BILL ANALYSIS �
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|SENATE RULES COMMITTEE | AB 2406|
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THIRD READING
Bill No: AB 2406
Author: Buchanan (D)
Amended: 5/14/12 in Assembly
Vote: 21
SENATE INSURANCE COMMITTEE : 8-0, 6/13/12
AYES: Calderon, Gaines, Anderson, Corbett, Correa, Lieu,
Lowenthal, Wyland
NO VOTE RECORDED: Price
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
ASSEMBLY FLOOR : 75-0, 5/17/12 - See last page for vote
SUBJECT : Insurance: rates
SOURCE : Personal Insurance Federation of California
DIGEST : This bill 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.
ANALYSIS : 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
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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.
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.
This bill:
1.Requires the Department of Insurance to post on its
Internet Web site, during the period of eligibility, all
requests for a finding of eligibility to seek
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compensation and all findings of eligibility, as defined.
2.Removes language declared unconstitutional by the courts
and declares that this change is declaratory of existing
law.
Background
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.
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
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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.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
SUPPORT : (Verified 6/25/12)
Personal Insurance Federation of California (source)
Association of California Insurance Companies
Greenlining Institute
ARGUMENTS IN SUPPORT : According to the author's office,
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.
ASSEMBLY FLOOR : 75-0, 5/17/12
AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Beall,
Bill Berryhill, Block, Blumenfield, Bonilla, Bradford,
Brownley, Buchanan, Butler, Charles Calderon, Campos,
Carter, Cedillo, Chesbro, Conway, Cook, Davis, Dickinson,
Donnelly, Eng, Feuer, Fong, Fuentes, Furutani, Beth
Gaines, Galgiani, Garrick, Gatto, Gordon, Gorell, Grove,
Hagman, Halderman, Hall, Harkey, Hayashi, Roger
Hern�ndez, Hill, Huber, Hueso, Huffman, Jeffries, Jones,
Knight, Lara, Logue, Ma, Mansoor, Mendoza, Miller,
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Mitchell, Monning, Morrell, Nestande, Nielsen, Norby,
Olsen, Pan, V. Manuel P�rez, Portantino, Silva, Smyth,
Solorio, Swanson, Torres, Valadao, Wagner, Wieckowski,
Williams, John A. P�rez
NO VOTE RECORDED: Fletcher, Bonnie Lowenthal, Perea,
Skinner, Yamada
JJA:n 6/26/12 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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