Bill Text

Bill Information


Add To My Favorites | print page

AB-1054 Motor vehicle insurance: rates.(2009-2010)

SHARE THIS: share this bill in Facebook share this bill in Twitter
AB1054:v97#DOCUMENT

Amended  IN  Assembly  January 11, 2010
Amended  IN  Assembly  April 13, 2009

CALIFORNIA LEGISLATURE— 2009–2010 REGULAR SESSION

Assembly Bill
No. 1054

Introduced  by  Assembly Member Coto

February 27, 2009

An act to amend Section 1861.05 of the Insurance Code, relating to insurance rates.


LEGISLATIVE COUNSEL'S DIGEST


AB 1054, as amended, Coto. Motor vehicle insurance: rates.
Existing law provides that rates set by the commissioner regulations require the Insurance Commissioners to calculate an efficiency standard, or defined in connection with setting insurance rates pursuant to Proposition 103 of the 1988, approved by voters in the November 8, 1988, statewide general election may be judicially challenged for various reasons, as specified.
This bill would provide that any rate filing, as defined, approved by the commissioner may be challenged, as provided. The bill would prohibit any retrospective adjustment of an approved filing from being awarded unless the insurer has not complied with the terms of the approval. This bill would exclude expenses paid to credit card issuers by the insurer as a result of premiums paid made by credit card from the calculation to determine the insurer’s efficiency standard.
This bill would find and declare that this act furthers the purposes of Proposition 103, and would make supporting and related findings and declarations.
Because this bill would amend Proposition 103, it would require a 2/3 vote of each house of the Legislature for enactment.
Vote: 2/3   Appropriation: NO   Fiscal Committee: YES   Local Program: NO  

The people of the State of California do enact as follows:


SECTION 1.

 Section 1861.05 of the Insurance Code is amended to read:

1861.05.
 Approval of Insurance Rates.  (a) No rate shall be approved or remain in effect which is excessive, inadequate, unfairly discriminatory or otherwise in violation of this chapter. In considering whether a rate is excessive, inadequate or unfairly discriminatory, no consideration shall be given to the degree of competition and the commissioner shall consider whether the rate mathematically reflects the insurance company’s investment income.
(b) Every insurer which desires to change any rate shall file a complete rate application with the commissioner. A complete rate application shall include all data referred to in Sections 1857.7, 1857.9, 1857.15, and 1864 and such other information as the commissioner may require. The applicant shall have the burden of proving that the requested rate change is justified and meets the requirements of this article.
(c) The commissioner shall notify the public of any application by an insurer for a rate change. The application shall be deemed approved 60 days after public notice unless (1) a consumer or his or her representative requests a hearing within 45 days of public notice and the commissioner grants the hearing, or determines not to grant the hearing and issues written findings in support of that decision, or (2) the commissioner on his or her own motion determines to hold a hearing, or (3) the proposed rate adjustment exceeds 7 percent of the then applicable rate for personal lines or 15 percent for commercial lines, in which case the commissioner must hold a hearing upon a timely request. In any event, a rate change application shall be deemed approved 180 days after the rate application is received by the commissioner (A) unless that application has been disapproved by a final order of the commissioner subsequent to a hearing, or (B) extraordinary circumstances exist. For purposes of this section, “received” means the date delivered to the department.
(d) For purposes of this section, extraordinary circumstances include the following:
(1) Rate change application hearings commenced during the 180-day period provided by subdivision (c). If a hearing is commenced during the 180-day period, the rate change application shall be deemed approved upon expiration of the 180-day period or 60 days after the close of the record of the hearing, whichever is later, unless disapproved prior to that date.
(2) Rate change applications that are not approved or disapproved within the 180-day period provided by subdivision (c) as a result of a judicial proceeding directly involving the application and initiated by the applicant or an intervenor. During the pendency of the judicial proceedings, the 180-day period is tolled, except that in no event shall the commissioner have less than 30 days after conclusion of the judicial proceedings to approve or disapprove the application. Notwithstanding any other provision of law, nothing shall preclude the commissioner from disapproving an application without a hearing if a stay is in effect barring the commissioner from holding a hearing within the 180-day period.
(3) The hearing has been continued pursuant to Section 11524 of the Government Code. The 180-day period provided by subdivision (c) shall be tolled during any period in which a hearing is continued pursuant to Section 11524 of the Government Code. A continuance pursuant to Section 11524 of the Government Code shall be decided on a case by case basis. If the hearing is commenced or continued during the 180-day period, the rate change application shall be deemed approved upon the expiration of the 180-day period or 100 days after the case is submitted, whichever is later, unless disapproved prior to that date.
(e) In calculating an insurer’s expenses for purposes of determining its efficiency standard, the commissioner shall not include expenses paid to credit card issuers by the insurer as a result of premium payments made by credit card as defined in subdivision (a) of Section 1747.02 of the Civil Code.

(f)Any rate filing approved by the commissioner may be challenged as provided in this chapter. However, no retrospective adjustment of an approved rate filing may be awarded unless the person challenging the rate filing establishes that the insurer has not complied with the approval. “Rate filing” includes the filed rates, premiums, and rating.

SEC. 2.

 The Legislature finds and declares that this act furthers the purposes of Proposition 103 of the November 8, 1988, statewide general election. Specifically, the Legislature finds and declares all of the following:
(a) Allowing insureds to use credit cards to pay the premiums on insurance coverage they are legally required to carry is an important option for insureds in this difficult economy.
(b) Insurers that allow insureds to use credit cards to pay premiums are generally absorbing the costs charged to the insurer for the use of the credit card.
(c) Including expenses paid by the insurer as a result of an insured’s use of a credit card in the calculation to determine an insurer’s efficiency standard may discourage insurers from accepting credit card payments from insureds to pay premiums in full.
(d) By excluding expenses paid to credit card issuers by an insurer as a result of premiums paid made by credit card, this act furthers the purpose of Proposition 103 by ensuring that insurance is fair, available, and affordable to all consumers during this difficult economy.

(e)Current law provides specific steps for rate approval, including liberal provision for consumer participation both before and after an approval.

(f)Insurers whose rates have been approved pursuant to subdivision (c) of Section 1861.01 and subdivision (c) of Section 1861.05 are subject to harsh penalties under Sections 1859.1 and 1861.14 for failing to comply strictly with the terms of the approvals, including potential loss of their certificates of authority.

(g)While preserving all existing rights to challenge an approval, this act also protects reasonable reliance on the commissioner’s rate approval process by ensuring that an insurer is not held retrospectively liable for a return of premium provided that the insurer has met the terms of the commissioner’s final order as embodied in a lawfully secured rate approval.

(h)This act furthers the purpose of Proposition 103 by providing certainty to insurers and consumers following the commissioner’s rate approval and by ensuring that the insurance commissioner is held accountable.