During 2013 Governor Jerry Brown signed four bills that the California Department of Insurance (CDI) sponsored during the legislative year. The bills are:
AB 32 (Chapter 608, Statutes of 2013) authored by Assembly Speaker John Pérez (D-Los Angeles).
AB 32, [enhanced version available to lexis.com subscribers], will provide a financial boost to California's economy of more than $460 million between 2013 and 2016 through increased investment incentives and tax credits available to insurers that participate in the expanded California Organized Investment Network (COIN), which promotes insurer investment in California's low-income and underserved communities. Specifically, this bill expands from $2 million to $10 million the annual tax credits available through COIN. These funds are used in low-income and rural communities to fund affordable housing, business loans, and other important projects. It is estimated that the projected $50 million in expected investments allowed under the new law will create more than 3,100 new jobs.
SB 476 (Chapter 347, Statutes of 2013) authored by Senate President pro Tempore Darrell Steinberg (D-Sacramento).
SB 476, [enhanced version available to lexis.com subscribers], eliminates the sunset on three insurance-related special assessments: the Auto Consumer Assessment; the Life and Annuity Consumer Protection Assessment; and the Organized Automobile Fraud Activity Interdiction Assessment. This bill also decreases the Auto Consumer Assessment fee. The Auto Consumer Assessment fee and Organized Automobile Fraud Activity Interdiction Assessment requires auto insurers to pay an annual assessment for each insured vehicle with the funds used by CDI to investigate, prosecute and for educational outreach activities related to auto insurance. Revenues are distributed between CDI (42.5 percent), district attorneys (42.5 percent), and the California Highway Patrol (15 percent). The Life and Annuity Consumer Protection Assessment requires an insurer to pay an annual fee for each individual life insurance policy or annuity product issued to a California resident. The funds are used for the investigation, prosecution and educational outreach activities related to individual life insurance and annuity products. The revenues are evenly distributed between CDI and district attorneys.
AB 584 (Chapter 238, Statutes of 2013) jointly authored by Assembly Insurance Committee Chair Henry Perea (D-Fresno) and Assembly Member Ken Cooley (D-Rancho Cordova).
The near collapse of AIG during the 2008 economic crisis revealed the need for insurers and insurance groups to better evaluate their risks. In response, the National Association of Insurance Commissioners (NAIC) created and adopted the Risk Management and Own Risk Solvency Assessment Model Law (ORSA) to establish the regulatory oversight needed to assess an insurer's or insurance group's ability to weather severe economic stress. AB 584, [enhanced version available to lexis.com subscribers], incorporates ORSA into California law for insurers with annual premiums greater than $500 million and insurance groups with annual premiums greater than $1 billion to maintain a comprehensive risk management framework to identify, assess, and manage material and relevant risks. This bill protects consumers by helping to make sure insurers and insurance groups do not collapse like big banks did in 2008.
AB 1391 (Chapter 321, Statutes of 2013) authored by the Assembly Insurance Committee.
AB 1391, [enhanced version available to lexis.com subscribers], remedies several issues identified and vetted by the California Department of Insurance to clarify and cleanup various insurance code sections, including several for alignment with NAIC model laws.
"My department is committed to vigorously protecting all consumers and these laws support that mission," said Insurance Commissioner Dave Jones. "I am very pleased Governor Brown signed four of our sponsored bills that increase safeguards for California's consumers, seniors and hard-working families."
"Our work is never done, and while 2013 has been a successful year with the implementation of new consumer protection measures, I am looking forward to the new year and new opportunities where I can support additional protections and strengthen existing consumer rights," added Jones.