The sponsor of a California bill that would mandate insurer community development investments, withdrew the bill from consideration by this legislative session.
Assembly Member Mark Ridley-Thomas, will not pursue AB 925 relating to insurer investments, making the bill a two-year bill, according to NAMIC’s state advocacy partner, the Personal Insurance Federation of California (PIFC).
NAMIC and PIFC opposed the bill as being unnecessary, unreasonable and impractical.
“The very concept of AB 925 is flawed from a public policy standpoint,” said NAMIC State Affairs Manager, Christian John Rataj. “It is really a form of ‘coerced philanthropy,’ not a meaningful investment opportunity for the insurance industry. Further, the bill is unnecessary since the insurance industry already contributes a significant amount of money to urban development. Lastly, the bill will eventually lead to higher insurance rates because consumers will ultimately be the one forced to pay for this ‘privatization of public welfare.'”
In 1999, NAMIC concluded that the federal Community Reinvestment Act should not be applied to insurers. NAMIC found that subjecting the industry to an unnecessary government mandate would: raise policyholders’ premiums; weaken the insurance industry financially; undermine its competitive position; and jeopardize its ability to pay customers’ claims, especially in catastrophic situations.
A copy of NAMIC’s paper, Should the Community Reinvestment Act Apply to Insurance Companies can be read on NAMIC Online at http://www.namic.org/policy/cra/default.asp.
AB 925 would have required that each insurer admitted to do business in California with a surplus of less than $500 million to invest not less than one percent of its California allocated surplus. Insurers with a surplus of $500 million or more would invest not less than one percent of California allocated invested assets.
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