The author of a California bill that would mandate insurer community development investments, withdrew the bill from consideration for this legislative session.
Assemblyman 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. The bill was sponsored by Insurance Commissioner John Garamendi.
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. “The bill is unnecessary since the insurance industry already invests a significant amount of money towards urban development and other areas throughout the state of California.”
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.
The bill called for community development investments–that have as their primary purpose community development benefiting California low income or moderate income individuals or communities–intended to create or retain jobs or create new or expanded business opportunities, in addition to developing affordable housing in various communities throughout the state.
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