BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
AB 1024 (Hueso)
Hearing Date: 8/15/2011 Amended: 8/15/2011
Consultant: Maureen Ortiz Policy Vote: Ins: 8-1
_________________________________________________________________
____
BILL SUMMARY: AB 1024 authorizes insurance agents and brokers
to sell low-cost auto insurance through an Internet website, and
requires the California Automobile Assigned Risk Plan (CAARP) to
create a website for referring consumers to certified agents or
brokers for the purchase of low-cost automobile insurance. The
bill additionally requires the Department of Motor Vehicles
(DMV) to update the insert regarding the low-cost automobile
insurance program that is included in registration renewals to
reflect the online program established by this measure.
_________________________________________________________________
____
Fiscal Impact (in thousands)
Major Provisions 2011-12 2012-13 2013-14 Fund
Online program $77
$78 $3 Special*
Insert notice ---------------minor,
absorbable--------------- Special**
*Insurance Fund **Motor Vehicle Fund
_________________________________________________________________
____
STAFF COMMENTS:
The Department of Insurance anticipates costs of approximately
$155,000 over a two fiscal year period for system development
and regulations, and then about $3,000 annual ongoing costs for
modifications. AB 1024 provides that up to $50,000 of the
funding for department costs will come from the Department's
existing consumer outreach fund, and that up to $100,000 from
the outreach fund may be used for the development of the
Internet website. This consumer outreach fund is funded by a
$0.05 assessment on every auto insurance policy. The DMV has
indicated minor costs associated with updating the notice
AB 1024 (Hueso)
Page 1
requirement.
Currently, the Department of Insurance maintains and promotes a
website entitled "mylowcostauto.com" and a toll-free hotline
where drivers can check their eligibility for the low cost auto
insurance program. According to the Department of Insurance,
approximately 150,000 people express interest in the program
each year, yet only 11,000 policies are in effect. This is
partially due to the accessibility of the program. While the
website informs the applicants of their eligibility, they must
go to an agent or broker to transact the policy.
AB 1024 will require CAARP to coordinate with the Department of
Insurance to develop a system for receiving and assigning
policies, and to create a website that will allow applicants to
purchase low cost auto insurance online. Specifically, AB 1024
requires CAARP to establish and maintain or contract with an
entity to establish and maintain a website that shall provide
the public an option of either:
1) Referral to a list with full contact information on
certified agents or brokers with an office near the consumer
whom they can contact to buy a program policy, or
2) Assignment to a randomly selected certified agent or broker
near the consumer who offers in accordance with this bill an
online ability to receive applications for the program policy.
Additionally, CAARP must ensure that the website provides
specified disclosures to consumers, effectively educates
consumers about the policy eligibility limits and benefits,
establishes a process to collect needed documents, provides
contact information, and maintains safeguards to ensure the
security of a consumer's personal data.
The California Low-Cost Automobile Insurance program was
established in 2007 and provides an affordable auto insurance
option for low-income good drivers. To qualify for a low-cost
policy, household income cannot exceed 250 percent of the
federal poverty level, the driver must be a "good driver", and
the applicant must be a state resident 19 years of age or older.
AB 1024 (Hueso)
Page 2
The program offers policy limits prescribed by law of $10,000
for bodily injury or death per person in an accident, $20,000
for bodily injury or death per accident, and $3,000 property
damage for each accident. Premiums vary by county and
installment options are available for payments.
The DMV currently includes an insert into each automobile
registration renewal that informs drivers about the low-cost
auto insurance program. AB 1024 will require the DMV to revise
the notice to inform consumers that they may also access
information about the program through an online method.