BILL ANALYSIS                                                                                                                                                                                                    �



                                                                  AB 2406
                                                                  Page  1

          Date of Hearing:   May 9, 2012

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                Felipe Fuentes, Chair

                  AB 2406 (Buchanan) - As Amended:  April 23, 2012 

          Policy Committee:                              Insurance Vote:13 
          - 0 

          Urgency:     No                   State Mandated Local Program: 
          No     Reimbursable:              

           SUMMARY  

          This bill requires the Insurance Commissioner to publish on the 
          California Department of Insurance (CDI) Internet Web site all 
          requests by organizations to intervene in rate regulation 
          proceedings on behalf of consumers and all findings of 
          eligibility for the intervening organization. This bill states 
          that this language is simply declaratory of existing law. 

           FISCAL EFFECT  

          Costs associated with this legislation would be minor and 
          absorbable within CDI's existing resources.

           COMMENTS  

           1)Purpose  . The intent of this legislation is to increase 
            transparency in the insurance rate-setting process by 
            requiring CDI to publish information regarding intervenor 
            eligibility on its website. 
           
          2)Background  . Proposition 103 (1988) established a process to 
            allow for public participation in the rate setting process for 
            casualty and car insurance rates. This process allows third 
            parties to intervene before the Insurance Commissioner in 
            representation of consumers to assist the Commissioner in 
            making rate-setting decisions.

            An intervenor is eligible to receive advocacy and witness fees 
            and expenses if it is able to establish for the Commissioner 
            that it represents the interests of consumers and made a 
            substantial contribution to the proceedings. These fees and 








                                                                  AB 2406
                                                                  Page  2

            expenses are paid by the insurance companies. 

            The primary intervenor in the state of California is Consumer 
            Watchdog.  Established in 1985, Consumer Watchdog (originally 
            the Foundation for Taxpayer and Consumer Rights) is a 
            California-based non-profit organization that conducts 
            research and public education campaigns around issues of 
            consumer protection and political reform. CDI and the 
            insurance industry paid approximately $850,000 in intervenor 
            fees to Consumer Watchdog during 2011.

           Analysis Prepared by  :    Julie Salley-Gray / APPR. / (916) 
          319-2081