Bill Text: CA SB1273 | 2013-2014 | Regular Session | Introduced

California Senate Bill 1273 (Prior Session Legislation)

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

Bill Title: Insurance: low-cost automobile insurance program.

Spectrum: Partisan Bill (Democrat 3-0)

Status: (Passed) 2014-09-19 - Chaptered by Secretary of State. Chapter 487, Statutes of 2014. [SB1273 Detail]

Download: California-2013-SB1273-Introduced.html

BILL NUMBER: SB 1273	INTRODUCED
	BILL TEXT


INTRODUCED BY   Senator Lara

                        FEBRUARY 21, 2014

   An act to amend Sections 11629.7, 11629.71, and 11629.72 of, and
to repeal Section 11629.84 of, the Insurance Code, relating to
insurance.



	LEGISLATIVE COUNSEL'S DIGEST


   SB 1273, as introduced, Lara. Insurance: low-cost automobile
insurance program.
   Existing law establishes within the California Automobile Assigned
Risk Plan (CAARP) a low-cost automobile insurance program for all
counties in California, until January 1, 2016, in order to provide a
means for eligible consumers to buy automobile insurance, as
specified. The parameters of the program, include, but are not
limited to, value limits for the insured vehicle, initial ratesetting
for certain counties, a surcharge for specified high-risk drivers,
eligibility, sales commissions set at the rate CAARP pays for private
passenger nonfleet risks, cancellation restrictions, and reporting
requirements.
   This bill would revise and recast the parameters of the program
by, among other things, deleting provisions that limit the initial
implementation of the program to specified counties and require the
Insurance Commissioner to make a need-based assessment as to
implementation in all other counties, deleting the repeal date of the
program, thereby extending the operation of the program
indefinitely, and deleting the limits on the value of an automobile
that can be insured through the program. The bill would also expand
the surcharge and eligibility requirements to include drivers with
fewer than 3 years of driving history, including a person who
operates a motor vehicle with a specified type of driver's license,
or drivers who have not been continually licensed for the past 3
years.
   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.  Section 11629.7 of the Insurance Code is amended to
read:
   11629.7.  (a) There is established, within the California
Automobile Assigned Risk Plan established under Section 11620, a
low-cost automobile insurance program for all counties in California.

   (b)  For the purpose of making the low-cost automobile insurance
program operational in all counties of California, pursuant to
subdivision (a), a low-cost automobile insurance program shall
commence operations in the Counties of Alameda, Fresno, Orange,
Riverside, San Bernardino, and San Diego, effective April 1, 2006,
and shall be made operational in all other counties of California
based upon a determination of need made by the commissioner. Program
outreach shall focus primarily on those counties which have the
highest number of uninsured drivers or the highest percentage of
uninsured drivers or the highest percentage of low-income
individuals. In making the determination of need for each county, the
commissioner shall consider each of the following: 

   (1) The number or percentage of motorists within the county who
are uninsured.  
   (2) The number or percentage of residents within the county who
are low income.  
   (3) The availability of affordable automobile insurance options
for the county's low-income residents within the private automobile
insurance marketplace.  
   (c) (1) After making the initial determination of need, the
commissioner shall, as soon as is practicable, hold a public meeting
in that county.  
   (2) The public meeting required by paragraph (1) shall be held not
for the consideration of rates, but for the public discussion of the
need and desirability of the program for the consumers of the
county. Within 30 days after the public meeting, the commissioner
shall make public his or her final determination of whether a need
for the program exists within the county. A separate hearing shall be
held for the consideration of rates pursuant to Section 11629.72.
 
   (d) 
    (b)  The commissioner, after a public hearing, shall
approve or issue a reasonable plan for the equitable apportionment,
among insurers required to participate in the California Automobile
Assigned Risk Plan established under Section 11620, of persons
 residing in the counties or cities and counties set forth in
subdivisions (a) and (b)  who are eligible to purchase
through the program  established in each county or city and
county  a low-cost automobile insurance policy, as described
in Section 11629.71. The program shall be conducted in conjunction
with the California Automobile Assigned Risk Plan established under
Section 11620.
  SEC. 2.  Section 11629.71 of the Insurance Code is amended to read:

   11629.71.  A low-cost automobile insurance policy for purposes of
the program established under this article shall have all of the
following attributes:
   (a) The policy shall offer coverage in the amount of ten thousand
dollars ($10,000) for bodily injury to, or death of, each person as a
result of any one accident and, subject to that limit as to one
person, the amount of twenty thousand dollars ($20,000) for bodily
injury to, or death of all persons as a result of any one accident,
and the amount of three thousand dollars ($3,000) for damage to
property of others as a result of any one accident.
   (b) The coverage required by Section 11580.2 shall be made
available to the consumer. However, an insurer may charge a premium
for that coverage in addition to the premium set forth in Section
11629.72. Notwithstanding the coverage amounts required by Section
11580.2 and Section 16056 of the Vehicle Code, uninsured motorist
coverage issued in conjunction with a low-cost automobile policy
under the program, with coverage limits at least equal to the limits
of liability in the underlying low-cost automobile policy, shall
satisfy the requirements of Section 11580.2 and the financial
responsibility requirements of Sections 4000.37, 16021, and 16431 of
the Vehicle Code.
   (c) Medical payments coverage shall be made available to the
consumer. However, an insurer may charge a premium for that coverage
in addition to the premium set forth in Section 11629.72.
   (d) The policy shall have an initial term of one year, renewable
on an annual basis thereafter.
   (e) The policy shall cover the person named in the policy, and to
the same extent that insurance is provided to the named insured, any
other person using the automobile, provided the use is with his or
her permission, express or implied, and within the scope of that
permission, except that the policy shall not cover members of the
named insured's household who do not satisfy the requirements of
subdivisions (b) to (e), inclusive, of Section 11629.73. 
   (f) The policy shall provide coverage for an automobile with a
value, at the time of purchase by the insured, of twenty thousand
dollars ($20,000) or less, as evidenced by the value given to the
automobile by the Department of Motor Vehicles in assessing vehicle
license fees. 
  SEC. 3.  Section 11629.72 of the Insurance Code is amended to read:

   11629.72.  (a)  Effective March 1, 2003, the annual rate
offered under the program for the low-cost automobile policy, unless
and until the time that the rate is adjusted, shall be three hundred
forty-seven dollars ($347) per covered vehicle for the County of Los
Angeles and three hundred fourteen dollars ($314) per covered vehicle
for the City and County of San Francisco, unless the commissioner
establishes that rate or a different rate prior to that time. The
annual rate offered initially under the program for each of the
Counties of Alameda, Fresno, Orange, Riverside, San Bernardino, and
San Diego shall be established by the commissioner no later than
April 1, 2006.  The annual rate offered  initially
 under the program for each of the  other 
counties in California shall be established at a date according to
the discretion of the commissioner. A surcharge, as a percentage of
the base rate, shall be added to the base rate and that percentage
shall be set at the discretion of the commissioner, if  the
named insured is an unmarried   the named insured or a
resident of the household of the named insured will be a driver of
the automobile covered under the low-cost policy, and is any of the
following: 
    (1)     An   unmarried  male
between  the ages of  19 and 24  ,
inclusive, or if an unmarried male between the ages of 19 and 24,
inclusive, resides in the household of the named insured and will be
a driver of the automobile covered under the low-cost policy
  years of age  . 
   (2) Operates a vehicle with a driver's license issued by the
Department of Motor Vehicles pursuant to Section 12801.9 of the
Vehicle Code and has fewer than three years of driving history. 

   (3) Has fewer than three years of driving history.  
   (4) Has not been continually licensed to drive for the past three
years. 
   (b)  (1)    In addition to existing premium
installment options offered by the California Automobile Assigned
Risk Plan under Article 4 (commencing with Section 11620), the plan
shall also make available to an insured under the program a premium
installment option pursuant to which an insured is required to pay
not more than 15 percent of the total policy cost upon issuance of
the low-cost policy, followed thereafter by six other payments.
 No  
   (2) Beginning on January 1, 2015, the commissioner may approve or
issue new installment plans in addition to or replacing those offered
pursuant to paragraph (1). 
    (3)     No  other premium financing
arrangement shall be permitted.
   (c) Rates for policies issued under the program in each county or
city and county shall be reviewed and revised as follows:
   (1) Rates shall be sufficient to cover (A) losses incurred under
policies issued under the program, and (B) expenses, including, but
not limited to, all reasonable and necessary expenses such as the
costs of administration, underwriting, taxes, commissions, and claims
adjusting, that are incurred due to participation in the program.
For purposes of this paragraph, "losses incurred" means claims paid,
claims incurred and reported, and claims incurred but not yet
reported. In assessing loss reserves, the commissioner shall only
allow loss reserves that are estimated from actual losses in the
program or comparable data by a licensed statistical agent, as
adjusted to reflect coverage provided under the program.
   (2) Rates shall be set so as to result in no projected subsidy of
the program by those policyholders of insurers issuing policies under
the program who are not participants in the program.
   (3) Rates shall be set with respect to the program so as to result
in no projected subsidy by policyholders in one county of
policyholders in any of the other counties.
   (4) Commencing on January 1,  2001   2015
 , and  annually   no less than every three
years  thereafter, the California Automobile Assigned Risk Plan
shall submit the loss and expense data, together with a proposed
rate and the surcharge authorized by subdivision (a) for the low-cost
automobile policy for the program, to the commissioner for approval
in accordance with this chapter. The commissioner shall act on the
recommendation within 90 days.
  SEC. 4.  Section 11629.84 of the Insurance Code is repealed.

   11629.84.  This article shall remain in effect only until January
1, 2016, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2016, deletes or extends
that date.