Today's Law As Amended


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AB-2049 Earthquake insurance.(1991-1992)



As Amends the Law Today


SECTION 1.

 Chapter 4.5 (commencing with Section 5000) of Part 1 of Division 2 of the Insurance Code is repealed.

SEC. 2.
 Notwithstanding the repeal of Section 5011.5 of the Insurance Code by this act, the advisory commission created by that section is hereby continued in existence as the Advisory Committee on Residential Earthquake Preparedness, Mitigation, and Recovery. Existing members shall continue as members to the maximum extent possible in order to minimize disruption and permit the committee to begin and finish its work at the earliest possible date. The committee shall have the following composition and duties:
(a)  The committee shall be composed of 10 members as follows:
(1)  The Insurance Commissioner.
(2)  The Director of Emergency Services.
(3)  One member of the Seismic Safety Commission, appointed by the advisory committee.
(4)  The Treasurer.
(5)  One member of the public appointed by the Speaker of the Assembly.
(6)  One member of the public appointed by the Senate Committee on Rules.
(7)  One member of the public appointed by the Governor.
(8)  Three representatives of private insurers, private reinsurers, or actuaries for insurers or reinsurers to be appointed by the Insurance Commissioner.
(b)  The committee shall study and, no later than July 1, 1993, submit a report to the Legislature on the following issues:
(1)  The availability, cost, and adequacy of private earthquake insurance for residential structures and options for making that private insurance more available.
(2)  The total extent of residential structural damage and related loss that may be expected to result from earthquakes of various magnitudes in various locations in California.
(3)  The feasibility of establishing and adequately and equitably funding a state-mandated earthquake recovery fund, or similar mechanism, to cover minor, moderate, or catastrophic earthquake damage to residential structures and related loss.
(4)  The relative value of requiring or encouraging the use of various complementary mitigation measures in connection with any state-mandated program identified in paragraph (3).
(5)  The advisability of pursuing a federal solution to the problem of insuring residential damage and loss caused by earthquake and the usefulness, if any, of interim state measures such as those identified above.
(c)  The report shall be specific and comprehensive and shall contain detailed recommendations, including specific alternative legislative proposals.
(d)  All expenses, direct or indirect, associated with the work and report of the committee shall be paid by the Department of Insurance out of existing revenues and appropriations for the support of the department. It is the intent of the Legislature that no additional revenues be appropriated for the purpose of implementing this section.
(e)  This section shall remain in effect only until January 1, 1994, and as of that date is repealed, unless a later enacted statute, which is enacted before January 1, 1994, deletes or extends that date.
SEC. 3.
 Notwithstanding the repeal of the Green, Hill, Areias, Farr California Residential Earthquake Recovery Act made by this act, all valid claims arising under that act prior to the effective date of this act, including claims arising from all the recent earthquakes, shall be paid in accordance with the provisions of the Green, Hill, Areias, Farr California Residential Earthquake Recovery Act as in effect prior to its repeal.
SEC. 4.
 All money in the California Residential Earthquake Recovery Fund, in addition to the purposes for which it has already been appropriated, is hereby appropriated for the purpose of paying actual costs associated with the termination of the program, including, but not limited to, administrative expenses and payment for contract services.
SEC. 5.
 Upon payment of all valid claims pursuant to Section 3, and payment of actual costs as authorized by Section 4, the Insurance Commissioner shall return any money remaining in the California Residential Earthquake Recovery Fund to insureds who have paid the surcharge imposed by the California Residential Earthquake Recovery Act on a pro rata basis determined by the Insurance Commissioner to be appropriate.
SEC. 6.
 The General Fund shall not have liability for any of the following:
(a)  The costs accrued to date in connection with the California Residential Earthquake Recovery Act, including, but not limited to, (1) any insurance benefits, (2) program administration, (3) reinsurance coverage for the program, or (4) any contract, including a contract for a fiscal intermediary and claims adjusting service.
(b)  Any future costs of the California Residential Earthquake Recovery Program, including, but not limited to, those costs to be incurred in termination of the operations of the program.
SEC. 7.
 The state and the Insurance Commissioner shall not be liable for any payments in excess of the amount of money in the fund. Insurers collecting the earthquake surcharge shall bear no risk and shall assume no liability for payments made by the fund, including any pro rata distribution.
SEC. 8.
 The Auditor General shall conduct a fiscal and management audit of the implementation, administration, and plans for termination of the California Residential Earthquake Recovery Program, and shall submit a report of its findings and recommendations to the Department of Finance and the Legislature within 45 days of the effective date of this act.