BILL NUMBER: AB 866 CHAPTERED
BILL TEXT
CHAPTER 480
FILED WITH SECRETARY OF STATE OCTOBER 11, 2009
APPROVED BY GOVERNOR OCTOBER 11, 2009
PASSED THE SENATE AUGUST 27, 2009
PASSED THE ASSEMBLY MAY 28, 2009
AMENDED IN ASSEMBLY MAY 12, 2009
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, 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, by May 1, to the
Legislature and the Insurance Commissioner on the authority's
conditions and affairs, as specified.
This bill would require the California Earthquake Authority to
make the annual report by August 1 and would require that the report
be posted on the authority's Internet Web site.
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 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. The report
shall be posted on the authority's official Internet Web site.
(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.
(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, 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.