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SB 476 Frequently Asked Questions (FAQ)

SB 476 (Chapter 347, Statutes of 2013)
Frequently Asked Questions
Updated December 12, 2013

Q: What is the change on the $0.30 Auto Consumer Special Purpose Assessment? What are the effective and implementation dates?

A: SB 476 repeals the January 1, 2015 sunset date. Additionally, it changes the assessment to $0.25; commencing July 1, 2014 and until January 1, 2016, and not exceeding $0.25 thereafter, on each vehicle insured under an insurance policy issued in this state by the insurer. To further illustrate:

  • Policies in force prior to July 1, 2014 will be subject to the $.30 annual fee.
  • Policies in force on or after July 1, 2014 will be subject to the $.25 annual fee.
 
Q: When will I see the new $0.25 fee reflected on the invoice?

A: The first invoices reflecting the new fee will be sent out on or around September 15, 2014, for the billing period July 1, 2014 - September 30, 2014.

 
Q: What are the rounding expectations on the fee?

A: With the change to the $0.30 Auto Consumer Special Purpose Assessment, the annual consolidated vehicle assessment will go from $1.80 to $1.75. Because the fee is billed by quarter and $1.75 is not evenly divisible by four, the quarterly assessment will be $0.4375 times the total number of vehicles. The total amount of the assessment should be rounded to the nearest dollar. For example: $0.4375 x 895,000 vehicles = $391,562.50. In this example the Insurer would remit $391,563.00.

Note: The consolidated vehicle assessment is made up of three vehicle assessments.

 
Q: Since the annual consolidated vehicle assessment is $1.75 per vehicle, what is the expectation on the pass through to customers on a six-month term? Should there be different treatment if the policy is multi-car? (Updated December, 2013)

A: The only thing that has changed is the assessment amount. Company policies related to six-month terms or multi-car policies should not change (Updated December, 2013)

 
Q: Since the annual consolidated vehicle assessment is $1.75 per vehicle, what is the expectation on the pass through to customers on a six-month term? (New December, 2013)

A: Companies cannot recoup more than the annual assessment of $1.75 per vehicle. Because the new assessment is not evenly divisible by two for six-month policies, companies have two options. (New December, 2013)

Option 1 - Assess 88¢ on the first six-month policy and 87¢ on the subsequent six-month policy for a total annual assessment of $1.75.

Option 2 - Assess 87¢ on every six-month policy for a total annual assessment of $1.74. The remaining 1¢ would not be recouped by the insurer.

 
Q: When is the invoice due and when is a late fee assessed?

A: There will be no change to the invoicing process. Invoices will still be sent out approximately 15 days prior to the end of the quarter and will be due 30 days from the invoice date. Payments postmarked after 45 days of the invoice date are considered delinquent and subject to a 1.5% late charge compounded monthly.

 
Q: What vehicles are included?

A: The type of vehicles included in the assessment has not changed. For further information, please refer to the vehicle definition page.

 
Q: What is the change on Life and Annuity assessment? When are the effective and implementation dates?

A: Under existing law each insurer admitted to transact insurance in this state paid a fee, not to exceed $1.00 on each individual life insurance and individual annuity product with a value of $15,000 or more. SB 476 deletes the requirement that each individual life insurance policy and individual annuity product has a value of $15,000 or more and applies the fee to all new products issued regardless of value.

The effective date for this change is January 1, 2014. This means when companies self-assess for the January 1, 2014 to June 30, 2014 reporting period (due July 10, 2014) they will include all new issued individual life insurance policies and individual annuity products regardless of value. The first invoice to reflect the change on Life and Annuity assessment will be sent out in July 2014 for the billing period of January 1, 2014 - June 30, 2014.

 
Q: Is the Organized Automobile Fraud Activity Interdiction Assessment a new assessment? Additionally, SB 476 mentions that this assessment is a special purpose assessment to be determined by the Insurance Commissioner, the charges can be up to a maximum of $0.50 per vehicle. What should companies expect to see from the Commissioner?

A: No, this is not a new assessment. The Organized Automobile Fraud Activity Interdiction Assessment was enacted in 1999. The only change related to this assessment pursuant to SB 476 is the repeal of the January 1, 2015 sunset date. There are no plans to change the current $0.50 assessment.

 
Q: What are the new annual reporting requirements?

A: For the Auto Consumer Special Purpose Assessment, relating to auto insurance described in Section 1872.81 of the California Insurance Code, there are a number of new reporting requirements that will be included in CDI's annual report. These are modeled on other information already in CDI's annual report. The new provisions are described in subdivision (d) of 1872.81 and briefly are:

  • Number of opened automobile insurance consumer complaints
  • Number of opened automobile insurance investigations
  • Number of automobile insurance investigations referred to prosecutors
  • Number of automobile insurance administrative or regulatory cases referred to CDI's legal division
  • Number of automobile insurance administrative or regulatory enforcement actions taken
  • Total aggregate annual revenue and expenditures pursuant to this assessment

For the Life and Annuity Consumer Assessment, there was a minor rewriting of the reporting language detailed in Section 10127.17(g)(6), but the substance of that report will remain the same.

 
Q: Who should I contact with further questions?

A: Please contact Julia Cross at (916) 492-3264.

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