BILL NUMBER: AB 866	AMENDED
	BILL TEXT

	AMENDED IN ASSEMBLY  MAY 4, 2009
	AMENDED IN ASSEMBLY  APRIL 23, 2009

INTRODUCED BY   Assembly Member Niello

                        FEBRUARY 26, 2009

   An act to amend Section 10089.13 of the Insurance Code, relating
to the California Earthquake Authority.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 866, as amended, Niello. California Earthquake Authority.
   Existing law requires the California Earthquake Authority to issue
policies of basic residential earthquake insurance to any owner of a
qualifying residential property, as specified. The California
Earthquake Authority is required to annually report,  as
specified   by May 1  , to the Legislature and the
Insurance Commissioner on the authority's conditions and affairs 
, as specified  . In verification of the matters set forth in
the annual report, the Department of Finance is required to approve
independent qualified auditors selected by the Insurance Commissioner
to examine the books and accounts relating to all matters concerning
the financial and program operations of the California Earthquake
Authority. The Insurance Commissioner is required to file a certified
report of that examination with specified members of the Legislature
within 10 days of its receipt. Existing law requires that the report
of the examination be made available to the public.
   This bill would require  the California Earthquake Authority
to make the annual report by August 1 and would require  that
the certified report of the examination be posted on the official
Internet Web site of the California Earthquake Authority.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 10089.13 of the Insurance Code is amended to
read:
   10089.13.  (a) One year following its commencement of operations,
and annually thereafter by each  May   August
 1, the authority shall report to the Legislature and the
commissioner on program operations in a format prescribed by the
commissioner. The report shall include, but shall not be limited to,
the financial condition of the authority, a description of all rates
and rating plans approved for use in the authority, an evaluation of
the functioning of the authority in light of its stated purpose of
making residential property insurance and residential earthquake
insurance more available. The report shall also include an analysis
of the growth by market share of residential property insurance of
participating insurers compared to nonparticipating insurers, any
adverse consequences on the various insurance distribution systems
resulting from the operation of the authority or alterations in the
growth of the residential property insurance market share between
participating insurers and nonparticipating insurers, any adverse
consequences of the various insurance distribution systems resulting
from the operation of the authority or alterations in the growth of
homeowners' insurance market share between participating insurers and
nonparticipating insurers, and an analysis of any recommended
program changes to permit the authority to better fulfill its stated
purpose. In making this determination the board shall be mindful of
the competitive nature of the market and how any decision can
negatively impact insurers who are currently competing in the
marketplace.
   (b) The annual report shall include full information describing
the following matters relating to the authority's condition and
affairs:
   (1) The property or assets held by the authority, including the
amount of cash on hand and deposited in banks to its credit, the
amount of cash in the hands of servicing insurance companies, the
amount of any stocks or bonds owned by the authority, specifying the
amount, number of shares, and the par and market value of each kind
of stock or bond, and all other assets, specifying each.
   (2) The liabilities of the authority, including the amount of
losses due and unpaid, the amount of claims for losses resisted by
the authority and the amount of losses in the process of adjustment
or in suspense, including all reported and supposed losses, the
amount of revenue bonds or other debt financing issues under Section
10089.29 or Section 10089.50, and all other liabilities.
   (3) Income of the authority during the preceding year, specifying
premiums received, interest money received, and income from all other
sources, specifying the source.
   (4) Expenditures of the authority during the preceding year,
specifying the amount of losses paid, the amount of expenses paid by
category, and the amount of all other payments and expenditures.
   (5) The costs and scope of all reinsurance and capital market
contracts entered into by the authority under Section 10089.10.
   (c) As part of the annual report, the authority shall make a
separate, summary report on the financial capacity of the authority
to pay claims made against the authority. Copies of this report shall
also be made available to the public. The report shall include, but
shall not be limited to, the following information, valued as of 30
days prior to the date of the report:
   (1) The available capital of the authority.
   (2) The liabilities of the authority.
   (3) The amount of all assessments previously made and the amount
of assessments that may be made in the future under Section 10089.23.

   (4) The amount of the reinsurance under contract and actually
available to the authority.
   (5) The amount of all revenue bonds or other debt financing
previously issued or contracted for and the amount of all revenue
bonds or other debt financing that may be issued or contracted for in
the future under Section 10089.29.
   (6) The amount of surcharges previously assessed against
policyholders and the amount of surcharges that are currently
outstanding against policyholders under Section 10089.29.
   (7) The amount of capital committed and actually available by
contract from private capital markets that is available to pay claims
against the authority.
   (8) The amount of all assessments previously made and the amount
of all assessments that may be made in the future under Section
10089.30.
   (9) The amount of all assessments previously made and the amount
of all assessments that may be made in the future under Section
10089.31.
   (d) In verification of the matters set forth in the annual report
provided for in subdivision (a), the Department of Finance shall
approve independent qualified auditors selected by the commissioner
to examine the books and accounts relating to all matters concerning
the financial and program operations of the authority. The
commissioner shall file a certified report of the examination with
the President pro Tempore of the Senate, the Speaker of the Assembly,
the Chairpersons of the Senate and Assembly Insurance Committees,
and the Chairperson of the Senate Committee on Judiciary within 10
days of its receipt. Copies of this report shall also be made
available to the public. The expense of examining the books and
accounts of the authority shall be paid out of the operating funds of
the authority. The report shall be posted on the official Internet
Web site of the California Earthquake Authority.
   (e) The authority shall, within 120 days following a seismic event
that results in the payment of claims by the authority, and within
one year of a major seismic event that results in the payment of
claims by the authority, submit to the President pro Tempore of the
Senate, the Speaker of the Assembly, the Chairpersons of the Senate
and Assembly Insurance Committees, and the Chairperson of the Senate
Committee on Judiciary, and the commissioner a concise written report
of program operations related to that seismic event. The reports
shall include, but not be limited to, progress on payment of claims,
claims payments made and anticipated, and the functioning of the
authority in response to the seismic event. Copies of this report
shall also be made available to the public.