Plain English Breakdown
The source material does not specify a calendar date for effectiveness, only that it takes effect immediately as an urgency statute.
New Funding Rules for California FAIR Plan Association
This law allows the California FAIR Plan Association to request bonds or loans from a state bank with commissioner approval to pay claims, increase cash reserves, and replace old debt.
What This Bill Does
- Allows the association to ask the California Infrastructure and Economic Development Bank for bonds after getting prior permission from the Insurance Commissioner.
- Lets the bank use bond money to help the association pay claim costs, increase its available cash (liquidity), improve claims-paying capacity, or replace old debt.
- Requires member insurance companies to be charged fees if the association cannot repay these debts on time and in full.
- Gives the association legal rights to secure loans with a statutory lien as described in the law.
Who It Names or Affects
- The California FAIR Plan Association
- Insurance companies that are members of the association
- The California Infrastructure and Economic Development Bank
Terms To Know
- California FAIR Plan Association
- A group where all property insurers work together to provide insurance for people who cannot get it through normal channels.
- Bonds
- Money borrowed by the bank that must be paid back with interest over time, used here to fund claims and cash reserves.
- Liquidity
- The amount of cash an organization has available right now to pay bills and claims.
Limits and Unknowns
- The association must get prior approval from the Insurance Commissioner before requesting any bonds or loans.
- Member insurers are only charged fees if the association fails to meet its repayment obligations on time and in full.
- The law takes effect immediately as an urgency statute.