Bill Text: CA AB1395 | 2013-2014 | Regular Session | Amended

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Insurance: special assessments: Seismic Safety Account.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Passed) 2014-09-18 - Chaptered by Secretary of State - Chapter 407, Statutes of 2014. [AB1395 Detail]

Download: California-2013-AB1395-Amended.html

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BILL NUMBER: AB 1395	AMENDED
	BILL TEXT

	AMENDED IN SENATE  JUNE 16, 2014
	AMENDED IN ASSEMBLY  APRIL 2, 2013

INTRODUCED BY   Committee on Insurance (Perea (Chair), Hagman (Vice
Chair), Bonilla, Bradford, Ian Calderon, Cooley, Frazier, Mitchell,
Olsen, Torres, and Wieckowski)

                        MARCH 4, 2013

   An act to amend  Section 1775.4   Sections
1872.81 and 12975.9  of the Insurance Code, relating to
insurance.



	LEGISLATIVE COUNSEL'S DIGEST


   AB 1395, as amended, Committee on Insurance. Insurance: 
surplus line brokers.   special assessments: Seismic
Safety Account.  
   Existing law requires a special purpose assessment of $0.25,
commencing July 1, 2014, until January 1, 2016, and not exceeding
$0.25 thereafter, on each vehicle insured under an insurance policy
issued in this state by the insurer. Existing law specifies that,
upon appropriation by the Legislature, 2/3 of the special purpose
assessment be used for the purpose of funding the consumer service
functions of the Department of Insurance related to regulating
automobile insurers, as provided, and 1/3 of the special purpose
assessment be used for the purpose of improving consumer functions of
the department, related to regulating automobile insurers, as
specified. Existing law also authorizes, upon appropriation by the
Legislature, to use up to $0.05 of the $0.25 special purpose
assessment revenues collected to notify insurers and other members of
the public about the existence of any low-cost automobile insurance
program.  
   This bill would raise the amount of the special purpose assessment
to $0.26, until January 1, 2016, and not exceeding $0.26 thereafter.
 
   Existing law created the Seismic Safety Account as a special
account within the Insurance Fund with the funds to 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. 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.  
   This bill would provide that the insurer is not required to refund
any portion of an assessment because the policy or coverage is
terminated prior to the expiration date of the policy or coverage.
 
   Existing law requires every surplus line broker to pay annually to
the Insurance Commissioner a tax of 3% of the gross premiums charged
less return premiums upon business done by the surplus line broker
under the authority of his or her license. If the annual tax for the
preceding calendar year was $5,000 or more, existing law requires the
surplus line broker to make monthly installment payments on account
of the annual tax on business done during the current calendar year.
Existing law requires the amount of the payment to be 3% of the gross
premiums charged less return premiums upon business done by the
surplus line broker during the calendar month ending 2 calendar
months immediately preceding the due date of the payment, as
specified. Existing law requires a surplus line broker to file a
return showing that his or her return premiums exceeded his or her
gross premiums even when no payment is payable by the broker.
 
   This bill would delete the provision requiring a surplus line
broker to file a return showing that his or her return premiums
exceeded his or her gross premiums even when no payment is payable by
the broker. The bill would instead provide that if no payment is
payable by the broker, the commissioner may waive or modify the
requirements by issuance of a notice published on the department's
Internet Web site. 
   Vote: majority. Appropriation: no. Fiscal committee:  yes
  no  . State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

   SECTION 1.    Section 1872.81 of the  
Insurance Code   is amended to read: 
   1872.81.  In addition to the special purpose assessment imposed
pursuant to Section 1872.8, effective July 1, 2014, an insurer doing
business in this state shall, until January 1, 2016, pay to the
commissioner an annual special purpose assessment of 
twenty-five cents ($0.25),   twenty-six cents ($0.26),
 and thereafter pay to the commissioner an annual special
purpose assessment in an amount not to exceed  twenty-five
cents ($0.25),   twenty-six cents ($0.26),  as
determined by the commissioner, for each vehicle insured under an
insurance policy it issues in this state, for expenditure, upon
appropriation by the Legislature, as follows:
   (a) Two-thirds of the special purpose assessment shall be used for
the purpose of funding the consumer service functions of the
department that are related to regulating automobile insurers,
including those functions performed by the rating and underwriting
service bureau, the claims service bureau, the investigations bureau,
or any successor bureaus of the department that may assume the
consumer service functions of these bureaus, and legal services in
support of these bureaus.
   (b) One-third of the special purpose assessment shall be used for
the purpose of improving consumer functions identified in subdivision
(a) of the department that are related to regulating automobile
insurers, including, for improving the ability of the department to
respond to consumer complaints and information requests through the
department's toll-free telephone number, and for improving the
ability of the department to offer information about automobile
insurance rates to the public.
   (c) Upon appropriation by the Legislature, the Department of
Insurance may use up to five cents ($0.05) of the special purpose
assessment revenues collected pursuant to this section to notify
insurers and other members of the public about the existence of any
low-cost automobile insurance program established pursuant to Section
11629.7 or other statutes that establish a program of the type
identified in Section 11629.7. In requesting an appropriation for
this purpose under its proposed plan developed pursuant to Section
11629.85, the Department of Insurance shall explain, with as much
specificity as is reasonably possible, the objectives for the use of
the funds and the quantitative criteria by which the Legislature may
evaluate the effectiveness of the department's use of the funds.
   (d) The commissioner shall include, in the annual report submitted
pursuant to Section 12922, all of the following information:
   (1) The number of opened consumer complaints related to automobile
insurance.
   (2) The number of opened investigations related to automobile
insurance.
   (3) The number of investigations related to automobile insurance
referred to prosecuting agencies.
   (4) The number of administrative or regulatory cases related to
automobile insurance referred to the department's legal division.
   (5) The number of administrative or regulatory enforcement actions
taken in cases related to automobile insurance.
   (6) Total aggregate annual assessment revenue and expenditures
pursuant to the assessment.
   SEC. 2.    Section 12975.9 of the  
Insurance Code   is amended to read: 
   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
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.  The
insurer is not required to refund any portion of an assessment
because the policy or coverage is terminated prior to the expiration
date of the policy or coverage.  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. 
  SECTION 1.    Section 1775.4 of the Insurance Code
is amended to read:
   1775.4.  (a) The amount of the payment shall be 3 percent of the
gross premiums charged less return premiums upon business done by the
surplus line broker during the calendar month ending two calendar
months immediately preceding the due date of the payment, as
specified in Section 1775.3, excluding gross premiums and return
premiums paid by him or her upon business governed by the provisions
of Section 1760.5. If during any calendar month those return premiums
upon business done by a surplus line broker exceed the gross
premiums upon the business done by him or her in that calendar month,
then no payment shall be payable by him or her in respect to that
calendar month, and he or she may carry forward that excess to the
next succeeding calendar month or months and apply it in reduction of
the taxable premiums on business done by him or her in that
succeeding calendar month or months. If no payment is payable by the
broker, the commissioner may waive or modify the requirements by
issuance of a notice published on the department's Internet Web site.

   (b) In determining the applicability of subdivision (a) of Section
1775.1 to a surplus line broker who has acquired the business of
another surplus line broker, the amount of tax liability of the
acquired broker for the immediately preceding calendar year shall be
added to the amount of the tax liability of the acquiring broker for
the immediately preceding calendar year.
   (c) All amounts paid, other than penalties and interest, shall be
allowed as a credit on the annual tax imposed by Section 1775.5.
   (d) If the total amount of monthly installment payments for any
calendar year exceeds the amount of annual tax for that year, the
excess shall be treated as an overpayment of annual tax and be
allowed as a credit or refund.
   (e) A penalty of 10 percent of the amount of the monthly payment
due shall be levied upon and paid by any surplus line broker who
fails to make the necessary payment within the time required, plus
interest at the rate of 1 percent per calendar month or fraction
thereof from the due date of the payment until the date payment is
received by the commissioner, but not for any period after the due
date of the annual tax. The penalty and interest shall be applied as
prescribed in Section 12636.5 of the Revenue and Taxation Code. The
commissioner may remit the penalty in a case where he or she finds,
as a result of examination or otherwise, that the failure of, or
delay in, payment arose out of excusable mistake or excusable
inadvertence.
   (f) For any part of a payment required that was not made within
the time required by law, when the nonpayment or late payment was due
to fraud on the part of the taxpayer, a penalty of 25 percent of the
amount unpaid shall be added thereto, in addition to all other
penalties otherwise imposed.
   (g) The commissioner, upon a showing of good cause, may extend for
not to exceed 10 days the time for making a monthly payment. The
extension may be granted at any time, provided that a request
therefor is filed with the commissioner within or prior to the period
for which the extension may be granted. Any surplus line broker to
whom an extension is granted shall, in addition to the monthly
payment, pay interest at the rate of 1 percent per month, or fraction
thereof, from the due date until the annual tax due date.