BILL ANALYSIS �
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ASSEMBLY THIRD READING
AB 2128 (Gordon)
As Amended March 19, 2014
Majority vote
INSURANCE 9-3 APPROPRIATIONS 12-5
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|Ayes:|Perea, Bradford, Ian |Ayes:|Gatto, Bocanegra, |
| |Calderon, Cooley, | |Bradford, |
| |Dababneh, Frazier, | |Ian Calderon, Campos, |
| |Gonzalez, V. Manuel | |Eggman, Gomez, Holden, |
| |P�rez, Wieckowski | |Pan, Quirk, |
| | | |Ridley-Thomas, Weber |
|-----+--------------------------+-----+--------------------------|
|Nays:|Allen, Beth Gaines, Olsen |Nays:|Bigelow, Allen, Donnelly, |
| | | |Linder, Wagner |
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SUMMARY : Extends the sunset clauses on the community
development investment program within the Department of
Insurance (DOI). Specifically, this bill :
1)Extends to January 1, 2020, the sunset date on the provisions
of law that define the scope of the Insurance Commissioner's
obligations to report on community development investments and
green investments, as defined.
2)Extends to January 1, 2020, the sunset date on the California
Organized Investment Advisory Board (Board).
3)Authorizes the Board to meet three or more times per year.
4)Deletes obsolete language relating to the staggering of terms
for the Board's initial members.
EXISTING LAW :
1)Establishes the California Organized Investment Network (COIN)
within the DOI, with the purpose of encouraging insurers to
invest in community development investments.
2)Declares that it is the policy of this state that:
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a) Insurers should be supportive of community development
investments and should, where practical, consider making
these investments; and
b) COIN should pursue active measures to encourage insurers
to make community development investments.
3)Defines "community development investments" as investments
where all or part of the investment has as its primary purpose
community development for, or that directly benefits,
California low or moderate income individuals, families, or
communities.
4)Establishes an Advisory Board to recommend to the Insurance
Commissioner (IC) how the COIN program should operate, but
sunsets the Board on January 1, 2015.
5)Requires the Board to meet quarterly.
6)Provides that COIN shall allocate a program of tax credits to
institutions that make investments in Community Development
Financial Institutions, as defined. Currently, tax credits of
20% are allocable by COIN for investments up to $50 million.
7)Requires insurers to file data with the IC concerning the
community development investments the insurers make in
California, but sunsets this obligation on January 1, 2015.
8)Requires the IC, by May 31, 2014, to provide information on
the DOI Web site relating to insurers' community development
investments.
FISCAL EFFECT : According to the Assembly Appropriations
Committee, continuing the reporting and Board functions will
result in only minor and absorbable costs to DOI (Insurance
Fund).
COMMENTS :
1)Purpose. This bill was introduced to ensure that key
provisions of the COIN program in the DOI do not sunset, and
to provide a vehicle for discussions about improvements or
reforms that might be made to the program. Specifically, the
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IC is expected to release a new report on insurers' community
development investing by May 31, 2014, and it is expected that
the report will provide the basis for discussions concerning
the role of COIN in carrying out the state policy of
encouraging insurers to make community development
investments.
2)Background. COIN was established by the DOI in 1996 as a
voluntary public/private partnership between the DOI,
insurers, state government, and community development
organizations. COIN's role was later formalized and codified,
and some of its functions, such as administering the tax
credit program, specified in statute. Its role has also been
expanded to include encouraging "green investments," among
other roles. In practice, COIN has struggled to find its
precise role; for example, whether it is an entity that should
actively seek out investment opportunities, or whether it is
an entity that merely certifies investment opportunities that
are presented to it so that insurers can easily identify
qualified community development investments.
3)Advisory Board. One aspect of COIN that has been formalized
is its Advisory Board. The membership is specified in
statute, and it is directed to meet quarterly. One of the
bill's goals is to add some flexibility to the functioning of
the Board by allowing it to meet as few as three times per
year, but more often if it so desires, on a schedule that is
determined in its own discretion. The role of the Board is a
part of the discussion about COIN's overall role - should the
Legislature make specific decisions on what COIN should do, or
how it should operate, or should these issues be delegated to
the Board, to be implemented by the IC?
4)DOI support. The DOI supports the bill because it continues
the COIN program, and specifically DOI asserts that its
upcoming report will discuss the importance of continuing the
data call and other measures associated with the state's
policy of encouraging community development investing by
insurers.
5)Insurer concerns. Several insurer associations have expressed
strong concerns with the continuation of data calls
documenting the scope or extent of insurer community
development investments. These organizations note that they
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have complied with numerous data calls, both voluntary and
mandatory, and assert the results of those data calls
establish that this industry has made substantial investments
in California generally, but in underserved communities
particularly. These organizations argue that COIN has
adequate information to perform comprehensive analyses of the
industry's performance, and that additional data calls are not
justified. These organizations point out that data calls
involve substantial time and expense, and question whether
there is sufficient value-added by continuing to collect more
data.
The analytical basis of these organizations' concerns is
summarized by the question: How does one define success? They
believe the existing data shows that the insurance industry is
significantly invested in California's underserved
communities, and that there is no reason to expect a
retrenchment should future data calls sunset. They also
believe that COIN does little more than analyze data and
administer the tax credit program. These organizations
believe more discussion about how we define success, and how
COIN should be better performing its "hunting and gathering"
role, needs to occur before placing further unnecessary
burdens on the industry.
Analysis Prepared by : Mark Rakich / INS. / (916) 319-2086
FN: 0003142