Today's Law As Amended


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AB-2996 California FAIR Plan Association.(2023-2024)



As Amends the Law Today


SECTION 1.

 Article 11 (commencing with Section 63049.75) is added to Chapter 2 of Division 1 of Title 6.7 of the Government Code, to read:

Article  11. California FAIR Plan Association Financing
63049.75.
 (a) Notwithstanding any other provision of this division, pursuant to Section 10100.3 of the Insurance Code and upon approval of the bank, a financing of the costs of paid claims or to increase liquidity and claims-paying capacity upon the request of the California FAIR Plan Association shall be deemed to be in the public interest and eligible for financing by the bank. Article 3 (commencing with Section 63040), Article 4 (commencing with Section 63042), Article 5 (commencing with Section 63043), Article 5.5 (commencing with Section 63047.1), Article 6 (commencing with Section 63048), Article 6.3 (commencing with Section 63048.55), Article 6.5 (commencing with Section 63048.6), Article 6.7 (commencing with Section 63048.91), Article 7 (commencing with Section 63049), Article 8 (commencing with Section 63049.6), Article 9 (commencing with Section 63049.67), and Article 10 (commencing with Section 63049.70) shall not apply to that financing provided by the bank.
(b) Notwithstanding any other provision of this division, the bank shall not have authority over any matter that is subject to the approval of, or otherwise regulated by, the Insurance Commissioner under Part 1 (commencing with Section 1880) of Division 2 of the Insurance Code. The bank shall have the right to enforce all obligations of the California FAIR Plan Association under the agreements relating to bonds issued under this section.
(c) The bank may issue taxable or tax-exempt bonds pursuant to Chapter 5 (commencing with Section 63070) to finance the costs of claims or to increase liquidity and claims-paying capacity of the California FAIR Plan Association, and to refund bonds previously issued for that purpose, and may loan the proceeds thereof to the California FAIR Plan Association. Bond proceeds may also be used to fund necessary reserves, capitalized interest, credit or liquidity enhancement costs, and costs of issuance.
(d) Bonds issued under this section shall not be deemed to constitute a debt or liability of the state or of any political subdivision thereof, other than the bank, or a pledge of the faith and credit of the state or of any political subdivision, but shall be payable solely from the fund and other revenues and assets securing the bonds. All bonds issued under this article shall contain on the face of the bonds a statement to that effect.

SEC. 2.

 Section 63087.5 is added to the Government Code, immediately following Section 63087, to read:

63087.5.
 For purposes of this chapter:
(a) “Participating party” includes the California FAIR Plan Association.
(b) “Project” has the same meaning as defined in Section 63010, and also includes financing all or any portion of the costs of claims or to increase liquidity and the claims-paying capacity of the California FAIR Plan Association in an amount, together with necessary reserves, capitalized interest, credit or liquidity enhancement costs, or costs of issuance, that may be determined by the California FAIR Plan Association, with prior approval from the Insurance Commissioner, in a request to the bank made pursuant to Section 63049.75.

SEC. 3.

 Section 10100.3 is added to the Insurance Code, to read:

10100.3.
 (a) If granted prior approval from the commissioner, the association may do all of the following:
(1) Request the California Infrastructure and Economic Development Bank to issue bonds from time to time to finance all or any portion of the costs of claims or to increase liquidity and claims-paying capacity, pursuant to Section 63049.75 of the Government Code.
(2) Enter into loan agreements with the California Infrastructure and Economic Development Bank, pursuant to Section 63049.75 of the Government Code.
(3) Enter into line of credit agreements with one or more institutional lenders, as defined in Section 22600 of the Financial Code, or one or more broker-dealers, as defined in Section 25004 of the Corporations Code, for the purpose of financing the costs of claims or to increase liquidity and claims-paying capacity and to refund lines of credit previously incurred for that purpose.
(4) Secure those loan agreements or line of credit agreements by a pledge of, and the grant of a lien and security interest in, collateral, including premiums, revenues, and receivables. That pledge, lien, and security interest is subject to Division 9 (commencing with Section 9101) of the Commercial Code.
(5) Enter into any other agreement or take any other action necessary or convenient to the execution and delivery of bonds, loan agreements, or line of credit agreements.
(b) If the bonds, loan agreements, or lines of credit described in subdivision (a) have received the prior approval of the commissioner as provided in subdivision (a), the association shall assess members in the amounts and at the times necessary to timely pay in full all obligations of the association with respect to those bonds, loan agreements, and lines of credit and all obligations of the association under agreements entered into pursuant to paragraph (5) of subdivision (a). Once approved by the commissioner, specific repayment terms, including those relating to assessment, shall not be altered by subsequent amendment to the plan of operation, and amendments to the plan of operation shall not impair the timely payment in full of any obligations of the association with respect to those bonds, loan agreements, and lines of credit and all obligations of the association under agreements entered into pursuant to paragraph (5) of subdivision (a).
SEC. 4.
 This act is an urgency statute necessary for the immediate preservation of the public peace, health, or safety within the meaning of Article IV of the California Constitution and shall go into immediate effect. The facts constituting the necessity are:
California is now experiencing a severe property insurance availability crisis in the state. This crisis in availability within the property insurance market normally provided by admitted insurers and licensed surplus line brokers is having the result that needed coverage is often unavailable in the normal insurance market, forcing consumers to resort to the “nonadmitted” or “secondary market,” which are insurance alternatives not overseen by the Department of Insurance. Consumers are also having to purchase much more insurance through the California FAIR Plan Association, and the association has grown to such an extent that its financial capacity to pay claims after a catastrophic fire is unlikely.
The Legislature finds that access to basic property insurance suitable for protection of all types of habitational risk, including personal and commercial lines of insurance, has become increasingly unavailable and that, as a result, all Californians may suffer because of this unavailability. In order for insurance consumers to obtain adequate policy coverage from the California FAIR Plan, which is subject to regulation by the commissioner, as soon as possible, it is necessary that this act take effect immediately.