Bill Text: CA SB336 | 2015-2016 | Regular Session | Introduced
Bill Title: Earthquake insurance: rates.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Failed) 2016-11-30 - From Assembly without further action. [SB336 Detail]
Download: California-2015-SB336-Introduced.html
BILL NUMBER: SB 336 INTRODUCED
BILL TEXT
INTRODUCED BY Senator Roth
FEBRUARY 23, 2015
An act to amend Section 10089.40 of the Insurance Code, relating
to earthquake insurance.
LEGISLATIVE COUNSEL'S DIGEST
SB 336, as introduced, Roth. Earthquake insurance: rates.
Existing law establishes the California Earthquake Authority and
authorizes the authority to transact insurance in this state as
necessary to sell policies of basic residential earthquake insurance.
Existing law requires that the rates established by the authority be
actuarially sound so as to not be excessive, inadequate, or unfairly
discriminatory. Existing law provides that policyholders who have
retrofitted their homes to withstand earthquake shake damage
according to standards and to the extent set by the governing board
of the authority shall enjoy a premium discount or credit of 5
percent on the authority-issued policy of residential earthquake
coverage. Existing law authorizes the board to approve a premium
discount or credit above 5 percent if the discount or credit is
determined by the authority to be actuarially sound.
This bill would instead provide that those policyholders shall
enjoy a premium discount or credit of at least 5 percent on the
authority-issued policy of residential earthquake coverage. The bill
would also make nonsubstantive, technical changes.
Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 10089.40 of the Insurance Code is amended to
read:
10089.40. (a) Rates established by the authority shall be
actuarially sound so as to not be excessive, inadequate, or unfairly
discriminatory. Rates shall be established based on the best
available scientific information for assessing the risk of earthquake
frequency, severity, and loss. Rates shall be equivalent for
equivalent risks. Factors the board shall consider in adopting rates
include, but are not limited to, the following:
(1) Location of the insured property and its proximity to
earthquake faults and to other geological factors that affect the
risk of earthquake or damage from earthquake.
(2) The soil type on which the insured dwelling is built.
(3) Construction type and features of the insured dwelling.
(4) Age of the insured dwelling.
(5) The presence of earthquake hazard reduction factors, including
those set forth in subdivision (a) of Section 10089.2.
(b) (1) If scientific information from geologists, seismologists,
or similar experts that assesses the frequency or severity of risk of
earthquake is considered in setting rates or in arriving at the
modeling assumptions upon which those rates are based, the
information may be used to establish differentials among risks only
if the information, assumptions, and methodology used are consistent
with the available geophysical data and the state of the art of
scientific knowledge within the scientific community.
(2) Scientific information from geologists, seismologists, or
similar experts shall not be conclusive to support the establishment
of different rates between the most populous rating territories in
the northern and southern regions of the state unless that
information, as analyzed by experts such as the United States
Geological Survey, the California Division of Mines and
Geology, Geological Survey, and experts in the
scientific or academic community, clearly shows a higher risk of
earthquake frequency, severity, or loss between those most populous
rating territories to support those differences.
(3) It is not the intent of the Legislature in adopting this
subdivision to mandate a uniform statewide flat rate for California
Earthquake Authority policies.
(c) The classification system established by the board shall not
be adjusted or tempered in any way to provide rates lower than are
justified for classifications that present a high risk of loss or
higher than are justified for classifications that present a low risk
of loss.
(d) Policyholders who have retrofitted their homes to withstand
earthquake shake damage according to standards and to the extent set
by the board shall enjoy a premium discount or credit of at
least 5 percent on the authority-issued policy of residential
earthquake coverage. For residential dwellings, the
5-percent discount shall be applicable if the dwelling, at
a minimum, meets the following requirements: the dwelling was built
prior to 1979, is tied to the foundation, has cripple walls braced
with plywood or its equivalent, and the water heater is secured to
the building frame. For mobilehomes, the 5-percent
discount shall be applicable if the mobilehome, at a minimum, is
reinforced by an earthquake resistant bracing system certified by the
Department of Housing and Community Development. The board may
approve a premium discount or credit above 5 percent, as
long as percent if the discount or credit is
determined by the authority to be actuarially
sound by the authority. sound.
(e) All rates shall be approved by the commissioner prior to their
use.
