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Home My WebLink About5.1 SB 103 Insurance Reform (�0 - CITY OF DUBLIN AGENDA STATEMENT CITY COUNCIL MEETING DATE: April 10, 1989 SUBJECT Written Communication Requesting Endorsement of SB 103 EXHIBITS ATTACHED Letter from Alan Robbins , Chairman, State Senate ommittee on Insurance , Claims and Corporations RECOMMENDATION Consider FINANCIAL STATEMENT: None DESCRIPTION Last November , the voters of California were asked to consider a number of insurance reform measures . Consequently, Proposition 103 was approved. Proposition 103 provides for insurance reform, including antitrust exemptions , limitations on annual increases , provisions regarding non-renewals and . cancellations , and a "Good Driver Discount Plan" . Under Proposition 103 , a notice of non-renewal or cancellation of a private passenger auto insurance policy is effective only if it is based on: • Non-payment of premium; • Fraud or material misrepresentation; or o A substantial increase in the hazard insured against . Further, Proposition 103 mandates a "Good Driver Discount" , which provides that a driver with only one citation must be included in the pool of motorists given the good driver discount . Allowing those convicted of drunk driving or other vehicle-relatedcrimes to be part of that pool drives up the cost for all good drivers . SB 103 proposes to clarify and enforce the provisions of Proposition 103 . SB 103 would specify that insurance companies are liable to policyholders for the cost of replacement policies if the insurance company fails to renew or cancels at least 5;; of its policies for private passenger auto insurance during any month between April 15 , 1989 , and November 8, 1989 . In addition, an insurer would also be subject to penalties imposed by the Insurance Commission. Of course , SB 103 would cease to be effective if either the U. S. or the California Supreme Court holds Proposition 103 ' s renewal provisions unconstitutional . SB 103 also proposes to clarify the Good Driver Discount Program so that a person convicted of drunk driving, reckless driving or automobile manslaughter within a three year period would not qualify for the discount . The State Senate Committee on Insurance , Claims and Corporations urges cities and counties to support SB 103 . -------------------------------------------------------------------------- 1�' COPIES TO: ITEM NO. ........... MEMBERS JIM CAT IHC A R7 '.-IEF',','61JI-Ta'.' -JIM NIELSEN SAL BIANC, I.CE 7-7 ED DAVIS WAD E DEDDEI-1 LEAH CARTAB�Fj'r� IJV Cat"forn 'a leg 'gtatut� ,;�PW �OLITTLE CECIL GPEEN 'AA r/ UREEN aP ,1:S 2APPY KEEME Gael McCORQUODALE JOSEPH MONTOYA STATE APITCL ROOM 5122 C SENATE COMMITTEE ON SACP.".'E!iT0.CA 95814 INSURANCE, CLAIMS AND CORPORATIONS `9t6,445.C;�25 RECEIVED ALAN ROBBINS CHAIRMAN Apt), CITY OF DUBLIN March 31, 1989 City of Dublin City Hall 6500 Dublin Blvd. Dublin, CA 94568 Dear Members of the City Council : Over twenty cities and counties have joined the fight against high insurance costs and have voted to endorse SB 103. Others are scheduled to vote on taking a stand next week. It would be helpful if we could add the City of Dublin to our support list, especially since April is the crucial time in this struggle. If you support our legislative efforts, please tell your local state legislators that you are in favor of SB 103 and urge them to vote yes on this bill . We appreciate your consideration of this request. My best regards. Sincerely aQ. x,.1 ALAN ROBBINS AR:LeaC/gny Enclosures �. SUPPORTERS OF SB 103 BUSINESS ORGANIZATIONS CONSUMER AND SENIOR ORGANIZATIONS *Arleta Chamber of Commerce *American Association of Retired Persons sCalifornia Highway Carriers *Congress of California Seniors *California Retailers Association •FAIR (Fair Automobile Insurance Rates) *Canoga Park Chamber. of Commerce •ICAN (Insurance Consumers Action Network) tChatsworth Chamber of Commerce *Seniors for Legislative Action *Citrus Heights Chamber of Commerce sCouncil on Aging, City of Los Angeles eGranada Hills Chamber of Commerce #Insurance Agents & Brokers Legislative Council GOVERNMENT *Mission Hills Chamber of Commerce •Northridge Chamber of Commerce eCounty Supervisors Association of Calif. *Pacoima Chamber of Commerce •Regional Council of Rural Counties *Panorama City/Sepulveda Chamber of Commerce *Alpine County •Amador County *Reseda Chamber of Commerce •Contra Costa County 9E1 Dorado County •San Fernando Chamber of Commerce •Fresno County •Glenn County •San Juan Capistrano Chamber of Commerce •Los Angeles County •Mono County •Sherman Oaks Chamber of Commerce •Nevada County ePlumas County •Studio City Chamber of Commerce *Santa Cruz County eSiskiyou County •Sunland/Tujunga Chamber of Commerce @Trinity County •Sun Valley Area Chamber of Commerce *City of Adelanto •City of Anaheim *Sylmar Chamber of Commerce *City of Artesia sCity of Gardena *Tarzana Chamber of Commerce #City of Irvine •City of Lancaster *Van Nuys (Greater Area) Chamber $City of Los Alamitos *City of Norco of Commerce #City of Orange Cove •City of Pacific Grove *Woodland Hills Chamber of Commerce #City of Tehachapi EDITORIAL SUPPORT LAW ENFORCEMENT •Oakland Tribune *California Association of Special •KMJC-AM Radio, San Diego Investigators LABOR ORGANIZATIONS #California Conference of Machinists *Teamsters Public Affairs Council •California Labor Federation, AFL-CIO *Transportation Communications International •California State Employees Association Union •Communications Workers of America *United Brotherhood of Carpenters and tInternation Longshoremen and Joiners of America WarehOU ,emen Union, Northern eftited Transportation Union California Council Prepared and Distributed by Senator Alan Robbins ZNSURANCk—_- REFORM IN' CALia=ORNIA FACT SHEET - SENATE BILL 103 (ROBBINS) , INTENT SB 103 will prevent illegal blanket cancellations in the private passenger automobile insurance segment of the market at least until November, 1989. On a permanent basis, it also will prevent abuse of the "Good Driver Discount" called for in Proposition 103. THE EXISTING OBLIGATION UNDER PROP. 103 On December 7, 1988, the California Supreme Court ordered into effect the provision in Proposition 103 that prohibits an insurance company from declining to renew a private passenger automobile insurance policy unless the action is legitimately based on: - Nonpayment of premium; - Fraud or material misrepresentation affecting the policy of the insured; or - A substantial increase in the hazard insured against. SB 103 ADDS TEETH FOR ENFORCEMENT If the insurers declined to renew 5% or more, the company must offer each policyholder who was cancelled an option to renew. In the event a policyholder who was not renewed has found a replacement policy at a higher premium rate, the former insurer must pay the policyholder the increase in premium. This portion of SB 103 and the penalty assessment provision are both temporary and only apply to private passenger automobile insurance policies that come due for renewal between the Act's effective date and November 8, 1989. If either the U.S. or the California Supreme Court holds Proposition 103's renewal provisions unconstitutional , this bill. immediately goes out of effect. THE PENALTY ASSESSMENT UNDER SB 103 An insurer in violation of the law maybe assessed 50° of its aggregate private passenger automobile insurance premiums on the policies illegally cancelled. If there has been substantial compliance, the Insurance Commissioner may reduce the percentage assessment to 25%. Assessment funds may be appropriated by the Legislature solely to subsidize those unable to afford automobile insurance, thus reducing the uninsured motorist problem. UNDER SB 103 AN INSURANCE COMPANY MAY STILL LEAVE CALIFORNIA, but it must do so in a lawful manner. No penalty will be charged against an insurance company so long' as it complies with the law and fulfills the existing Insurance Code requirement that it have another insurer assume its renewal obligations before it leaves the state. "GOOD DRIVER DISCOUNT" The Good Driver Discount plan mandated by Proposition 103 provides that a driver with only one citation must be included in the pool of motorists given the good driver discount. Allowing drunk drivers and others who commit vehicle-related crime to be part of that pool drives up the cost for all good drivers. To prevent abuse, this bill clarifies the Good Driver Discount program so that a person convicted of drunk driving, reckless driving or automobile manslaughter within the three year period will not qualify for the discount. leaC327