BILL ANALYSIS                                                                                                                                                                                                    �



                                                                  AB 1395
                                                                  Page  1

          CONCURRENCE IN SENATE AMENDMENTS
          AB 1395 (Perea)
          As Amended  June 19, 2014
          Majority vote
           
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          |ASSEMBLY:  |     |(May 9, 2013)   |SENATE: |36-0 |(August 18,    |
          |           |     |                |        |     |2014)          |
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               (vote not relevant)

          Original Committee Reference:   INS.  

           SUMMARY  :  Makes noncontroversial clarifications to the statutes  
          governing two fees collected by insurance companies.  

           The Senate amendments  :

          1)Increase an annual $0.25 per vehicle fee assessed on  
            automobile insurance policies to fund anti-fraud efforts to  
            $0.26 per vehicle.

          2)Clarifies that an insurer, after it remits a $0.15 assessment  
            on property insurance policies to the Department of Insurance  
            (which in turn provides the funds to the Seismic Safety  
            Commission), does not owe a duty to the policyholder to return  
            portions of the assessment in the event the policy is  
            terminated early.

           EXISTING LAW  :

          1)Requires each automobile insurer to collect an annual $0.25  
            per vehicle fee, and dedicates these funds to fight insurance  
            fraud.

          2)Requires each property insurer to collect an assessment of  
            $0.15 per policy to fund the Seismic Safety Commission.

           FISCAL EFFECT  :  Unknown
           
           COMMENTS  :   

          1)Purpose.  The automobile insurance fraud fee was decreased  
            recently from $0.30 to $0.25 annually.  Unfortunately,  
            interested parties neglected to consider the facts that most  








                                                                  AB 1395
                                                                  Page  2

            automobile insurance policies are for six months, and a $0.125  
            cent fee (half of the annual $0.25 fee) would be unwieldy to  
            implement.  This bill fixes this omission.

          With respect to the Seismic Safety Commission assessment,  
            insurers have become concerned that they might be vulnerable  
            to lawsuits seeking return of a few pennies for all of the  
            policies that might have been terminated earlier than the one  
            year policy period for which it was assessed.  This bill  
            merely provides that once remitted, the Seismic Safety  
            Commission can rely on the funding, and policyholders who  
            terminate their policy early do not get a few pennies  
            returned.


           Analysis Prepared by  :    Mark Rakich / INS. / (916) 319-2086 FN:  
          0004187