BILL ANALYSIS
SENATE COMMITTEE ON BANKING, FINANCE,
AND INSURANCE
Senator Ronald Calderon, Chair
AB 2535 (Blakeslee) Hearing Date: June 16, 2010
As Amended: May 3, 2010
Fiscal: Yes
Urgency: No
VOTES: Asm. Floor(05/06/10)74-0/Pass
Asm. Appr.
(04/28/10)14-0/Pass
Asm. Ins. (04/21/10)12-0/Pass
SUMMARY Would specify the California Earthquake Authority
(CEA), upon request, shall make available in an electronic form
by which the CEA 1) holds or uses the information or 2) has made
copies for the use by others, nonproprietary materials and
documents its Governing Board uses in the determination of
whether to open CEA participation to additional insurers who are
not currently participating insurers.
2) Makes technical, nonsubstantive changes.
DIGEST
Existing law
1.Established in 1996 the California Earthquake Authority as a
privately financed publicly managed entity regulated as a
monoline private earthquake insurer by the Department of
Insurance (DOI);
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.Imposes on the CEA by express statute (since it is an
instrumentality of the state rather than a state agency
subject to the open records law) a public access provision
which says the public may inspect rating-related
nonproprietary materials at no charge but copies must be
purchased at actual cost .
AB 2535 (Blakeslee), Page 2
4.Authorizes insurers who agree to sign a participation
agreement with the both the Commissioner of Insurance and the
CEA to meet their obligation under California law to offer
their new residential insureds earthquake insurance coverage
by offering a CEA policy as authorized by California Insurance
Code Section 10085. Such insurers are termed participating
insurers under the CEA law and the participation agreement is
required to be uniform for all participating insurers;
5.Authorizes the California Earthquake Authority (CEA) to allow
participation in the CEA by insurers who, to date, have not
elected to participate if the CEA makes certain findings
regarding its financial condition or the Insurance
Commissioner or the board of the CEA finds that it is
necessary to broaden the availability of residential
earthquake insurance;
6.Requires a finding of necessity to open participation to
non-CEA members that states the specific facts and conditions
that establish the necessity and justify the actions to open
participation to new member insurers or insurance groups;
7.Provides that if, subsequent to the CEA's formation, a
nonparticipating insurer elects to become a participating
insurer of the authority, the authority shall present the
nonparticipating insurer with the most recent form of the
amended uniform authority participation contract for execution
as a condition of authority participation;
8.Requires that the materials and documents used by the CEA to
make the determination to open participation to non-CEA
members be considered public documents and requires that a
copy of these materials shall be available to the public;
9.Specifies, in the Government Code for application to state
agencies, the rule that unless prohibited by law, an agency
holding a public record not exempt from disclosure and which
is in an electronic format shall make that information
available in an electronic format when requested by any person
and, when applicable, shall make the information available in
any electronic format in which it holds the information.
This bill
AB 2535 (Blakeslee), Page 3
1.Would specify that the CEA shall, upon request, make all
nonproprietary materials and documents used by the CEA to make
the determination whether or not to open participation to
non-CEA members available to the public in the electronic form
in which the CEA holds the information or in which has been
used by the CEA to create copies for its own use or the use of
others.
COMMENTS
1. Purpose of the bill To clarify that as a California public
instrumentality, while not a true state agency, the CEA is
subject to a Government Code provision favoring providing
access electronically to electronically held public records
and this shall apply to requests for records held in an
electronic form and used in the Board's consideration of
expanding participation in the CEA.
2. Background The Author states that in 1996 the California
Legislature established the CEA as a publicly managed,
largely privately funded entity. Insurance companies that
sell residential property insurance in California can choose
to offer their own privately funded earthquake insurance or
they can become a participating insurance company in the
CEA. Only participating insurers can offer CEA earthquake
insurance policies.
3. The CEA, while not a state agency, is by statute subject to
an express "public documents" provision (California
Insurance Code Section 10089.11(d)). This provision does
not, however, currently include a requirement of electronic
access of the type being added to the CEA law by this bill.
The CEA law's general "public access provision says the
public may inspect rating-related nonproprietary materials
at no charge but copies must be purchased at actual cost.
4. The CEA has the authority to open up the CEA to
nonparticipating insurers and to modify the requirements for
entry into the CEA based upon a finding of necessity, as
specified in law. All materials and documents used or
prepared by the CEA to make that finding of necessity are
considered public documents. Copies of those public
documents must be made available to the public for
inspection at no charge, and members of the public may
purchase copies of the documents from the CEA at actual
cost.
AB 2535 (Blakeslee), Page 4
5. Arguments in Support The author points out that an existing
section of law (Gov Code Section 6253.9) provides that
agencies that have information that constitutes a public
record and it is in an electronic format shall make that
information available to the public in an electronic format.
While the CEA is not considered a state agency, it was
created by the Legislature and is publicly governed.
Therefore, the CEA should be required to provide electronic
access to public records used by the Governing Board in the
process of determining whether to permit additional insurers
to participate in its operations.
6. Opposition None
7. Prior and Related Legislation None
POSITIONS
Support
Personal Insurance Federation of California
Oppose
None
Consultant: Kenneth Cooley (916) 651-4102