California Gov. Arnold Schwarzenegger has signed insurance-related bills into law, including those affecting the California Earthquake Authority, excess investment and auto insurance licenses.
Senate Bill 430 was signed on Oct. 5, designating $1.3 billion from participating insurers to fund the CEA. This additional $1.3 billlion contribution is being made with no compensation to the particpating insurers (PIs), and brings total financial support by the PIs for the CEA to more than $3 billion, when combined with other current commitments.
Existing law authorizes the California Earthquake Authority, administered under the authority of the commissioner to transact basic residential earthquake insurance and defines “available capital,” for the purpose of issuing policies. The bill revises the definition of “available capital,” allowing the authority to require participating insurers to make certain additional capital assessments under specified conditions. The assessments are required to be reduced to zero 12 years after the commencement of authority operations. That 12-year period ends on Dec. 1, 2008.
As signed, the bill would specify that these assessments shall be reduced to zero on Dec. 1, 2008, with respect to earthquake events that commence on or after that date. This bill would also provide that, if claims and claim expenses paid by the authority due to earthquake
events that commence on or after Dec. 1, 2008, exhaust existing
capital and the maximum amount of all specified assessments, the
board shall have the power to further assess participating insurers,
subject to specified maximum limits according to a specified formula.
This bill would make various other related changes to implement
the assessment provisions that apply to earthquake events that
commence on or after Dec. 1, 2008. The provisions of the bill
would become operative on July 1, 2008.
The governor also signed SB 339, affecting excess investment. Existing law provides that an insurer may make excess fund investments in shares of an open-end diversified investment company, as defined, under specified conditions. The bill revises and recasts the conditions applicable to an investment company in which a domestic insurer may make excess fund investments.
In addition, a measure providing a limited lines auto insurance-only license, was signed by the governor. AB 797 adds a limited lines automobile insurance agent, as specified, to the existing types of agent licensees. Existing law provides that an organization may hold any license or licenses necessary to act in specified capacities. The bill provides that an organization may hold a license to act as a limited lines automobile insurance agent. This bill requires candidates for the limited lines automobile insurance agent license to undergo a minimum of 20 hours of prelicensing study as a prerequisite for qualification for the license. Approved courses in business management practices may consist of up to 25 percent of the agent or broker requirements for license renewal.
Source: Office of the Governor
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