Bill Text: CA SJR28 | 2013-2014 | Regular Session | Chaptered

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Bill Title: Earthquake insurance: affordability.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Passed) 2014-07-09 - Chaptered by Secretary of State. Res. Chapter 92, Statutes of 2014. [SJR28 Detail]

Download: California-2013-SJR28-Chaptered.html

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BILL NUMBER: SJR 28	CHAPTERED
	BILL TEXT

	RESOLUTION CHAPTER  92
	FILED WITH SECRETARY OF STATE  JULY 9, 2014
	ADOPTED IN SENATE  JUNE 9, 2014
	ADOPTED IN ASSEMBLY  JULY 3, 2014

INTRODUCED BY   Senator Monning

                        MAY 28, 2014

   Relative to earthquake insurance.


	LEGISLATIVE COUNSEL'S DIGEST


   SJR 28, Monning. Earthquake insurance: affordability.
   This measure would memorialize the President of the United States
and the Congress of the United States to enact the Earthquake
Insurance Affordability Act.



   WHEREAS, The magnitude 6.7 Northridge Earthquake in 1994 was the
costliest natural disaster in the history of the State of California
to date, with more than $25 billion in property damage, and $49
billion in economic losses to the region and the state; and
   WHEREAS, A major earthquake in the San Francisco Bay area or in
southern California could have an even greater impact than Hurricane
Katrina had in Louisiana and Mississippi; and
   WHEREAS, Risk Management Solutions, Inc., estimated the potential
cost of a repeat of the 1906 San Francisco earthquake at $260
billion, and a magnitude 7.0 earthquake rupturing the southern and
northern Hayward Fault between $210 and $235 billion; and
   WHEREAS, The seven southern California counties that would be most
affected by an earthquake on the southern San Andreas Fault are home
to 621,000 businesses, 6.3 million employees, and an annual payroll
of $303.3 billion; and
   WHEREAS, A magnitude 7.8 southern California earthquake modeled by
the United States Geological Survey and the Southern California
Earthquake Center at the University of Southern California in 2008
found that such an earthquake could cause more than $213 billion in
damage, and affect roughly 1 out of every 15 workers in the United
States, and that the nationwide toll on unemployment and lost
productivity could be severe; and
   WHEREAS, Risks from flood and earthquake are generally not
included in homeowners' insurance and must be purchased separately,
but few homeowners purchase earthquake insurance for many reasons,
including its high cost; and
   WHEREAS, The National Flood Insurance Program makes federally
backed flood insurance available to homeowners, renters, and business
owners in exchange for state and community floodplain management
regulations that reduce future flood damages; and
   WHEREAS, Unlike flood insurance, there is no requirement at the
federal or state level to obtain earthquake insurance for purposes of
securing financing for real property located in high risk areas,
leaving the mortgage industry, including Fannie Mae and Freddie Mac,
effectively the insurer of last resort; and
   WHEREAS, Under current federal law, earthquake insurance premiums
that are collected and not used for claims arising within the year of
collection are taxed and there is no ability to reserve profits or
accumulate capital for future losses, leading to the need for higher
premiums; and
   WHEREAS, California Senators Dianne Feinstein and Barbara Boxer
have introduced the Earthquake Insurance Affordability Act (EIAA)
that would authorize a federal guarantee of limited postearthquake
borrowing by actuarially sound state residential earthquake insurance
programs; and
   WHEREAS, The EIAA would lower the cost of earthquake insurance for
homeowners who buy coverage from nonprofit, state earthquake
insurance programs and direct funding to effective seismic-mitigation
measures; and
   WHEREAS, The EIAA would allow the California Earthquake Authority
to sell postevent bonds in the private capital market, reducing the
need to purchase reinsurance preevent and resulting in rate
reductions and lower deductibles; and
   WHEREAS, With more Californians insured, postevent disaster
assistance would cost less to both the state and the federal
government, and communities could recover more quickly; and
   WHEREAS, A Congressional Budget Office analysis of a similar bill
introduced in 2007 estimated that the cost to the federal government
for loan guarantees and postdisaster loans would be negligible; now,
therefore, be it
   Resolved by the Senate and the Assembly of the State of
California, jointly, That the Legislature memorializes the President
and the Congress of the United States to enact the Earthquake
Insurance Affordability Act; and be it further
   Resolved, That the Secretary of the Senate transmit copies of this
resolution to the President and Vice President of the United States,
to the Speaker of the House of Representatives, to the Majority
Leader of the Senate, to each Senator and Representative from
California in the Congress of the United States, and to the author
for appropriate distribution.