BILL ANALYSIS
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|Hearing Date:June 28, 2010 |Bill No:AB |
| |2128 |
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SENATE COMMITTEE ON BUSINESS, PROFESSIONS
AND ECONOMIC DEVELOPMENT
Senator Gloria Negrete McLeod, Chair
Bill No: AB 2128Author:Gaines
As Amended:March 25, 2010 Fiscal: No
SUBJECT: Private security services: insurance policies.
SUMMARY: Requires a private patrol operator employing any security
guard to maintain an insurance policy with minimum limits of one
million dollars ($1,000,000) for loss due to bodily injury and death,
and one million dollars ($1,000,000) for loss due to injury or
destruction of property.
Existing law:
1) Provides for the licensing and regulation of private patrol
operators (PPOs) and the registration and regulation of security
guards by the Bureau of Security and Investigative Services
(Bureau) within the Department of Consumer Affairs (DCA).
2) Defines a private patrol operator (PPO) as a person who, for
any consideration, furnishes a watchman, guard, patrol person
or other person to protect persons or property.
3) Defines a proprietary private security officer (PPSO) as an
unarmed individual who is employed exclusively by any one
employer whose primary duty is to provide security services for
his or her employer, whose services are not contracted to any
other entity or person.
4) Defines a security guard or security officer as an employee of
a PPO whose job duties include protecting persons or property.
5) Requires PPOs who employ a security guard who carries a firearm to
maintain an insurance policy; defines insurance policy as a
contract of liability of insurance issued by an insurance company
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which provides minimum limits of insurance of five hundred thousand
dollars ($500,000) for any one loss due to bodily injury and death
and five hundred thousand dollars ($500,000) for any one loss due
to injury or destruction of property.
6) Requires PPOs to provide proof of an insurance policy to the Bureau
upon demand.
7) Clarifies that failure of a PPO to maintain an insurance policy is
grounds for suspension of his or her license.
This bill:
1) Removes the requirement for PPOs to maintain an insurance policy if
he or she employs a security guard who carries a firearm and
instead requires all PPOs who employ a security guard to maintain
an insurance policy.
2) Changes the amount of minimum limits of insurance from five hundred
thousand dollars ($500,000) to one million dollars ($1,000,000) for
loss due to bodily injury and death and changes the amount of
minimum limits of insurance from five hundred thousand dollars
($500,000) to one million dollars ($1,000,000) for injury or
destruction of property.
FISCAL EFFECT: None. This measure has been keyed "nonfiscal" by
Legislative Counsel.
COMMENTS:
1.Purpose. The Sponsor of this measure is the California Association
of Licensed Security Agencies, Guards & Associates (CALSAGA).
According to the Author, "only PPOs who provide armed security
services are required to have a minimum general liability policy of
500,000. PPOs that provide unarmed security services are not
currently required to have general liability insurance." The Author
states that this is an effort to continue to professionalize the
industry.
2.Background. The Bureau currently licenses 2,457 PPOs and 243,699
security guards. According to Bureau data, there has been a steady
rise in the number of PPOs operating in the state during the past
decade and particularly since the events of September 11, 2011.
This increase and growth in the industry nationwide has also been
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attributed to consistent cuts to local government budgets and
diminishing funds for local police, as well as general concerns
about crime, vandalism and terrorism. Security personnel commonly
are granted formal authority over members of the general public in
carrying out their duty to protect a wide range of property and
people - including real estate and industrial sites (e.g.,
warehouses and factories), commercial sites (e.g., office buildings
and shopping malls), public gatherings (e.g., sporting events and
concerts), residential communities and individuals.
3.Previous Related Legislation. SB 741 (Maldonado, Chapter 361,
Statutes of 2009) required both proprietary private security
officers and proprietary private security employers to register with
the Bureau and established training and enforcement provisions.
SB 666 (Maldonado, Chapter 721, Statutes of 2007) required PPSOs to
complete security officer skills training as they begin their
employment and to undergo an annual review of this training. SB
666 also required the Bureau to establish a training curriculum by
regulation, with the assistance of an advisory committee. However,
the bill did not grant the Bureau the authority to issue
administrative citations to PPSOs or to their employers when they
do not comply with training requirements. When the Governor signed
SB 666, he issued the following signing message:
"I am signing Senate Bill 666 because it would require
proprietary private security officers to complete security
officer skills training and require the Bureau? to develop a
curriculum for this training with the assistance of an advisory
committee. However, I am signing this bill with the expectation
that the Legislature will provide the Bureau the legal authority
to enforce these requirements." [emphasis added]
SB 194 (Maldonado, Chapter 655, Statutes of 2005) established the
initial Proprietary Security Services Act, defining proprietary
private security officers and requiring them to register with DCA.
SB 1209 (Maldonado, 2008) included provisions very similar to SB
741. However, those provisions were included only for a short time
(inserted in June 9, 2008 amendments and stricken out in June 18,
2009 amendments). The bill was eventually held on the Assembly
Appropriations Suspense File.
4.Arguments in Support. According to the Sponsor, the California
Association of Licensed Security Agencies, Guards & Associates
(CALSAGA) this measure will "add another layer of consumer
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protection by ensuring that security customers are protected from
liability and bodily injury damages when an uninsured PPO goes out
of business."
5.Arguments in Opposition. Department of Consumer Affairs (DCA)
writes in opposition, stating, "The current insurance requirements
for PPOs are sufficient and PPOs should not be required to carry
such large insurance policies when they only employ security guards
that do not carry firearms." DCA also adds that this bill will
result in cost increases to PPOs which may be passed onto consumers
through higher prices for these services.
6.Policy Issues :
a) Potential Impact on Smaller PPOs. It is not clear why the
state needs to mandate that PPOs carry a minimum liability policy
of $1 million. Staff at the Bureau seem unaware of cases where
consumer harm arose from a PPO only carrying a $500,000 and this
lower threshold does not seem to have any bearing on unlicensed
activity. It also appears that the market actually sets the
standard for a dollar amount of insurance, as many Requests for
Proposals (RFPs) and subsequent contracts require a higher policy
than $500,000 and, in fact, most PPOs already carry a policy
beyond $1 million. This measure and the $1 million requirement
may have the unintended consequence of limiting access to
contracts for smaller PPOs who may not be able to meet the higher
liability provision or choose to carry a smaller policy.
b) Lack of Enforcement Authority. As this measure is written, it
does not appear to specifically authorize the Bureau to enforce
the proposed provisions which require PPOs to maintain a certain
level of insurance. According to the Bureau, they do not believe
they have citation and fine or other enforcement authority to
take action against a licensee who does not obtain the
appropriate level of liability insurance, nor do they have anyway
of knowing who is in compliance. The only action the Bureau
could possibly take against the licensee in instances of
noncompliance, would be to revoke their license which would
effectively shut down their business. The Author has indicated
that it is his intention to make the increased liability policy a
condition of licensure for PPOs, but there is currently nothing
in the bill to clarify that position.
7.Suggested Technical Amendment: There appears to be a drafting
error, with an extra parentheses mark.
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Staff suggests a technical amendment to strike out ")" after "and" on
page 2, line 15.
SUPPORT AND OPPOSITION:
Support:
California Association of Licensed Security Agencies, Guards &
Associates (Sponsor)
Opposition:
Department of Consumer Affairs
Consultant: Sarah Mason