BILL ANALYSIS                                                                                                                                                                                                    






                    SENATE COMMITTEE ON INSURANCE
                Senator Herschel Rosenthal, Chairman


Senate Bill 350 (Peace)                    Hearing Date: April 5,  
1995

As Amended:     March 21, 1995
Fiscal:         Yes 


 SUMMARY:  

SB 350 would allow a portion of funds authorized for automobile  
insurance fraud and theft programs to be used to investigate and  
prosecute other types of insurance fraud uncovered in the course of  
auto fraud and theft cases.


 DIGEST:

 Existing law 

Requires each insurer doing business in this state to pay an annual  
fee, not to exceed one dollar ($1), for each vehicle it insures to  
fund the increased investigation and prosecution of fraudulent  
automobile insurance claims and automobile theft.  The funds  
collected are distributed primarily to (1) the Department of  
Insurance Bureau of Fraudulent Claims, and (2) District Attorneys,  
with a small portion of the funds going to (3) the California  
Highway Patrol.
     
 This bill:  

Requires that the funds distributed from the annual vehicle fees  
assessed on insurance companies shall be used solely for  
investigating and prosecuting automobile insurance fraud and  
economic automobile theft,  except that up to 25% of the distributed  
funds may be used to investigate and prosecute other types of  
insurance fraud uncovered in the course of pursuing auto insurance  
fraud and auto theft.
     

 COMMENTS:

1.   Purpose of the bill.  The author introduced SB 350 in order to  










give District Attorneys greater flexibility and resources to pursue  
insurance fraud activities uncovered in the course of pursuing an  
auto insurance fraud or auto theft case.  According to the author,  
the District Attorneys report that often a variety of insurance  
fraud cases turn up during auto insurance fraud investigations but  
cannot be prosecuted due to lack of funding.  SB 350 will allow  
these additional insurance fraud cases to be pursued. 


















































2.   Support.  The Department of Insurance and the District Attorney  
of San Diego County support SB 350 arguing that the measure will  
strengthen the fight against insurance fraud.  In order to promote  
even greater flexibility to combat insurance fraud, the San Diego DA  
suggests that the bill be  amended to  delete the requirement that  
other types of insurance fraud can only be pursued if odiscovered in  
the course of pursuing automobile insurance fraud and economic  
automobile theft.o 

3.   Opposition.   The opponents of SB 350 argue that the funds  
diverted by the bill for a broad array of insurance fraud activities  
come from assessments on automobile insurance policies, and should  
therefore only be used for the investigation and prosecution of  
automobile insurance-related fraud, rather than being diverted for  
other arguably deserving, but unrelated enforcement activities.   
They argue that auto fraud and theft is on the rise, and the  
existing funds should be dedicated to this problem.
They also maintain that diverting these funds from auto fraud and  
theft cases amounts to an improper tax on insurance companies.

4.   Prior Legislation.     SB 1743 (Lockyer), Chap. 1248 of 1994, and  
 AB 1926 (Peace), Chap. 1247 of 1994, earmarked a portion of the  
annual automobile insurance vehicle fees to the California Highway  
Patrol and to the District Attorneys to fund the investigation and  
prevention of o economic automobile theft.o  Allowing use of these  
funds for automobile "theft" cases set a precedent for using some of  
these funds in criminal investigations other than traditional  
automobile fraud cases.


 POSITIONS:  

 Support:  

Department of Insurance
San Diego County District Attorney

 Oppose:

Alliance of American Insurers
Personal Insurance Federation of California
State Farm Insurance Companies
















Consultant:  Michael Shapiro