BILL ANALYSIS                                                                                                                                                                                                    �



                                                                  AB 2301
                                                                  Page  1

          Date of Hearing:   May 2, 2012

                           ASSEMBLY COMMITTEE ON INSURANCE
                                 Jose Solorio, Chair
            AB 2301 (Committee on Insurance) - As Amended:  April 9, 2012
           
          SUBJECT  :   California Insurance Guarantee Association: covered 
          claims

           SUMMARY  :   Conforms California statutes governing insolvent 
          insurers to existing practices in cases involving multi-state 
          insurer insolvencies.  Specifically,  this bill  :  

          1)Provides that, in order for a claim against an insolvent 
            insurer to be a "covered" claim for purposes of the California 
            Insurance Guarantee Association (CIGA), the claim must be 
            presented to the liquidator in the state of domicile of the 
            insolvent insurer.

          2)Makes other technical and nonsubstantive changes to the CIGA 
            statute.

           EXISTING LAW  :

          1)Establishes a detailed system to handle insurer insolvencies, 
            with the Insurance Commissioner (commissioner) serving as 
            court-appointed liquidator.

          2)Makes the commissioner in an insurer's state of domicile the 
            primary liquidator of an insolvent insurer, even if that 
            insurer has business in more than one state.

          3)Establishes CIGA to pay "covered claims" to California 
            policyholders and claimants, even if the insolvent insurer is 
            domiciled in another state.

          4)Includes within the definition of "covered claim" the 
            requirement that a California claimant file the claim with the 
            California commissioner.

           FISCAL EFFECT  :   None.  The bill codifies existing practice.

           COMMENTS  :   AB 2301 was introduced by the Insurance Committee to 
          address two issues associated with CIGA.  First, the bill cleans 
          up several technical issues that a Code Clean-up bill proposed 








                                                                  AB 2301
                                                                  Page  2

          to make last Session, but were chaptered out by a previous 
          Insurance Committee bill.  Second, the bill corrects a reference 
          that might confuse a claimant against an insolvent insurer who 
          is seeking coverage by CIGA by causing the claimant to file the 
          claim with the California commissioner, even though the claim 
          should initially be filed with the commissioner in the insurer's 
          state of domicile.

           REGISTERED SUPPORT / OPPOSITION  :   

           Support 
           
          California Insurance Guarantee Association

           

          Opposition 
           
          None received.
           
          Analysis Prepared by  :    Mark Rakich / INS. / (916) 319-2086