BILL ANALYSIS
AB 2327
Page 1
Date of Hearing: May 19, 2010
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 2327 (Harkey) - As Amended: May 4, 2010
Policy Committee: Insurance
Vote:11-0
Housing & Community Development 7-0
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill creates a framework by which private affordable
housing entities are able to join a multi-state risk pool for
the purposes of procuring liability coverage. Specifically, this
bill:
1)Defines affordable housing.
2)Establishes financial requirements for the risk pooling.
3)Specifies these risk pooling arrangements are not insurance
and not subject to regulation by the California Department of
Insurance.
4)Requires any pool established pursuant to this bill to furnish
a copy of the pool's annual audited financial statement to the
California Secretary of State within 180 days of the close of
the pool's fiscal year.
FISCAL EFFECT
Unknown, likely absorbable workload to the California Secretary
of State to review pool annual audited financial information.
COMMENTS
1)Rationale . This bill is sponsored by the Housing Authorities
Risk Retention Pool, a self-insurance pool of 90 public
housing authorities from California, Oregon, Washington, and
Nevada. This bill broadens definitions and requirements to
authorize non-public housing authorities to enter into risk
pooling arrangements for the provision of tort, employee
AB 2327
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injury, board member, and physical property liability
coverage.
2)Recommended Amendment . This bill was recently amended to
provide information to a California-based entity because the
risk pool addressed by this bill may be administered from
outside of California and the bill prohibits regulation of the
risk pool by the California Department of Insurance.
Committee staff recommends annual audited financial statements
be submitted to the Assembly Housing and Community Development
Committee and the Senate Transportation and Housing Committee,
rather than the Secretary of State.
3) Background . The Housing Authority Risk Retention Pool (HARRP)
was established in 1987 as a response to rapidly escalating
insurance costs. The mission of HARRP is to pool risk
associated with housing authorities administered by public
agencies and to provide claims administration, risk
management, financial services, and underwriting in-house.
HARRP insures its members for $2 million for each liability
and property loss. Excess coverage is purchased in the
commercial insurance market. This bill enables private
affordable housing entities to join HARRP to take advantage of
the risk pooling arrangements and services.
Analysis Prepared by : Mary Ader / APPR. / (916) 319-2081