BILL ANALYSIS
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|SENATE RULES COMMITTEE | AB 866|
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THIRD READING
Bill No: AB 866
Author: Niello (R)
Amended: 5/12/09 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 : Senate Rule 28.8
ASSEMBLY FLOOR : 76-0, 5/28/09 (Consent) - See last page
for vote
SUBJECT : California Earthquake Authority
SOURCE : Author
DIGEST : This bill revises the due date of the California
Earthquake Authority (CEA) Annual Report from May 1st of
each year to August 1st of each year and provides for its
publication on the CEA website.
ANALYSIS :
Existing law:
1. Established in 1996 the California Earthquake authority
as a privately financed publicly managed entity
CONTINUED
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regulated as a monoline private earthquake insurer by
the Department of Insurance (CDI).
2. Provides for CEA oversight via a five-member governing
board that includes the Governor, State Treasurer,
Insurance Commissioner, and non-voting representatives
of the Speaker of the Assembly and the Senate Rules
Committee.
3. Provides for the CEA to be operated as a private
monoline insurer, regulated by the CDI, including in the
matter of rate approvals, but under the guidance of a
governing board that is obligated to comply with
California's open meeting laws.
4. Requires the CEA by May 1st of each year to report to
the Legislature and the CDI commissioner on program
operations in a format prescribed by the commissioner.
The report is required to include:
A. The financial condition of the authority.
B. A description of all rates and rating plans
approved for use in the authority.
C. 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.
D. An analysis of the growth by market share of
residential property insurance of participating
insurers compared to nonparticipating insurers.
E. 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.
F. 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
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participating insurers and nonparticipating insurers.
G. An analysis of any recommended program changes to
permit the authority to better fulfill its stated
purpose.
This bill:
1. Revises the date for the submittal of the CEA Annual
Report from May 1 of each year to August 1 of each year.
2. Requires the CEA to make of copy of the annual report
available on the CEA's official website.
Comments
Purpose of the bill . The bill's purpose is to revise the
date for submittal of the Annual Report to the Legislature
and the Insurance Commissioner and to provide for its
broader dissemination via the CEA's Internet website.
Background
As a publicly managed entity organized to provide
earthquake insurance to Californians, the operations of the
CEA are important to its customers and potential customers.
The CEA is the largest provider of residential earthquake
insurance in the United States. It writes almost 75
percent of all residential earthquake insurance polices in
force in California, approximately 780,000 policies in
2008.
At present, although California public policy strongly
favors the public to consider purchases of earthquake
insurance, and a mandatory offer of earthquake insurance is
required by law when a person purchasers a homeowners
policy and every two years thereafter, only about seven
percent of California homeowners buy earthquake insurance.
Providing for broader dissemination of the CEA Annual
Report may tend to support greater visibility of the
availability in California of earthquake insurance, and is
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consistent with transparency in government.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
SUPPORT : (Verified 8/17/09)
Personal Insurance Federation of California
ASSEMBLY FLOOR :
AYES: Adams, Ammiano, Anderson, Arambula, Beall, Bill
Berryhill, Tom Berryhill, Blakeslee, Block, Blumenfield,
Brownley, Buchanan, Caballero, Charles Calderon, Carter,
Chesbro, Conway, Cook, Coto, Davis, De La Torre, De Leon,
DeVore, Emmerson, Eng, Feuer, Fletcher, Fong, Fuentes,
Fuller, Furutani, Gaines, Galgiani, Garrick, Gilmore,
Hagman, Hall, Harkey, Hayashi, Hernandez, Hill, Huber,
Huffman, Jeffries, Jones, Knight, Krekorian, Lieu, Logue,
Bonnie Lowenthal, Ma, Miller, Monning, Nava, 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, Bass
NO VOTE RECORDED: Duvall, Evans, Mendoza, Nestande
JJA:mw 8/17/09 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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