SB 528: California Earthquake Authority.

Existing law establishes the California Earthquake Authority (CEA), administered under the authority of the Insurance Commissioner and governed by a 3-member board, to transact insurance in this state as necessary to sell policies of basic residential earthquake insurance. Existing law establishes a capital structure for the CEA, with several sources of financing.

Existing law authorizes the CEA, with the Treasurer as its agent, to issue and sell investment grade revenue bonds or issue or secure other debt financing, or both, up to a specified amount, if claims and claim expenses paid following an earthquake event exhaust 4 specified sources of capital. Existing law authorizes the CEA to impose a surcharge on all CEA policies up to a specified amount to secure funds to repay the bonded indebtedness or other debt. Existing law additionally authorizes the CEA to assess participating insurers, up to a specified amount, if claims and claim expenses exhaust the CEAs sources of capital and the policy surcharge.

Existing law further authorizes the CEA to assess participating insurance companies up to $1,780,000,000 if claims and claim expenses paid by the CEA due to earthquake events exhaust the 4 specified sources of capital, the policy surcharge, and the participating insurance company assessment, described above.

This bill would repeal the $1,780,000,000 assessment authorization and make conforming changes.

Existing law requires the CEA to report annually by each August 1 to the Legislature and the commissioner on program operations, including, but not limited to, the financial condition of the authority. Existing law requires the authority, within 120 days following a seismic event and within one year of a major seismic event that results in the payment of claims by the authority, to submit a concise written report of program operations related to that seismic event to the President pro Tempore of the Senate, the Speaker of the Assembly, the Chairpersons of the Senate and Assembly Insurance Committees, the Chairperson of the Senate Committee on Judiciary, and the commissioner.

This bill would delete the 120-day reporting requirement as well as the requirement to report to the various officials and committees and incorporate the major seismic event reporting requirement into the annual report due by each August 1 to the Legislature and commissioner.