BILL ANALYSIS
AB 954
Page 1
Date of Hearing: May 13, 2009
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Kevin De Leon, Chair
AB 954 (Jones) - As Amended: April 28, 2009
Policy Committee: InsuranceVote:7-0
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill requires the California Department of Insurance (CDI)
to use the Administrative Procedures Act (APA) when adopting
rules, regulations, or insurance standards recommended by the
National Association of Insurance Commissioners (NAIC), with
specified exceptions.
FISCAL EFFECT
Unknown annual fee-supported special fund costs to CDI in the
range of $1 million to $2.5 million for increased compliance
with the APA, which requires a heightened level of scrutiny and
public input. Actual costs may be higher or lower than this
estimate depending on whether CDI APA workload is generated
prospectively or is required, to some extent, for current rules,
regulations, or standards. In addition, there is some ambiguity
regarding the level at which an NAIC-recommended policy would be
subject to increased requirements established by this bill.
Under current law, CDI has the authority to adopt certain NAIC
recommended changes apart from the APA. For example, CDI is
currently able to make some changes to accounting procedures and
instructions using specified standards, instructions and forms.
This bill may require use of the APA for dozens of current law
and future efforts that would otherwise not be subject to APA.
COMMENTS
1) Rationale . This bill requires CDI to use the APA prior to
adopting rules, regulations, or standards recommended by
NAIC. The NAIC is the organization of insurance regulators
from each state and provides a forum for the development of
uniform public policy to be introduced in states to improve
oversight and increase regulatory uniformity. Consistent NAIC
AB 954
Page 2
reporting, accounting, and reserve valuation enable CDI and
other insurance regulators to carry out their solvency
oversight activities effectively and efficiently while
permitting insurers to conduct their operations in all states
with their varied regulatory schemes.
2)Background . The APA establishes procedures for state agencies
to follow when adopting regulations. The procedures include
public notice of the proposed regulation, an opportunity for
comment by interested parties, and review by the Office of
Administrative Law. The APA was designed, in part, to
prevent the use of underground regulations by administrative
agencies and to ensure that entities affected by a regulation
have a voice in its creation.
Analysis Prepared by : Mary Ader / APPR. / (916) 319-2081