Bill Text: CA AB53 | 2011-2012 | Regular Session | Amended

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

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Bill Title: Insurers: procurement contracts: minority, women, and

Spectrum: Partisan Bill (Democrat 6-0)

Status: (Passed) 2012-09-21 - Chaptered by Secretary of State - Chapter 414, Statutes of 2012. [AB53 Detail]

Download: California-2011-AB53-Amended.html

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BILL NUMBER: AB 53	AMENDED
	BILL TEXT

	AMENDED IN ASSEMBLY  MAY 19, 2011
	AMENDED IN ASSEMBLY  MAY 11, 2011
	AMENDED IN ASSEMBLY  MARCH 21, 2011

INTRODUCED BY   Assembly Member Solorio
   (Coauthors: Assembly Members Davis, Furutani, Mendoza, and
Portantino)
   (Coauthor: Senator Price)

                        DECEMBER 6, 2010

   An act to add Article 10.2 (commencing with Section 927) to
Chapter 1 of Part 2 of Division 1 of the Insurance Code, relating to
insurers.



	LEGISLATIVE COUNSEL'S DIGEST


   AB 53, as amended, Solorio. Insurers: procurement contracts:
 women,  minority,  women,  and disabled
veteran business enterprises.
   Existing law requires each admitted insurer to provide information
to the Insurance Commissioner on all of its community development
investments and community development infrastructure investments in
California.
   This bill would require that each admitted insurer with 
California  premiums written equal to or in excess of
$100,000,000 to submit  annually  to the
commissioner,  commencing   by  July 1,
 2013, a detailed and verifiable plan for increasing
procurement from women, minority,   2012, a report on
its minority, women,  and disabled veteran business enterprises
 procurement efforts  , as specified.  Failure to file
the report, by July 1, 2012, would subject the admitted insurer to
civil penalties to be fixed by the commissioner, as provided. 

   The bill would require the commissioner to, among other things,
establish guidelines for qualified admitted insurers to be used in
establishing these programs, provide a report annually on the
Department of Insurance's Internet Web site and to the Legislature on
September 1 of each year on the progress of activities undertaken by
each qualified admitted insurer in the implementation of these
programs, and to require admitted insurers subject to this bill to
implement an outreach program to inform and recruit eligible business
enterprises to apply for procurement contracts.  
   The bill would provide that any person, corporation, or other
organization, through its directors, officers, or agents, that
falsely represents a business as a women, minority, or disabled
veteran business enterprise in the procurement of, or attempt to
procure, a contract from an admitted insurer subject to this bill
would be barred from participating in the program for up to 3 years
from the date of the false representation, as provided. 

   The bill would require, among other things, that commencing July
1, 2014, each eligible admitted insurer biennially update its
supplier diversity report and submit a new report, containing
additional elements, to the commissioner no later than July 1. 

   The bill would require that, by July 31, 2012, the commissioner
establish and maintain a link on the department's Internet Web site
that provides public access to the contents of each admitted insurer'
s report on minority, women, and disabled veteran-owned business
procurement efforts.  
   The bill would require that a supplier firm that provides a
materially false statement regarding its status as a minority, women,
or disabled veteran business enterprise be barred for up to 3 years
from being considered as one of those enterprises. 
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.


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

  SECTION 1.  Article 10.2 (commencing with Section 927) is added to
Chapter 1 of Part 2 of Division 1 of the Insurance Code, to read:

      Article 10.2.  Women, Minority, and Disabled Veteran Business
Enterprises


   927.  The Legislature finds and declares all of the following:
   (a) It is in the state's interest to encourage competitive
business opportunities for all of its people. Insurers are uniquely
positioned to build relationships within the communities they serve
through the development, inclusion, and utilization of certified
minority, women, and disabled veteran-owned business enterprises
whenever possible. National companies are able to leverage buying
power to save costs to the benefit of policyholders.
   (b) By providing that each major insurer submit to the Insurance
Commissioner a report and plan containing the insurer's supplier
diversity statement and expressing its goals regarding certified
minority, women, and disabled veteran-owned business enterprises, and
the commissioner placing that information on the department's
Internet Web site, that online resource will help facilitate these
supplier relationships.  
   927.1.  For the purposes of this article, the following
definitions apply:
   (a) "Control" means to exercise the power to make policy
decisions.
   (b) "Disabled veteran business enterprise" has the same meaning as
defined in subparagraph (A) of paragraph (7) of subdivision (b) of
Section 999 of the Military and Veterans Code, or any successor
provision. Disabled veterans business enterprise certification
eligibility requirements shall be consistent with those imposed by
the Department of General Services, and this section applies only to
those disabled veteran business enterprises certified by the
Department of General Services.
   (c) "Minority business enterprise" means a business enterprise,
physically located in the United States or its trust territories,
that is at least 51 percent owned by a minority group or groups, or,
in the case of any publicly owned business, at least 51 percent of
the stock of which is owned by one or more minority groups, and whose
management and daily business operations are controlled by one or
more of those individuals. "Minority" includes African Americans,
Hispanic Americans, Native Americans, and Asian Pacific Americans who
provide proof of United States citizenship or legal resident alien
status.
   (d) "Operate" means to be actively involved in the day-to-day
management of the enterprise and not to be merely officers or
directors.
   (e) "Women business enterprise" means a business enterprise
physically located in the United States or its trust territories,
that is at least 51 percent owned by a woman or women, or, in the
case of any publically owned business at least 51 percent of the
stock of which is owned by one or more women, and whose management
and daily business operations are controlled by one or more of those
individuals, who provide proof of United States citizenship or legal
resident alien status.  
   927.2.  (a) (1) By July 1, 2012, each admitted insurer, with
premiums written of one hundred million dollars ($100,000,000) or
more, shall submit a report to the commissioner on its minority,
women, and disabled veteran-owned business procurement efforts.
   (2) The report shall include all of the following:
   (A) The insurer's supplier diversity policy statement.
   (B) The insurer's outreach and communications to minority, women,
and disabled veteran business enterprises, including:
   (i) How the insurer encourages and seeks out minority, women, and
disabled veteran owned business enterprises to become potential
suppliers.
   (ii) How the insurer encourages its employees involved in
procurement to seek out minority, women, and disabled veteran-owned
business enterprises to become potential suppliers.
   (iii) How the insurer conducts outreach and communication to
minority, women, and disabled veteran business enterprises.
   (iv) How the insurer supports organizations that promote or
certify minority, women, and disabled veteran-owned business
enterprises.
   (v) Information regarding appropriate contacts at the insurer for
interested business enterprises.
   (C) The report shall include information about which procurements
are made from minority, women, and disabled veteran business
enterprises with at least a majority of the enterprise's workforce in
California, to the extent that information is readily accessible.
   (b) Nothing in this section shall be construed to require quotas,
set-asides, or preferences in an admitted insurer's procurement of
goods or services, nor does this section apply to insurer producer or
licensee contracts. Admitted insurers retain the authority to use
business judgment to select the supplier for a particular contract.
   (c) Nothing in this section shall preclude an admitted insurer
that is a member of an insurance holding company system, as defined
in Article 4.7 (commencing with Section 1215) of Chapter 2, from
complying with paragraphs (1) and (2) of subdivision (a) through a
single filing on behalf of the entire group of affiliated companies.
   (d) Failure to file the report required by subdivision (a), by
July 1, 2012, shall subject the admitted insurer to a civil penalty
to be fixed by the commissioner, not to exceed five thousand dollars
($5,000), or if the act or practice was willful, a civil penalty not
to exceed ten thousand dollars ($10,000). If the insurer has failed
to file the report within 30 days of a written notice by the
commissioner, the commissioner may find that the failure to file the
report was willful and increase the civil penalty to an amount not to
exceed ten thousand dollars ($10,000). The penalty imposed by this
section is appealable by means of any remedy provided by Section
12940, or by Chapter 5 (commencing with Section 11500) of Part 1 of
Division 3 of Title 2 of the Government Code.
   (e) (1) Commencing July 1, 2014, each admitted insurer specified
in subdivision (a) shall biennially update its supplier diversity
report and submit the new report to the commissioner no later than
July 1.
   (2) By July 1, 2014, each insurer specified in subdivision (a)
shall, as part of the supplier diversity report, submit to the
commissioner a plan that includes the goals and outreach efforts that
are planned in connection with procurement from minority, women, and
disabled veteran business enterprises during the current and
following calendar year. The plan shall also include all of the
elements contained in subdivision (a).
   (f) By July 31, 2012, the commissioner shall establish and
maintain a link on the department's Internet Web site that provides
public access to the contents of each admitted insurer's report on
minority, women, and disabled veteran-owned business procurement
efforts.
   (g) Each insurer required to submit a report or plan pursuant to
this section may request verification of the status of any supplier
that asserts it qualifies as a women business enterprise, a minority
business enterprise, or a disabled veteran business enterprise from
the Public Utilities Commission, the Department of General Services,
the Department of Insurance, or any entity selected or recognized by
these agencies for the purpose of verifying the accuracy of that
assertion.
   (h) (1) In the event that the report or plan includes a goal to
increase procurement from minority, women, or disabled veteran
business enterprises, then the procurement attributed to a minority,
women, or disabled veteran business enterprise, for statistical
purposes, shall be one that is verified as one of those enterprises
by the primary entity selected by the Public Utilities Commission, by
the Department of General Services, or by the Department of
Insurance for this purpose, or by another entity or organization that
is recognized by any of these agencies to conduct supplier
verifications. Insurers are encouraged to utilize these verification
resources.
   (2) This subdivision does not require any state agency to conduct
these verifications, contract with any entity to conduct these
verifications, or to recognize any other entity or organization for
this purpose.
   (i) A supplier firm that provides a materially false statement
regarding its status as a minority, women, or disabled veteran
business enterprise shall be barred for up to 3 years from being
counted as one of those enterprises for purposes of this section.
 
   927.  (a) The Legislature hereby declares that the essence of the
American economic system of private enterprise is free competition.
Only through full and free competition can free markets, reasonable
and just prices, free entry into business, and opportunities for the
expression and growth of personal initiative and individual judgment
be ensured in all of the state's communities. The preservation and
expansion of that competition is basic to the economic well-being of
this state and that well-being cannot be realized unless the actual
and potential capacities of women, minority, and disabled veteran
business enterprises are encouraged and developed. The state's
diverse composition propels economic innovation and growth, and the
economy's full employment potential cannot be achieved if these
communities are left underutilized. Therefore, it is the declared
policy of the state to aid the interests of women, minority, and
disabled veteran business enterprises in order to preserve reasonable
and just prices and a free competitive enterprise, to ensure that a
fair proportion of the total purchases and contracts or subcontracts
for commodities, supplies, technology, property, and services for
insurers are awarded to women, minority, and disabled veteran
business enterprises, and to maintain and strengthen the overall
stability and growth of the state's economy.
   (b) (1) The Legislature declares all of the following:
   (A) The opportunity for full participation in our free enterprise
system by women, minority, and disabled veteran business enterprises
is essential if this state is to approach full employment of its
human resources and improve economic efficiency and equity in
opportunity.
   (B) Public utilities and telecommunications companies, which have
established short- and long-range women, minority, and disabled
veteran business enterprise goals, are awarding 30 percent or more of
their contracts to these business enterprises.
   (C) Women, minority, and disabled veteran business enterprises
have traditionally received less than a proportionate share of
regulated procurement contracts.
   (D) It is in the state's interest to expeditiously improve the
economically disadvantaged position of women, minority, and disabled
veteran business enterprises.
   (E) The position of these businesses can be improved by providing
long-range substantial goals for procurement by insurers of
technology, equipment, supplies, services, materials, and
construction work from women, minority, and disabled veteran
businesses.
   (F) That procurement also benefits the regulated insurance
companies and consumers of the state by encouraging the expansion of
the number of suppliers for procurements, thereby encouraging
competition among the suppliers and promoting economic efficiency in
the process.
   (2) It is the purpose of this article to do all of the following:
   (A) Encourage greater economic opportunity for women, minority,
and disabled veteran business enterprises in the one hundred sixteen
billion dollar ($116,000,000,000) California insurance market.
   (B) Promote competition among the suppliers of insurers in order
to enhance economic efficiency in the procurement of contracts
relevant to the insurance industry and contracts of the subsidiaries
and affiliates of those insurance providers.
   (C) Clarify and expand the program for the procurement by insurers
of technology, equipment, supplies, services, materials, and
construction work from women, minority, and disabled veteran business
enterprises.  
   927.1.  For the purposes of this article, the following
definitions apply:
   (a) "Women business enterprise" means a business enterprise that
is at least 51 percent owned by a woman or women, or, in the case of
any publicly owned business, at least 51 percent of the stock of
which is owned by one or more women, and whose management and daily
business operations are controlled by one or more of those
individuals.
   (b) "Minority business enterprise" means a business enterprise
that is at least 51 percent owned by a minority group or groups, or,
in the case of any publicly owned business, at least 51 percent of
the stock of which is owned by one or more minority groups, and whose
management and daily business operations are controlled by one or
more of those individuals. The contracting admitted insurer shall
presume that minority includes African Americans, Hispanic Americans,
Native Americans, and Asian Pacific Americans.
   (c) "Disabled veteran business enterprise" has the same meaning as
defined in subparagraph (A) of paragraph (7) of subdivision (b) of
Section 999 of the Military and Veterans Code, or any successor
provision.
   (d) To "control" means exercise the power to make policy
decisions.
   (e) To "operate" means to be actively involved in the day-to-day
management and not merely officers or directors.
   (f) "Women, minority, or disabled veteran business enterprise" or
"WMDVBE" means an enterprise as defined in subdivisions (a), (b), or
(c), respectively. 
   927.2.  (a) (1) Each insurer admitted in California, with
California premiums written equal to or in excess of one hundred
million dollars ($100,000,000) shall be required to submit annually
to the commissioner, commencing July 1, 2013, a detailed and
verifiable plan for increasing procurement from women, minority, and
disabled veteran business enterprises.
   (2) These annual plans shall include short- and long-term goals
and timetables, but not quotas, and shall include methods for
encouraging contractors to engage women, minority, and disabled
veteran business enterprises in subcontracts in all areas that
provide subcontracting opportunities.
   (b) The commissioner shall establish guidelines for all admitted
insurers with California premiums written equal to or in excess of
one hundred million dollars ($100,000,000) to be utilized in
establishing programs pursuant to this article.
   (c) Each admitted insurer, with California premiums written equal
to or in excess of one hundred million dollars ($100,000,000), shall
furnish an annual report to the commissioner regarding the
implementation of programs established pursuant to this article in a
form that the commissioner shall require, and at the time that the
commissioner shall annually designate.
   (d) (1) Notwithstanding Section 10231.5 of the Government Code,
the commissioner shall annually report on the department's Internet
Web site and provide a report to the Legislature on September 1 of
each year on the progress of activities undertaken by each admitted
insurer with California premiums written equal to or in excess of one
hundred million dollars ($100,000,000) pursuant to this article in
the implementation of women, minority, and disabled veteran business
enterprise development programs. The report shall include information
about which procurements are made from women, minority, and disabled
veteran business enterprises with at least a majority of the
enterprise's workforce in California, to the extent that information
is readily accessible. The commissioner shall recommend a program for
carrying out the policy declared in this article, together with
recommendations for legislation that the commissioner deems necessary
or desirable to further that policy.
   (2) In regard to disabled veteran business enterprises, the
commissioner shall ensure that the programs and legislation
recommended pursuant to paragraph (1) are consistent with the
disabled veteran business enterprise certification eligibility
requirements imposed by the Department of General Services and that
the recommendations address themselves to only those disabled veteran
business enterprises certified by the Department of General
Services. The Department of General Services shall, as requested by
the Department of Insurance, advise and assist in the administration
of this section.
   (3) A report to be submitted pursuant to this subdivision shall be
submitted in compliance with Section 9795 of the Government Code.
   (e) The Legislature declares that each admitted insurer that is
not required to submit a plan pursuant to subdivision (a) is
encouraged to voluntarily adopt a plan for increasing women,
minority, and disabled veteran business enterprise procurement. The
commissioner may publicize participants and nonparticipants in the
program.  
   927.3.  (a) (1) The commissioner shall, by regulation, adopt
criteria for verifying and determining the eligibility of women and
minority business enterprises for procurement contracts.
   (2) The commissioner shall adopt the Department of General
Services' disabled veteran business enterprise certification
eligibility requirements for verifying and determining the
eligibility of disabled veteran business enterprises for procurement
contracts, and shall not deem eligible those disabled veteran
business enterprises that are not certified by the Department of
General Services.
   (3) The commissioner shall, to the extent possible, coordinate
with the Public Utilities Commission for the sharing of WMDVBE
identification and verification information.
   (b) The commissioner shall require each admitted insurer with
California premiums written equal to or in excess of one hundred
million dollars ($100,000,000) to implement an outreach program to
inform and recruit women, minority, and disabled veteran business
enterprises to apply for procurement contracts under this article.
 
   927.4.  Any person, corporation, or other organization, through
its directors, officers, or agents, that falsely represents a
business as a women, minority, or disabled veteran business
enterprise in the procurement of, or attempt to procure, a contract
from a California admitted insurer with California premiums written
equal to or in excess of one hundred million dollars ($100,000,000)
subject to this article, shall be barred from participating in the
program for up to three years from the date of the false
representation. In the case of a corporation or other organization,
this punishment shall be imposed on the corporation or other
organization and every director, officer, or agent responsible for
the false statements. 
    927.5.  927.3.   In order to facilitate
the participation of women-owned businesses, minority-owned
businesses, disabled veteran-owned businesses, and small businesses
in contract procurement, any insurer subject to this article may
consider the following measures to include those businesses in all
phases of their contracting:
   (a) Timely or progressive payments to those businesses.
   (b) The provision of assistance to those businesses by securing
contract payments to those businesses with letters of credit,
negotiable securities, or other financing arrangements or measures.