A bill that allows the California Earthquake Authority to collect an assessment from insurers to pay for policyholder claims after an earthquake has been signed into law by Governor Arnold Schwarzenegger.
The California Earthquake Authority (CEA) is a publicly managed, largely privately funded organization that provides catastrophic residential earthquake insurance to state residents. According to the legislation, California Senate Bill 430, CEA will be allowed to collect up to $1.3 billion from participating insurers to pay claims after other specified sources of funds have been depleted.
The CEA said that current sources of funds to pay claims include the authority to levy approximately $3.66 billion in assessments on participating insurers, but that $2.2 billion of that assessment authority expires by law on Dec. 1, 2008. Without the enactment of SB 430, the CEA's claims-paying capacity would have been substantially reduced.
According to a release from CEA, the enactment of SB 430 is expected to permit the organization to maintain both its current financial strength rating and a financial structure that would have a near-100 percent probability of paying all claims that might arise from an earthquake or series of earthquakes in any given year.
“We are extremely pleased that Senate Bill 430 has been enacted,” said Tim Richison, CEA interim chief executive officer, in a release. “We would like to thank our governing board, our participating insurers, and the legislature for their support.”
CEA's participating insurers include:
ACA Insurance
Allstate Insurance
Armed Forces Insurance Exchange
Automobile Club of Southern California
California FAIR Plan
California State Automobile Association
Commerce West
Encompass
Farmers Insurance Group
Foremost
Golden Eagle
Homesite/GMAC
Liberty Mutual
Merastar
Mercury
State Farm Insurance
USAA
Workman's Auto
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