related consumer
protection and education activities including responding to
consumer complaints, serving as a mediator between
consumers and insurers to resolve claim issues, and
investigating suspected violations of law. The funds also
support consumer education and outreach activities
including the California Low Cost Automobile Insurance
Program."
The DOI also states the assessment "makes it possible for
DOI to maintain the staff needed for investigations to be
carried out in a timely manner. Prompt investigations are
integral to locating witnesses while their ability to
recall events and produce vital documents is optimal, as
well as minimizing damages to victims and the number of
victims. A prompt investigation is also pivotal to DOI's
ability to seek prosecution or disciplinary actions."
ASSEMBLY FLOOR :
AYES: Adams, Ammiano, Anderson, Arambula, Beall, Tom
Berryhill, Blakeslee, Blumenfield, Brownley, Buchanan,
Caballero, Charles Calderon, Carter, Chesbro, Conway,
Cook, Coto, Davis, De La Torre, De Leon, DeVore, Duvall,
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Emmerson, Eng, Evans, Feuer, Fletcher, Fong, Fuentes,
Fuller, Furutani, Gaines, Galgiani, Garrick, Gilmore,
Hagman, Harkey, Hayashi, Hernandez, Hill, Huber, Huffman,
Jeffries, Jones, Krekorian, Lieu, Logue, Bonnie
Lowenthal, Ma, Mendoza, Miller, Monning, Nava, Nestande,
Niello, Nielsen, John A. Perez, V. Manuel Perez,
Portantino, Price, Ruskin, Salas, Saldana, Silva,
Skinner, Smyth, Solorio, Audra Strickland, Swanson,
Torlakson, Torres, Torrico, Tran, Villines, Yamada
NO VOTE RECORDED: Bill Berryhill, Block, Hall, Knight,
Bass
JJA:do 8/19/09 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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