BILL ANALYSIS �
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|SENATE RULES COMMITTEE | AB 1024|
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THIRD READING
Bill No: AB 1024
Author: Hueso (D), et al.
Amended: 8/15/11 in Senate
Vote: 21
SENATE INSURANCE COMMITTEE : 8-1, 6/22/11
AYES: Calderon, Gaines, Corbett, Correa, Lieu, Lowenthal,
Price, Wyland
NOES: Anderson
SENATE APPROPRIATIONS COMMITTEE : 8-0, 8/15/11
AYES: Kehoe, Walters, Alquist, Emmerson, Lieu, Pavley,
Price, Steinberg
NO VOTE RECORDED: Runner
ASSEMBLY FLOOR : 76-0, 5/31/11 - See last page for vote
SUBJECT : Low-cost automobile insurance: sales
SOURCE : Consumer Watchdog
DIGEST : This bill authorizes insurance agents and
brokers to sell low-cost auto insurance through an Internet
website, and requires the California Automobile Assigned
Risk Plan 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 to update the insert regarding
the low-cost automobile insurance program that is included
in registration renewals to reflect the online program
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established by this bill.
ANALYSIS :
Existing law :
1. The California Automobile Assigned Risk Plan (CAARP)
operates the California Low-Cost Automobile Insurance
program which provides an affordable auto insurance
option for low-income good drivers in California and
since December 2007 the program has been available to
qualifying motorists in all 58 counties.
2. To qualify for a low-cost policy, household income can't
exceed 250 percent of the federal poverty level, the
driver must be a "good driver" as defined by law, and
the applicant must be a state resident 19 years of age
or older meeting other criteria too. 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 with premium that vary by
county; installment options are available.
3. Requires that access to the plan for an immediate date
be provided via a tool-free number and specifies the
procedure for establishing an electronic effective date
shall be established by the plan.
4. The Insurance Commissioner is required to adopt a plan
for operation of the program, including the
apportionment of the costs of this program equitably
among admitted liability insurers.
This bill:
1. Authorizes a CAARP-certified "producer" (i.e., insurance
agent or broker) to accept and process applications to
purchase low-cost automobile insurance policies through
an Internet Web site.
2. Specifies that any consumer information required by this
bill may be accepted by electronic means after the
Department of Insurance (DOI) adopts rules and only if
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the information is submitted in accordance with the
rules.
3. Requires CAARP to coordinate with the DOI to develop a
system for receiving and assigning policies issued
through Internet Web sites.
4. Authorizes the plan to request, and the DOI to include
in its annual report to the Legislature that up to
$50,000 from the DOI's existing consumer outreach fund
to be used for the purpose of implementing the above
provisions.
5. 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:
A. 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.
B. Assignment to a randomly selected certified
agent or broker near the consumer who offers in
accordance with this bill the online ability to
receive applications for the program policy.
6. Authorizes the plan, with the Insurance Commissioner's
approval, to permit the use, for a designated period of
time, of the DOI-owned Internet website domain name
http://www.mylowcostauto.com, or other relevant domain
names controlled by the DOI.
7. Requires CAARP to ensure that the Web site does all the
following:
A. Provides all disclosures and other information
required by law that would otherwise be provided by
the producer.
B. Effectively educates consumers about the policy
eligibility limits, benefits and limits.
C. Describes or sets up a process to collect needed
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documents for policy qualification determinations,
if any.
D. Establishes a process to electronically certify
consumer-provided information.
E. Maintains safeguards to ensure security of a
consumer's information.
F. Provides the physical address, telephone number
and email of the producer.
G. Indicates how the consumer may contact the DOI's
Consumer Services Division.
H. Adheres to any other rules and regulations of
the DOI adopted in furtherance of this bill.
I. Notifies the consumer that if he or she does not
qualify for the program policy, other policies may
be available from producers or insurers and directs
the consumer to the DOI's auto insurance premium
comparison Internet Web page.
8. Specifies the program Web site is not to be made
available to the public until the commissioner
determines it provides all information necessary for
consumers to apply to buy the policy.
9. Requires the Web site to let plan-certified producers
forward applications, supporting documents, and the
applicant's certification to the plan and also requires
the Web site to accept payment by credit card, debit
card, such other forms of electronic payment as the
Department determines appropriate and shall allow
payment by check.
10.Requires the Web site to be made available in English
and Spanish and as many other languages as is feasible.
11.Requires, if the plan contracts with an entity to
establish and maintain the website, the plan use an
open, competitive bidding process once the Insurance
Commissioner approves the request. The contract period
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may not exceed three years and the plan may determine to
renew the contract.
12.Authorize the plan to request, and the DOI to include in
its annual report to the Legislature that up to $100,000
from DOI's existing consumer outreach fund be made
available for the development of the Primary California
Low-Cost Auto Insurance Web Site.
13.Specifies that are not required to provide a copy of the
consumer or other household members' driver's licenses
upon a finding by the DOI that other suitable
documentation of drivers' licensure status is available.
14.Requires the Department of Motor Vehicles 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 bill.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee:
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
SUPPORT : (Verified 8/16/11)
Consumer Watchdog (source)
California Department of Insurance
ARGUMENTS IN SUPPORT : According to Consumer Watchdog,
the bill's sponsor, this bill "does not change"
California's Low Cost Auto Insurance program in any
substantive way but it will operate to "bring the program
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into the 21st century to improve access to car insurance
for low-income families, while at the same time achieving
the fundamental goal of reducing the number of uninsured
drivers on the road".
ASSEMBLY FLOOR :
AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Beall, Bill
Berryhill, Block, Blumenfield, Bonilla, Bradford,
Brownley, Butler, Campos, Carter, Cedillo, Chesbro,
Conway, Cook, Davis, Dickinson, Donnelly, Eng, Feuer,
Fletcher, Fong, Fuentes, Furutani, Beth Gaines, Galgiani,
Garrick, Gatto, Gordon, Grove, Hagman, Halderman, Hall,
Harkey, Hayashi, Roger Hern�ndez, Hill, Huber, Hueso,
Huffman, Jeffries, Jones, Knight, Lara, Logue, Bonnie
Lowenthal, Ma, Mendoza, Miller, Mitchell, Monning,
Morrell, Nestande, Nielsen, Norby, Olsen, Pan, Perea, V.
Manuel P�rez, Portantino, Silva, Skinner, Smyth, Solorio,
Swanson, Torres, Valadao, Wagner, Wieckowski, Williams,
Yamada, John A. P�rez
NO VOTE RECORDED: Buchanan, Charles Calderon, Gorell,
Mansoor
JJA:do 8/17/11 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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