R Street applauds Gov. Jerry Brown’s signature of Assembly Bill 2927
The compromise proposal, suggested in February by R Street Associate Vice President of State Affairs Ian Adams, changes California law to allow the California Earthquake Authority to access nearly $1 billion in additional capital for purposes of rate stabilization and growth. According to Adams, the law does so by affirming that “in the event a major seismic event exhausts the Authority’s other sources of capital, the CEA’s Governing Board shall have an obligation to levy an assessment on existing policyholders.”
Vitally, the bill secures the additional capital for the CEA without recourse to a broad-based assessment on all Californians that would function as a tax.
The CEA’s need for additional capital stems from a recent period of sustained expansion resulting in an ever-growing number of Californians gaining protection from the financial consequences of the state’s substantial earthquake risk. Continued access to affordable earthquake coverage is crucial because California, even with the CEA’s success, remains dramatically underinsured relative to the extent of the peril it faces.
With the support of the CEA, Commissioner Dave Jones of the California Department of Insurance, and United Policyholders, the straightforward salutary nature of the proposed R Street policy ensured that AB 2927, throughout the entire legislative process, never received a “no” vote. Now, with Governor Brown’s signature, the product of good-will and collaboration is law.
In light of the dire threat posed by uninsured earthquake risk (detailed in a recent study by R Street senior fellow R.J. Lehmann and policy analyst Daniel Semelsberger), R Street commends the leadership of the CEA, in particular, for its unwavering vision throughout this process and looks forward to again collaborating for the seismic well-being of all Californians.
