BILL ANALYSIS
AB 866
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Date of Hearing: May 6, 2009
ASSEMBLY COMMITTEE ON INSURANCE
Joe Coto, Chair
AB 866 (Niello) - As Amended: April 23, 2009
And as Proposed to be Amended
SUBJECT : California Earthquake Authority (CEA)
SUMMARY : Requires an audit report on the financial operations
of the California Earthquake Authority (CEA) to be posted on its
website. Specifically, this bill :
1)Requires the independent audit report certified by the
Insurance Commissioner (IC) which examines the books and
accounts relating to the CEA financial and program operations,
to be posted on the official Internet website of the CEA.
2)Changes the date in which the CEA is required to submit its
annual report on program operations to the Legislature and the
IC, from May 1 to August 1 of each year.
EXISTING LAW :
1)Requires the CEA to annually report to the Legislature and the
IC on the CEA program operations, including the financial
condition of the CEA, a description of rates and rating plans
approved, an evaluation of CEA efforts toward making
residential property insurance and residential earthquake
insurance more available, and other specified requirements.
This report is due by May 1 of each year.
2)Specifies that in verifying the matters contained in the
annual report, the Department of Finance shall approve
independent qualified auditors selected by the IC to examine
the books and accounts regarding all matters of the financial
and program operations of the CEA.
3)Requires the IC to 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 be made available to the public.
AB 866
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FISCAL EFFECT : Minor cost to the CEA to post the audit report
on its website.
COMMENTS :
1)Purpose. This bill will require the independent audit report
of the CEA to be posted on its website, and extends by three
months the deadline for the CEA to submit its annual report to
the Legislature and the IC.
2)Date change on annual report. This bill will change the
deadline for the CEA to submit its financial report to the
Legislature from May 1 to August 1 of each year. The CEA
states this date change is needed because the IC's analysis of
market share data, which the CEA needs to prepare its annual
report, does not become available until late April each year.
This does not allow enough time for the CEA to prepare its
annual report by the May 1st statutory deadline. Generally,
the CEA informs the legislative offices that the report will
be submitted after May 1.
3)Clarify the report to be posted on CEA website. The author's
background materials state that the purpose of this bill is to
require the CEA to post its annual report on its website and
change the due date to August 1. The text of the bill
accomplishes the latter but not the former. As the bill is
written, it will require that the independent audit report of
the CEA filed by the IC to be posted on CEA's website. If the
author intends the CEA's own report to be posted on its
website, then the bill should be amended accordingly. A
suggestion is to move the website posting language from
subdivision (d) to subdivision (a) in Section 1 of the bill.
REGISTERED SUPPORT / OPPOSITION :
Support
Personal Insurance Federation of California
Opposition
None received.
Analysis Prepared by : Manny Hernandez / INS. / (916) 319-2086
AB 866
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