BILL ANALYSIS
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|SENATE RULES COMMITTEE | AB 2535|
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CONSENT
Bill No: AB 2535
Author: Blakeslee (R)
Amended: 6/16/10 in Senate
Vote: 21
SENATE BANKING, FINANCE, AND INS. COMMITTEE : 10-0, 6/30/10
AYES: Calderon, Cogdill, Correa, Florez, Kehoe, Liu,
Lowenthal, Padilla, Price, Runner
NO VOTE RECORDED: Cox
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
ASSEMBLY FLOOR : 74-0, 5/6/10 (Consent) - See last page for
vote
SUBJECT : Insurance: California Earthquake Authority
SOURCE : Author
DIGEST : This bill requires the California Earthquake
Authority (CEA), upon request, make available in electronic
form 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.
ANALYSIS :
Existing law
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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.
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 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
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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 specifies 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.
Background
The author's office 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.
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.
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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.
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.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
SUPPORT : (Verified 8/3/10)
Personal Insurance Federation of California
ASSEMBLY FLOOR :
AYES: Adams, Ammiano, Anderson, Arambula, Beall, Bill
Berryhill, Tom Berryhill, Blakeslee, Blumenfield,
Bradford, Brownley, Buchanan, Caballero, Charles
Calderon, Carter, Chesbro, Conway, Cook, Coto, Davis, De
Leon, DeVore, Emmerson, Eng, Evans, Feuer, Fletcher,
Fong, Fuentes, Fuller, Furutani, Gaines, Galgiani,
Garrick, Hagman, Hall, Harkey, Hayashi, Hernandez, Hill,
Huber, Huffman, Jeffries, Jones, Knight, Lieu, Logue,
Bonnie Lowenthal, Ma, Miller, Monning, Nava, Nestande,
Niello, Nielsen, Norby, V. Manuel Perez, Portantino,
Ruskin, Salas, Saldana, Silva, Skinner, Smyth, Solorio,
Audra Strickland, Swanson, Torlakson, Torres, Torrico,
Tran, Villines, Yamada, John A. Perez
NO VOTE RECORDED: Bass, Block, De La Torre, Gilmore,
Mendoza, Vacancy
JJA:do 8/3/10 Senate Floor Analyses
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SUPPORT/OPPOSITION: SEE ABOVE
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