BILL ANALYSIS �
AB 2406
Page 1
ASSEMBLY THIRD READING
AB 2406 (Buchanan)
As Amended May 14, 2012
Majority vote
INSURANCE 13-0 APPROPRIATIONS 17-0
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|Ayes:|Solorio, Hagman, |Ayes:|Fuentes, Harkey, |
| |Bradford, | |Blumenfield, Bradford, |
| |Charles Calderon, Carter, | |Charles Calderon, Campos, |
| |Feuer, | |Davis, Donnelly, Gatto, |
| |Beth Gaines, Hayashi, | |Hall, Hill, Lara, |
| |Miller, Olsen, Skinner, | |Mitchell, Nielsen, Norby, |
| |Torres, Wieckowski | |Solorio, Wagner |
| | | | |
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SUMMARY : Requires the Insurance Commissioner (commissioner) to
publish on the Department of Insurance (DOI) Internet Web site
all requests for a finding of eligibility to seek compensation,
and all findings of eligibility to be compensated, with respect
to parties intervening in rate change request proceedings.
EXISTING LAW :
1)Provides, based on initiative statute (Proposition 103,
adopted by the voters at the November, 1988 General Election),
for a comprehensive system of rate regulation for
property-casualty insurance rates administered by the
commissioner.
2)Provides, based on initiative statute, that a
property-casualty insurer may not charge any rate unless and
until it has obtained the prior approval of the commissioner.
3)Specifies, based on initiative statute, when hearings may or
must be held by the commissioner on rate change requests, and
requires that specified provisions of the Administrative
Procedures Act shall apply at these hearings.
4)Authorizes, based on initiative statute, "Consumer
Participation" in these rate change proceedings, specifically
authorizing "any person" to intervene in any proceeding
permitted or required by the initiative statute.
AB 2406
Page 2
5)Requires, based on initiative statute, the commissioner or a
court to award reasonable advocacy and witness fees to a
person who demonstrates that he or she represents the
interests of consumers and has made a substantial contribution
to the adoption of any order, regulation or decision of the
commissioner or a court.
6)Provides, based on regulations adopted by the commissioner,
that a proceeding within the meaning of these provisions of
law commences with the filing of a rate change request.
7)Provides, based on regulations adopted by the commissioner,
that the right to intervene will be granted to any party that
has relevant issues to raise. The "substantial contribution"
which entitles the intervener to compensation is determined at
the end of the proceedings.
FISCAL EFFECT : According to the Assembly Appropriations
Committee, minor absorbable costs to the DOI to post the
information required by the bill on the DOI Internet Web site.
COMMENTS :
Purpose . According to the author, while the right to intervene
is contained in statute, virtually all of the details concerning
how to request to intervene, what information is required, and
how the DOI will evaluate the requests are contained in
regulations. This bill is designed to ensure that the
materials, and subsequent determinations by the commissioner,
are posted on the DOI Internet Web site to ensure maximum public
access to the information.
Majority vote vs. two-thirds vote . As a general rule,
initiatives are not amendable by the Legislature unless the
initiative itself grants the Legislature that authority. The
law is also clear that an initiative can place conditions on the
power of the Legislature to amend the initiative. On the other
hand, the Legislature has plenary authority, subject to various
constitutional exceptions, to legislate on a majority vote basis
on any matter before it. Thus, a question can arise whether a
particular bill proposal is amending "initiative statute" (and
therefore subject to the initiative's restrictions), or whether
the bill proposal is not doing so, and therefore subject to the
rules governing the Legislature's plenary authority.
AB 2406
Page 3
Proposition 103 contains a provision that limits legislative
amendments to the initiative statute by imposing two
requirements: first, the legislative amendment to the
initiative statute must be passed by a two-thirds vote of each
house; second, any amendment to the initiative statute must
further the purposes of the initiative. (The courts have
determined that whether or not a particular amendment furthers
the purposes of the initiative is for the courts, and not the
Legislature, to determine.)
Legislative Counsel has determined that the bill's requirement
that certain data be posted to the DOI Internet Web site does
not constitute an amendment to the initiative statute because
the requirement does not change the effect of any provision of
the initiative. As a result, the vote requirement tag is
"majority." Clearly, an amendment to an Insurance Code
provision outside of the article adopted by Proposition 103 that
materially changes the effect of the initiative statute would
result in a two-thirds vote requirement. Similarly, an
amendment within the article adopted by Proposition 103 that
effects no change to any provision of law enacted by the
initiative statute does not require a two-thirds vote because it
does not effect any change to what the voters enacted. The new
subdivision proposed by this bill would be added to an Insurance
Code section that is in the article adopted by Proposition 103.
Despite Legislative Counsel's determination that the bill's
provisions do not effect any change to any provision of the
initiative statute, Consumer Watchdog objects to the majority
vote tag, arguing that any change to the Insurance Code sections
adopted by Proposition 103 necessarily constitute an amendment
to the initiative statute, requiring compliance with the
initiative's two restrictions on legislative amendments.
Analysis Prepared by : Mark Rakich / INS. / (916) 319-2086
FN: 0003627