BILL ANALYSIS
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|SENATE RULES COMMITTEE | AB 2800|
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THIRD READING
Bill No: AB 2800
Author: Huffman (D), et al
Amended: 8/14/08 in Senate
Vote: 27
SEN. BANKING, FINANCE, AND INS. COMMITTEE : 10-1, 6/18/08
AYES: Machado, Runner, Correa, Cox, Hollingsworth, Kehoe,
Lowenthal, Margett, Scott, Wiggins
NOES: Florez
SENATE APPROPRIATIONS COMMITTEE : 14-0, 8/7/08
AYES: Torlakson, Cox, Aanestad, Ashburn, Cedillo, Corbett,
Dutton, Florez, Kuehl, Oropeza, Ridley-Thomas, Runner,
Wyland, Yee
NO VOTE RECORDED: Simitian
ASSEMBLY FLOOR : 72-2, 5/22/08 - See last page for vote
SUBJECT : Automobile insurance: rates
SOURCE : Author
DIGEST : This bill allows insurers to apply a different
rating factor for insurer-verified miles driven annually
for purposes of automobile insurance rates.
ANALYSIS :
Existing Law
CONTINUED
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1.Provides that insurance rates for most property-casualty
insurance, including auto insurance, are regulated by the
Insurance Commissioner (Commissioner) on a prior approval
basis.
2.Specifies that rates for private passenger automobile
insurance shall be based on the insured's driving safety
record, the number of miles the insured drives annually,
the number of years of driving experience of the insured,
and such other factors that the Commissioner by
regulation adopts that have a substantial relationship to
the risk of loss.
3.Establishes that the reduction of greenhouse gases is the
policy of the State of California.
This bill:
1.Finds and declares that reducing greenhouse gas emissions
is the policy of the state, that vehicle mileage is a
significant contributor to the greenhouse gas emissions
produced, and that offering insurance on a verified
mileage basis creates an incentive to drive less, assures
more accurate insurance rates, and provides an incentive
to reduce emissions.
2.Provides that, in determining the "number of miles driven
annually" rating factor, insurers may apply different
rating factors for insurer-verified annual mileage and
applicant-estimated annual mileage. The insurer-verified
annual mileage rating factor shall be a voluntary
mileage-based insurance program.
3.Includes a declaration that the Legislature finds the
bill to further the purposes of Proposition 103 (the 1988
initiative that established the regulatory structure that
controls automobile insurance rates).
Background
Statutory law (Proposition 103 in 1988) requires that the
insurance rates for private automobiles be based on the
following for each individual motorist and vehicle:
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1.Driving record.
2.Number of miles driven annually.
3.Number of years of driving experience.
4.Other factors that the Commissioner may adopt by
regulation that have a substantial relationship to the
risk of loss.
Current insurance regulations base automobile insurance
premiums for drivers on the projections of future mileage.
These projections may prove to be accurate or inaccurate.
Although insurance companies may require some supporting
information, such as the customer's self report on the
number of miles driven to work, insurers do not have a
reliable means to verify the customer's mileage. Insurers
may request, but not require, mileage verification through
odometer readings based on recent vehicle service reports
(e.g., oil change invoices) or mileage-tracking technology.
FISCAL EFFECT : Appropriation: No Fiscal Com.: No
Local: No
According to the Senate Appropriations Committee, the
annual cost of this bill will be approximately $200,000
from the Insurance Fund for reviewing and approving new
rates.
SUPPORT : (Verified 8/15/08)
Alliance of Automobile Manufacturers
American Lung Association
Association of California Insurance Companies
California League for Environmental Enforcement Now
California League of Conservation Voters
California Secure Transportation Energy Partnership
Environment California
Environmental Defense Fund
Ford Motor Company
Green California
National Parks Conservation Association
Natural Resources Defense Council
Personal Insurance Federation of California
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Planning and Conservation League
Santa Cruz County Regional Transportation Commission
Sierra Club California
The Greening Institute
Toyota Motor Sales, U.S.A.
Union of Concerned Scientists
OPPOSITION : (Verified 8/15/08)
Consumer Watchdog
Consumer Action
Consumer Federation of California
Electronic Frontier Foundation
ARGUMENTS IN SUPPORT : According to the author's office,
this bill provides a financial incentive for California
motorists to drive less, and for insurers to verify miles
actually driven. By linking automobile insurance costs
directly to each decision to drive the insured vehicle, the
author's office believes drivers will make the decision to
drive less, reduce greenhouse gas emissions, and be
rewarded with lower auto insurance costs.
The Natural Resources Defense Council supports this bill
and states that it is consistent with the recommendations
of the AB 32 Economic and Technology Advancement Advisory
Committee report to the Air Resources board since it will
help California to reach global warming emission reduction
targets. The Environmental Defense Fund points out that 28
percent of California's greenhouse gas emissions come from
passenger automobiles, and the great increase in annual
vehicle miles driven between 1990 and 2006 in California
(31 percent) requires this type of legislation.
The Personal Insurance Federation of California, which
supports the bill, states that the Department of
Insurance's proposed "mileage verification regulations" do
not allow insurers the adequate tools to achieve true
miles.
ARGUMENTS IN OPPOSITION : The Consumer Watchdog (formerly
the Foundation for Taxpayer and Consumer Rights), which
opposes this bill, states that while the bill has a
laudable goal of attempting to create an incentive to drive
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less, it will not serve that objective well because it
improperly amends a voter approved initiative and will be
rejected by the courts. Consumer Watchdog states that this
bill purports to amend one of Proposition 103's mandatory
rating factors by creating multiple mileage factors and to
do this outside of the Commissioner's regulations on
mileage verification, which are within the purview of the
Commissioner.
ASSEMBLY FLOOR :
AYES: Adams, Aghazarian, Arambula, Beall, Benoit, Berg,
Berryhill, Blakeslee, Brownley, Caballero, Charles
Calderon, Carter, Cook, Coto, Davis, De La Torre, De
Leon, DeSaulnier, DeVore, Duvall, Emmerson, Eng, Evans,
Feuer, Fuentes, Fuller, Furutani, Gaines, Galgiani,
Garcia, Garrick, Hancock, Hayashi, Hernandez, Horton,
Houston, Huff, Huffman, Jones, Keene, Krekorian, La
Malfa, Laird, Leno, Levine, Lieber, Lieu, Ma, Maze,
Mullin, Nakanishi, Nava, Niello, Plescia, Portantino,
Price, Sharon Runner, Ruskin, Salas, Saldana, Silva,
Smyth, Solorio, Spitzer, Strickland, Swanson, Torrico,
Tran, Villines, Walters, Wolk, Bass
NOES: Anderson, Parra
NO VOTE RECORDED: Dymally, Jeffries, Karnette, Mendoza,
Nunez, Soto
GFC:cm 8/25/08 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
SUPPORT/OPPOSITION: NONE RECEIVED
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