Amended in Senate August 4, 2014

Amended in Senate July 1, 2014

Amended in Assembly March 19, 2014

California Legislature—2013–14 Regular Session

Assembly Bill No. 2128

Introduced by Assembly Member Gordon

February 20, 2014

An act to amend Sections begin insert 926.1, end insert 926.2, 926.3, and 12939.2 of the Insurance Code, relating to insurer investments.

LEGISLATIVE COUNSEL’S DIGEST

AB 2128, as amended, Gordon. Insurer investments: community development.

Existing law requires each admitted insurer to provide information by January 1, 2014, to the Insurance Commissioner on all of its community development investments and community development infrastructure investments in California. Community development investments are investments where all or a portion of the investment has as its primary purpose community development for, or that directly benefits, California low- or moderate-income individuals, families, or communities, and includes, but is not limited to, investments in California in or through the California Organized Investment Network begin delete (COIN), certified end delete begin insert (COIN)-certified end insert community development financial institutions begin delete (CDFIs), end delete begin insert (CDFIs) end insert and investments made pursuant to the requirements of federal, state, or local community development investment programs or community development investment tax incentive programs, including green investments, if these investments directly benefit low- or moderate-income individuals, families, and communities and are consistent with applicable provisions. The commissioner and the Department of Insurance are required to provide certain information on community development investments and community development infrastructure investments to the public on the department’s Internet Web site, as specified, by May 31, 2014, and biennially with regard to green investments. These provisions are to remain in effect only until January 1, 2015, and are repealed as of that date.

This bill would revise and recast these provisions by instead requiring each admitted insurer with annual premiums written in California equal to or in excess of $100,000,000 for any reporting year to provide information to the commissioner on all of its community development investments, community development infrastructure investments, and green investments in California. The bill would require the information be reported by begin delete January 1, 2017, end delete begin insert July 1, 2016, end insert as provided. The bill would revise the information that the commissioner and the department are required to provide on the department’s Internet Web site by begin insert , among other things, end insert including information on the actions taken by COIN to analyze the data by insurers for the purpose of creating and identifying potential investment opportunities, as specified. The bill would extend the department’s Internet Web site publication date from May 31, 2014, to begin delete November 1, 2017, inclusive, end delete begin insert December 31, 2016, and end insert would delete the biennial publication requirement for green investments and instead require a publication deadline of begin delete November 1, 2017. end delete begin insert December 31, 2016. end insert The bill would also extend the repeal date to January 1, 2020.

Existing law requires each insurer admitted in California that writes premium in California equal to or in excess of $100,000,000 annually to develop, and file with the commissioner no later than July 1, 2011, a policy statement on community development investments and community development infrastructure investments that expresses the insurer’s goals for those investments during the filing year and following calendar year. Thereafter, each insurer that these provisions apply to is required to biennially review its policy statement, and, if the insurer revises or changes its policy statement, submit the new policy statement to the commissioner no later than July 1 of each odd-numbered year.

This bill would delete the provisions requiring a biennial review by each insurer of its policy statement and the submission of a new policy statement if there is a revision or change.

Existing law requires the department, COIN, or any successor thereof, to require the CDFIs receiving specified tax credit investments to submit reports to the department, COIN, or any successor thereof, on their use of the program. Existing law authorizes the commissioner to establish and appoint a California Organized Investment Network Advisory Board. The term of each board member is 2 years and is staggered as provided. The board has certain powers and duties, including, but not limited to, advising COIN, or any successor thereof, on the best methods to increase the level of insurance industry capital in safe and sound investments while providing fair returns to investors and social benefits to underserved communities, meeting quarterly or as deemed necessary by the commissioner, and recommending programmatic guidelines, but not specific allocations of the tax credit amount, to the COIN program. The provisions regarding the board are in effect only until December 1, 2015, and are repealed as of that date.

This bill begin delete would authorize the commissioner, in his or her discretion, to extend or reduce a board member’s 2-year term, and would delete the end delete begin insert would delete the board members end insert begin insert ’ end insert staggered terms requirement. The bill would delete the quarterly meeting requirement, and would instead require a minimum of 3 or more meetings per year. The bill would also extend the repeal date to January 1, 2020.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

begin insert

begin insert SECTION 1. end insert   

end insert

begin insert Section 926.1 of the end insert begin insert Insurance Code end insert begin insert is amended
to read: end insert

926.1.  

As used in this article, the following terms shall have
the following meanings:

(a) “Area median income” (AMI) means either of the following:

(1) The median family income for the Metropolitan Statistical
Area (MSA), if a person or geography is located in an MSA, or
for the metropolitan division, if a person or geography is located
in an MSA that has been subdivided into metropolitan divisions.

(2) The statewide nonmetropolitan median family income, if a
person or geography is located outside an MSA.

(b) “Community development investment” means an investment
where all or a portion of the investment has as its primary purpose
community development for, or that directly benefits, California
low- or moderate-income individuals, families, or communities.
“Community development investment” includes, but is not limited
to, investments in California in the following:

(1) Affordable housing, including multifamily rental and
ownership housing, for low- or moderate-income individuals or
families.

(2) Community facilities or community services providers
(including providers of education, health, or social services)
directly benefiting low- or moderate-income individuals, families,
or communities.

(3) Economic development that demonstrates benefits, including,
but not limited to, job creation, retention, or improvement, or
provision of needed capital, to low- or moderate-income,
individuals, families, or communities, including urban or rural
communities, or businesses or nonprofit community service
organizations that serve these communities.

(4) Activities that revitalize or stabilize low- or moderate-income
communities.

(5) Investments in or through California Organized Investment
Network (COIN)-certified community development financial
institutions (CDFIs) and investments made pursuant to the
requirements of federal, state, or local community development
investment programs or community development investment tax
incentive programs, including green investments, if these
investments directly benefit low- or moderate-income individuals,
families, and communities and are consistent with this article.

(6) Community development infrastructure investments.

(7) Investments in a commercial property or properties located
in low- or moderate-income geographical areas and are consistent
with this article.

(c) “Community development infrastructure” means California
public debt (including all debt issued by the State of California or
a California state or local government agency) where all or a
portion of the debt has as its primary purpose community
development for, or that directly benefits, low- or moderate-income
communities and is consistent with subdivision (b).

(d) “Geography” means a census tract delineated by the United
States Bureau of the Census in the most recent decennial census.

(e) “Green investments” means investments that emphasize
renewable energy projects, economic development, and affordable
housing focused on infill sites so as to reduce the degree of
automobile dependency and promote the use and reuse of existing
urbanized lands supplied with infrastructure for the purpose of
accommodating new growth and jobs. “Green investments” also
means investments that can help communities grow through new
capital investment in the maintenance and rehabilitation of existing
infrastructure so that the reuse and reinvention of city centers and
existing transportation corridors and community space, including
projects offering energy efficiency improvements and renewable
energy generation, including, but not limited to, solar and wind
power, mixed-use development, affordable housing opportunities,
multimodal transportation systems, and transit-oriented
development, can advance economic development, jobs, and
housing.

begin insert

(f) “High-impact investments” means investments that are
innovative, responsive to community needs, not routinely provided
by insurers, or have a high degree of positive impact on the
economic welfare of low- or moderate-income individuals, families,
or communities in urban or rural areas of California.

end insert begin delete

(f)

end delete

begin insert (g) end insert  “Insurer” means an admitted insurer as defined in Section
24, including the State Compensation Insurance Fund, or a
domestic fraternal benefit society as defined in Section 10990.

begin delete

(g)

end delete

begin insert (h) end insert  “Investment” means a lawful equity or debt investment, or
loan, or deposit obligation, or other investment or investment
transaction allowed by the Insurance Code.

begin delete

(h)

end delete

begin insert (i) end insert  “Low-income” means an individual income that is less than
50 percent of the AMI, or a median family income that is less than
50 percent of the AMI in the case of a geographical area.

begin delete

(i)

end delete

begin insert (j) end insert  “MSA” means a metropolitan statistical area as defined by
the Director of the Office of Management and Budget.

begin delete

(j)

end delete

begin insert (k) end insert  “Moderate-income” means an individual income that is at
least 50 percent but less than 80 percent of the AMI, or a median
family income that is at least 50 percent but less than 80 percent
of the AMI in the case of a geographical area.

begin delete

(k)

end delete

begin insert (l) end insert  “Nonmetropolitan area” means any area that is not located
in an MSA.

begin delete SECTION 1. end delete
begin insert SEC. 2. end insert   

Section 926.2 of the Insurance Code is amended to
read:

926.2.  

(a) (1) Each admitted insurer with annual premiums
written in California equal to or in excess of one hundred million
dollars ($100,000,000) for any reporting year shall provide
information to the commissioner on all of its community
development investments, community development infrastructure
investments, and green investments in California. This information
shall be reported by begin delete January 1, 2017, end delete begin insert July 1, 2016, end insert on investments
made begin insert or held end insert during the calendar years 2013, 2014, and 2015 and
list, if applicable, investments that are begin delete high impact, end delete begin insert high-impact, end insert
green, or rural. begin insert The information reported by insurers may include
investments both held and originated, the percentage of any
investment that qualifies, and why an investment qualifies. end insert This
information shall be provided as part of the required filing pursuant
to Section 900 or begin delete Section end delete 11131, or through a data call, or by other
means as determined by the commissioner. The California
Organized Investment Network (COIN) shall provide insurers with
information on why investments, if any, were found not to be
qualified by the commissioner.

(2) Nothing in this subdivision shall preclude an insurer that is
a member of an insurance holding company system, as defined in
Article 4.7 (commencing with Section 1215) of Chapter 2, from
complying with paragraph (1) through a single filing on behalf of
the entire group of affiliated companies, provided that the data so
filed accurately reflects the investments made by each of the
affiliates, and accurately attributes, by National Association of
Insurance Commissioners (NAIC) number or other identifier
required by the commissioner, which of the investments were made
by each affiliated company.

(3) This subdivision shall not preclude an insurer from satisfying
the requirements of paragraph (1) through a filing made by a
community development financial institution, provided all of the
following conditions are met:

(A) The insurer has no less than a 10 percent ownership interest
in a COIN-certified community development financial institution.

(B) The insurer makes community development investments
and community development infrastructure investments in and
through the community development financial institution.

(C) The community development financial institution accurately
files the information required by paragraph (1) with the
commissioner on behalf of the insurer and accurately attributes,
by NAIC number or other identifier required by the commissioner,
which investments, including the dollar amounts of the investments,
were made by each insurer on whose behalf the community
development financial institution is reporting.

(b) The commissioner shall, by begin delete November 1, 2017, end delete begin insert December
31, 2016, end insert provide all of the following:

(1) Information on the department’s Internet Web site on the
aggregate insurer community development investments and
community development infrastructure investments. Insurers that
make begin insert high-impact end insert investments that are begin insert defined as end insert innovative,
responsive to community needs, not routinely provided by insurers,
begin delete qualify as green investments, end delete or have a high degree of positive
impact on the economic welfare of low- or moderate-income
individuals, families, or communities in urban or rural begin insert areas of end insert
California shall be identified.

(2) Information on the department’s Internet Web site on the
actions taken by COIN to analyze the data by insurers for the
purpose of creating and identifying potential investment
opportunities, including the development of investment opportunity
bulletins. This information shall state the efforts made by COIN
to market and expand outreach to communities.

(c) The department shall also, by begin delete November 1, 2017, end delete begin insert December
31, 2016, end insert provide information on the department’s Internet Web
site regarding the aggregate amount of California public debt
(including all debt issued by the State of California or a California
state or local government agency) purchased by insurers as reported
to the department in their NAIC annual statement filing pursuant
to Section 900 or begin delete Section end delete 11131.

(d) The department shall also, by begin delete November 1, 2017, end delete begin insert December
31, 2016, end insert provide on its Internet Web site the aggregate amount
of identified California investments, as reported to the NAIC in
the annual statement filed pursuant to Section 900 or Section
11131.

(e) The department shall also by begin delete November 1, 2017, end delete begin insert December
31, 2016, end insert provide information on its Internet Web site regarding
the aggregate amount of identified California insurer investments
in green investments.

(f) This article shall remain in effect only until January 1, 2020,
and as of that date is repealed, unless a later enacted statute, that
is enacted before January 1, 2020, deletes or extends that date.

begin delete SEC. 2. end delete
begin insert SEC. 3. end insert   

Section 926.3 of the Insurance Code is amended to
read:

926.3.  

(a) It is the policy of the State of California that (1)
insurers should, where practicable, be supportive of community
development investments and community development
infrastructure investments, and insurers should be encouraged to
invest in prudent community development investments and
community development infrastructure investments that benefit
California and California’s low- and moderate-income
communities; (2) every admitted insurer that writes a substantial
amount of insurance in the state should consider community
development investments and community development
infrastructure investments; and (3) the California Organized
Investment Network is a part of the department, and has the
responsibility to pursue active measures to encourage community
development investing by admitted insurers.

(b) Each insurer admitted in California that writes premium in
California equal to or in excess of one hundred million dollars
($100,000,000) annually shall develop, and file with the
commissioner no later than July 1, 2011, a policy statement on
community development investments and community development
infrastructure investments that expresses the insurer’s goals for
these investments during the current and following calendar year.
These filings shall be public information. For purposes of this
subdivision, “policy statement” means a statement of principle
intended to influence a decision or action. The policy statement
may include general goals or specific investment goals, but is not
required to contain specific investment goals or thresholds.

(c) The commissioner shall establish a link on the department’s
Internet Web site that provides public access to the contents of
each insurer’s policy statement and the data on community
development investments and community development
infrastructure investments provided by each insurer pursuant to
subdivision (b).

begin delete SEC. 3. end delete
begin insert SEC. 4. end insert   

Section 12939.2 of the Insurance Code is amended to
read:

12939.2.  

(a) The commissioner may establish and appoint a
California Organized Investment Network Advisory Board.

(b) For purposes of this section, all of the following shall apply:

(1) “Commissioner” means the Insurance Commissioner of this
state.

(2) “Board” means the California Organized Investment
Network Advisory Board.

(3) “Licensed attorney” means an attorney who resides in this
state who has successfully passed the California bar examination
and has been admitted to practice in this state or has otherwise
been licensed to practice law in this state by the State Bar of
California.

(c) The board shall include the commissioner, or his or her
designee, three executives in the insurance investment industry,
and one volunteer from each of the following categories:

(1) A licensed attorney practicing insurance law.

(2) A member of the public, appointed by the Speaker of the
Assembly.

(3) A member of the public, appointed by the Senate Committee
on Rules.

(4) A member of a consumer advocacy group.

(5) An affordable housing practitioner.

(6) A local economic development practitioner.

(7) A member of a financial institution or a community
development financial institution.

(8) A representative with experience seeking investments for
low- to moderate-income or rural communities.

(d) The board shall elect, from among its members, a chair.

(e) The term of each member shall be for two begin delete years and may
be extended or reduced at the discretion of the commissioner. end delete
begin insert years. end insert

(f) The board shall have all of the following powers and duties:

(1) To advise the California Organized Investment Network, or
any successor thereof, on the best methods to increase the level of
insurance industry capital in safe and sound investments while
providing fair returns to investors and social benefits to
underserved communities.

(2) To meet a minimum of three or more times per year, or as
deemed necessary by the commissioner.

(3) To facilitate contacts among executives at insurance
companies, community-based organizations, and community
development financial institutions.

(4) To recommend programmatic guidelines, but not specific
allocations of the tax credit amount, to the California Organized
Investment Network program.

(g) The members of the board shall not receive compensation
from the state for their services under this section but, when called
to attend a meeting of the board, may be reimbursed for their actual
and necessary expenses incurred in connection with the meeting.

(h) This section shall remain in effect only until January 1, 2020,
and as of that date is repealed, unless a later enacted statute, that
is enacted before January 1, 2020, deletes or extends that date.