Amended in Assembly June 12, 2014

Senate Bill No. 867

Introduced by Committee on Budget and Fiscal Review

January 9, 2014

begin delete An act relating to the Budget Act of 2014. end delete begin insert An act to amend Section 12975.9 of the Insurance Code, relating to property insurance, and declaring the urgency thereof, to take effect immediately. end insert

LEGISLATIVE COUNSEL’S DIGEST

SB 867, as amended, Committee on Budget and Fiscal Review. begin delete Budget Act of 2014. end delete begin insert Property insurance: Seismic Safety Account. end insert

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Existing law created the Seismic Safety Account as a special account within the Insurance Fund with the funds to be distributed, upon appropriation, to the Alfred E. Alquist Seismic Safety Commission for the support of the commission and to the Department of Insurance for the actual administrative costs incurred in collecting the assessments. In order to fund the account, an assessment, as specified, is imposed on each person who owns real property, commercial or residential, that is covered by a property insurance policy.

end insert begin insert

This bill would extend that assessment to each person who rents or leases real property, commercial or residential, that is covered by a property insurance policy.

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This bill would declare that it is to take effect immediately as an urgency statute.

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This bill would express the intent of the Legislature to enact statutory changes relating to the Budget Act of 2014.

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Vote:  begin delete majority end delete begin insert ²⁄₃ end insert . Appropriation: no. Fiscal committee:  begin delete no end delete begin insert yes end insert . State-mandated local program: no.

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

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begin insert SECTION 1. end insert   

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begin insert Section 12975.9 of the end insert begin insert Insurance Code end insert begin insert is amended
to read: end insert

12975.9.  

(a) The Seismic Safety Account is hereby created as
a special account within the Insurance Fund. Moneys in the account
are available, upon appropriation by the Legislature, for the
purposes of this section to fund the department and the Alfred E.
Alquist Seismic Safety Commission.

(b) There is hereby imposed an assessment on each person who
owns begin insert , rents, or leases end insert real property, commercial or residential,
that is insured by a property insurance policy. The department
shall calculate the annual assessment to be charged to each
commercial and residential earned property exposure. The
assessment shall be set annually every August 1, beginning August
1, 2014, for all commercial and residential earned property
exposures reported during the previous calendar year. The annual
assessment shall be set at fifteen cents ($0.15) per earned property
exposure for the first three years of the implementation of this
section. Each year thereafter, the annual assessment shall be based
upon the number of earned property exposures from both
commercial and residential insurance policies, the amount required
for the support of the Alfred E. Alquist Seismic Safety
Commission, the actual collection and administrative costs of the
department, and the maintenance of an adequate reserve, but shall
not exceed fifteen cents ($0.15) per earned property exposure.

(c) The insurer, upon receipt of an invoice from the department,
shall transmit payment to the department for deposit into the
Seismic Safety Account. The insurer shall recover the assessment
from the insured, unless the insurer elects to pay the assessment
on the insured’s behalf. The insurer may provide a description of
the assessment to the insured as part of its billing statement. Any
deficiency or excess in the amount collected in relation to the
appropriation authority for the commission and the department
shall be accounted for in the subsequent annual fee calculation.
Any balance remaining in the Seismic Safety Account at the end
of each fiscal year shall be retained in the account and carried
forward to the next fiscal year.

(d) Funds in the Seismic Safety Account shall be distributed,
upon appropriation by the Legislature, to the Alfred E. Alquist
Seismic Safety Commission for the support of the commission
and to the department for the actual administrative costs incurred
in collecting the assessments.

(e) Any assessment collected from an insured that has not been
remitted to the department shall be a debt owed to the state by the
insurer. This part does not impose any obligation upon an insurer
to take any legal action to enforce the collection of the assessment
imposed by this section.

(f) Payment of the assessment shall be considered delinquent
if not paid within 45 days of the invoice date. The department is
authorized to charge a late fee of 1.5 percent per month of the
balance due, compounded monthly, for any amount not paid within
this period in accordance with Section 12995.

(g) (1) Notwithstanding Section 10231.5 of the Government
Code, the department shall report by December 1 of each year,
beginning on December 1, 2014, to the Legislature, the Alfred E.
Alquist Seismic Safety Commission, and the Department of
Finance on the assessment calculation methodology employed.

(2) A report to be submitted to the Legislature pursuant to this
subdivision shall be submitted in compliance with Section 9795
of the Government Code.

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begin insert SEC. 2. end insert   

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This act is an urgency statute necessary for the
immediate preservation of the public peace, health, or safety within
the meaning of Article IV of the Constitution and shall go into
immediate effect. The facts constituting the necessity are:

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In order to protect the public from the continuing threat of loss
of life and property damage due to earthquakes, it is necessary
that this act take effect immediately.

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begin delete

SECTION 1.  

It is the intent of the Legislature to enact statutory
changes relating to the Budget Act of 2014.

end delete