BILL ANALYSIS                                                                                                                                                                                                    �



                                                                  AB 2064
                                                                  Page  1

          Date of Hearing:   May 7, 2014

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                  Mike Gatto, Chair

                   AB 2064 (Cooley) - As Amended:  April 21, 2014 

          Policy Committee:                               
          InsuranceVote:13-0

          Urgency:     No                   State Mandated Local Program:  
          No     Reimbursable:              No

           SUMMARY  

          This bill updates existing statutory notice requirements related  
          to earthquake insurance, and clarifies and loosens existing  
          statutory limits on spending on operating expenses by the  
          California Earthquake Authority (CEA).  

           FISCAL EFFECT  

          Minor one-time costs to the California Department of Insurance  
          to review and approve proposed earthquake insurance forms.

           COMMENTS  

           1)Purpose  .  According to the author, homeowners have the right  
            to purchase earthquake insurance but very few Californians  
            take advantage of that right.  The author states current law  
            requires insurers to make the offer of earthquake insurance in  
            a form that is written at a twelfth grade reading level, uses  
            insurance industry jargon, and intimidates many consumers. An  
            updated offer that is written in a more consumer-friendly  
            fashion may encourage more consumers to buy earthquake  
            insurance. In addition, existing statute limiting CEA  
            operating expenses is unclear and is preventing the CEA from  
            being more effective in reaching out to Californians who don't  
            have earthquake insurance.

           2)California Earthquake Authority  .  The CEA was formed through  
            legislation in 1996 to address an insurance-availability  
            crisis that followed the 1994 Northridge earthquake.  The CEA  
            is a privately funded, publicly managed not-for-profit  
            organization that provides catastrophic residential earthquake  








                                                                  AB 2064
                                                                  Page  2

            insurance. The Governor, State Treasurer, and Insurance  
            Commissioner serve as the CEA's governing board voting  
            members. The CEA is funded through sales of earthquake  
            policies, and investments.

           
          Analysis Prepared by  :    Lisa Murawski / APPR. / (916) 319-2081