BILL NUMBER: AB 2002INTRODUCED BILL TEXT INTRODUCED BY Assembly Member Huffman FEBRUARY 17, 2010 An act to amend Section 923.5 of, and to repeal Section 11558 of, the Insurance Code, relating to reserve requirements. LEGISLATIVE COUNSEL'S DIGEST AB 2002, as introduced, Huffman. Reserve requirements. Existing law requires the Insurance Commissioner to promulgate regulations for the computation of the amount of reserves to be maintained by each insurer transacting business in this state. Under existing law, the minimum reserve requirement prescribed by the commissioner pursuant to those regulations cannot be less than 60% of certain liability insurer's earned premiums during each year less the amount already paid for related incidental losses and expenses, as specified. This bill would remove the 60% reserve requirement for those liability insurers and allow the Insurance Commissioner to prescribe the minimum reserve requirement by regulation. 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 923.5 of the Insurance Code is amended to read: 923.5. Each insurer transacting business in this state shall at all times maintain reserves in an amount estimated in the aggregate to provide for the payment of all losses and claims for which the insurer may be liable, and to provide for the expense of adjustment or settlement of losses and claims. The reserves shall be computed in accordance with regulations made from time to time by the commissioner. The promulgation of the regulations by the commissioner, or any changes thereto or amendments thereof, shall be in accordance with the procedure provided in Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code. The commissioner shall make the regulations upon reasonable consideration of the ascertained experience and the character of such kinds of business for the purpose of adequately protecting the insured and securing the solvency of the insurer.With respect to liability and common carrier liability, the regulations shall be consistent with Section 11558.The commissioner may prescribe the manner and form of reporting pertinent information concerning the reserves provided for in this section. This section shall not apply to life insurance, title insurance, disability insurance, mortgage insurance, or mortgage guaranty insurance. SEC. 2. Section 11558 of the Insurance Code is repealed.11558. The minimum reserve requirements prescribed by the commissioner in regulations promulgated pursuant to Section 923.5 for outstanding losses and loss expenses for each of the most recent three years for coverages included in the lines of business described in the annual statement as liability other than automobile bodily injury, and for automobile liability bodily injury, shall be not less than 60 percent of earned premiums during each year less the amount already paid for losses and expenses incidental thereto incurred during each such year. The commissioner may prescribe the manner and form of reporting pertinent information concerning the reserves provided for in this section.