Bill Text: CA AB1522 | 2021-2022 | Regular Session | Amended
Bill Title: The Catastrophic Wildfire Insurance Act.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Failed) 2022-02-01 - From committee: Filed with the Chief Clerk pursuant to Joint Rule 56. [AB1522 Detail]
Download: California-2021-AB1522-Amended.html
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Amended
IN
Assembly
January 03, 2022 |
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Amended
IN
Assembly
September 09, 2021 |
CALIFORNIA LEGISLATURE—
2021–2022 REGULAR SESSION
Assembly Bill
No. 1522
| Introduced by Assembly Member Levine |
February 19, 2021 |
An act to add Chapter 12 (commencing with Section 10109) to Part 1 of Division 2 of the Insurance Code, relating to insurance.
LEGISLATIVE COUNSEL'S DIGEST
AB 1522, as amended, Levine.
The Catastrophic Wildfire Insurance Act.
Existing law generally regulates classes of insurance, including residential and commercial property insurance. Existing law requires an admitted insurer with written California premiums totaling $10,000,000 or more, as specified, to submit a biennial report to the Insurance Commissioner on its residential property experience data for the previous 2 years for policies written in California and to include in the report information on fire- or wildfire-incurred losses, as specified. Existing law prohibits an insurer, for one year after the declaration of a state of emergency, from canceling or refusing to renew a residential property insurance policy solely because the property is in an area in which a wildfire occurred.
This bill would create the California Wildfire Insurance Authority to serve as a marketplace for catastrophic wildfire
insurance. The bill would require the authority to be formed as a nonprofit entity that is privately funded and publicly managed. The Under the bill, the authority would be governed by a 3-member governing board consisting of the Governor, the Treasurer, and the Insurance Commissioner, or their designees. The bill would also require the Speaker of the Assembly and the Chairperson of the Senate Committee on Rules, or their designees, to serve as nonvoting, ex officio members of the board. The bill would require the authority to be advised by an advisory panel consisting of members appointed by the Governor, the commissioner, the Speaker of the Assembly, and the Chairperson of the Senate Committee on Rules, as specified.
This bill would require the Department of Insurance to promulgate regulations to govern the approval and regulation of catastrophic wildfire insurance policies and would prohibit, on and after January 1, 2023, a policy of residential or commercial property insurance from being issued, amended, or renewed by an insurer unless the named insured is offered coverage for loss or damage caused by a catastrophic wildfire. The bill would require an insurer to provide a discount of up to 20% on catastrophic wildfire insurance policy premiums to a residential or commercial property owner who hardens their property and would authorize the policy to contain a deductible. The bill would require the commissioner to approve all catastrophic wildfire insurance policy rates, discounts, and deductibles.
This bill would establish the
Catastrophic Wildfire Insurance Fund to provide a stable and ongoing source of reimbursement to participating insurers. The bill would require the fund to be administered as a state-administered reinsurance program and would require the fund to reimburse all participating insurers for losses totaling over $100,000,000 that are incurred each year due to claims filed on catastrophic wildfire insurance policies.
insurers for their catastrophic wildfire losses. Under the bill, the fund would be financed by state contributions, revenue bonds, and assessments. assessments, and other investment strategies approved by the commissioner.
This bill would establish the California Wildfire Protection Program to provide home inspections for residential property owners who own homes located in high fire risk areas, and to provide recommendations on how to harden those homes to protect against wildfires. Under the bill, the program would offer grants to residential property owners for costs associated with the recommended home hardening improvements.
Digest Key
Vote: MAJORITY Appropriation: NO Fiscal Committee:Bill Text
The people of the State of California do enact as follows:
SECTION 1.
Chapter 12 (commencing with Section 10109) is added to Part 1 of Division 2 of the Insurance Code, to read:
CHAPTER
12. The Catastrophic wildfire Wildfire Insurance Act
Article 1. California Wildfire Insurance Authority
10109.
The California Wildfire Insurance Authority is hereby created to serve as a marketplace for catastrophic wildfire insurance.10109.01.
The authority shall be formed as a nonprofit entity that is privately funded and publicly managed.10109.02
(a) The authority shall be governed by a three-member governing board consisting of the Governor, the Treasurer, and the Insurance Commissioner, each of whom may name designees to serve as board members in their place. The Speaker of the Assembly and the Chairperson of the Senate Committee on Rules shall serve as nonvoting, ex officio members of the board, and may name designees to serve in their place.(b) (1) The authority shall be advised by an advisory panel whose members who shall be appointed as follows:
(A) Four members shall be appointed to the advisory panel who represent insurance companies that are licensed to transact fire insurance in the
state. Two of the members described by this subparagraph shall be appointed by the Governor and two of the members shall be appointed by the commissioner.
(B) Two members shall be appointed to the advisory panel who are licensed insurance agents. One of the members described by this subparagraph shall be appointed by the Governor and one of the members shall be appointed by the commissioner.
(C) The Governor shall appoint three members to the advisory panel who are members of the public that are not connected with the insurance industry. At least one of the members described by this subparagraph shall be a consumer representative.
(D) The Speaker of the Assembly and the Chairperson of the Senate Committee on Rules may each appoint one additional member to the advisory panel who is a member of the public not connected
with the insurance industry.
(2) The members of the advisory panel shall serve for four-year terms, which may be staggered for administrative convenience. The members of the advisory panel may be reappointed. The commissioner shall be a nonvoting, ex officio member of the advisory panel and shall be entitled to attend all panel meetings, either in person or by representative.
Article 2. Catastrophic Wildfire Insurance
10109.10.
(a) The department shall promulgate regulations to govern the approval and regulation of catastrophic wildfire insurance policies for the California insurance market.(b) A catastrophic wildfire insurance policy shall be separate and distinct from any coverage included in a traditional residential property or commercial insurance policy and the policy shall be offered by an insurer in addition to a traditional homeowners’ or commercial insurance policy.
10109.11.
A catastrophic wildfire insurance policy shall cover loss or damage caused by a catastrophic wildfire, as designated by the Department of Forestry and Fire Protection, or by a wildfire that is included in a state of emergency declared by the Governor.10109.12.
(a) On and after January 1, 2023, a policy of residential or commercial property insurance shall not be issued, amended, or renewed by an insurer unless the named insured is offered coverage for loss or damage caused by a catastrophic wildfire.(b) Subject to Section 10109.13, an insurer shall provide a discount of up to 20 percent on catastrophic wildfire insurance policy premiums to a residential or commercial property owner who hardens their property.
(1) The commissioner, in consultation with representatives of the insurance industry and consumer advocacy groups, shall determine the
hardening improvements that shall be considered in order to qualify for a discount on premiums.
(2) An insurer may require a certified inspector to examine a residential or commercial property to determine whether the property contains qualified hardening improvements.
(c) A catastrophic wildfire insurance policy may contain a deductible.
10109.13.
The commissioner shall approve all catastrophic wildfire insurance policy rates, discounts, and deductibles.Article 3. Catastrophic Wildfire Insurance Fund
10109.20.
The Catastrophic Wildfire Insurance Fund is hereby established to provide a stable and ongoing source of reimbursement to participatingThe fund shall reimburse all participating insurers for losses totaling over one hundred million dollars ($100,000,000) that are incurred each year due to claims filed on catastrophic wildfire insurance policies.
