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Italicized text includes proposed additions to law or the previous version of the bill.
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INTRODUCED BY Assembly Member Solorio
(Coauthors: Assembly Members Davis, Furutani, and Mendoza)
(Coauthor: Senator Price)

DECEMBER 6, 2010

An act to add Article 10.2 (commencing with Section 927) to
Chapter 1 of Part 2 of Division 1 of the Insurance Code, relating to
insurers.



LEGISLATIVE COUNSEL'S DIGEST


AB 53, as introduced, Solorio. Insurers: procurement contracts:
women, minority, and disabled veteran business enterprises.
Existing law requires each admitted insurer to provide information
to the Insurance Commissioner on all of its community development
investments and community development infrastructure investments in
California.
This bill would require that each admitted insurer, with gross
annual revenues exceeding $25,000,000, and their regulated
subsidiaries and affiliates, submit annually to the commissioner a
detailed and verifiable plan for increasing procurement from women,
minority, and disabled veteran business enterprises, as specified.
The bill would require the commissioner to, among other things,
establish guidelines for all admitted insurers to be used in
establishing these programs, provide a report to the Legislature on
September 1 of each year on the progress of activities undertaken by
each admitted insurer in the implementation of these programs, and to
develop and require admitted insurers subject to this bill and their
regulated subsidiaries and affiliates to implement an outreach
program to inform and recruit eligible business enterprises to apply
for procurement contracts.
The bill would provide that any person or corporation, through its
directors, officers, or agents, this falsely represents a business
as a women, minority, or disabled veteran business enterprise in the
procurement of, or attempt to procure, a contract from an admitted
insurer subject to this bill, or a regulated subsidiary or affiliate,
be punished by a fine of not more than $5,000, by imprisonment in a
county jail for not more than one year or in the state prison, or by
both that fine and imprisonment. Because this bill would create a new
crime, the bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
This bill would provide that no reimbursement is required by this
act for a specified reason.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

SECTION 1. Article 10.2 (commencing with Section 927) is added to
Chapter 1 of Part 2 of Division 1 of the Insurance Code, to read:

Article 10.2. Women, Minority, and Disabled Veteran Business
Enterprises


927. (a) The Legislature hereby declares that the essence of the
American economic system of private enterprise is free competition.
Only through full and free competition can free markets, reasonable
and just prices, free entry into business, and opportunities for the
expression and growth of personal initiative and individual judgment
be ensured in all of the state's communities. The preservation and
expansion of that competition is basic to the economic well-being of
this state and that well-being cannot be realized unless the actual
and potential capacities of women, minority, and disabled veteran
business enterprises are encouraged and developed. The state's
diverse composition propels economic innovation and growth, and the
economy's full employment potential cannot be achieved if these
communities are left underutilized. Therefore, it is the declared
policy of the state to aid the interests of women, minority, and
disabled veteran business enterprises in order to preserve reasonable
and just prices and a free competitive enterprise, to ensure that a
fair proportion of the total purchases and contracts or subcontracts
for commodities, supplies, technology, property, and services for
regulated insurance providers are awarded to women, minority, and
disabled veteran business enterprises, and to maintain and strengthen
the overall stability and growth of the state's economy.
(b) (1) The Legislature declares all of the following:
(A) The opportunity for full participation in our free enterprise
system by women, minority, and disabled veteran business enterprises
is essential if this state is to approach full employment of its
human resources and improve economic efficiency and equity in
opportunity.
(B) Public utilities and telecommunications companies, which have
established short- and long-range women, minority, and disabled
veteran business enterprise goals, are awarding 30 percent or more of
their contracts to these business enterprises.
(C) Women, minority, and disabled veteran business enterprises
have traditionally received less than a proportionate share of
regulated procurement contracts.
(D) It is in the state's interest to expeditiously improve the
economically disadvantaged position of women, minority, and disabled
veteran business enterprises.
(E) The position of these businesses can be improved by providing
long-range substantial goals for procurement by regulated insurance
providers of technology, equipment, supplies, services, materials,
and construction work from women, minority, and disabled veteran
businesses.
(F) That procurement also benefits the regulated insurance
companies and consumers of the state by encouraging the expansion of
the number of suppliers for procurements, thereby encouraging
competition among the suppliers and promoting economic efficiency in
the process.
(2) It is the purpose of this article to do all of the following:
(A) Encourage greater economic opportunity for women, minority,
and disabled veteran business enterprises in the ninety billion
dollar ($90,000,000,000) California insurance market.
(B) Promote competition among the suppliers of regulated insurance
providers in order to enhance economic efficiency in the procurement
of contracts relevant to the insurance industry and contracts of the
subsidiaries and affiliates of those insurance providers.
(C) Clarify and expand the program for the procurement by
regulated insurance providers of technology, equipment, supplies,
services, materials, and construction work from women, minority, and
disabled veteran business enterprises.
927.1. For the purposes of this article, the following
definitions apply:
(a) "Women business enterprise" means a business enterprise that
is at least 51 percent owned by a woman or women, or, in the case of
any publicly owned business, at least 51 percent of the stock of
which is owned by one or more women, and whose management and daily
business operations are controlled by one or more of those
individuals.
(b) "Minority business enterprise" means a business enterprise
that is at least 51 percent owned by a minority group or groups, or,
in the case of any publicly owned business, at least 51 percent of
the stock of which is owned by one or more minority groups, and whose
management and daily business operations are controlled by one or
more of those individuals. The contracting admitted insurer shall
presume that minority includes African Americans, Hispanic Americans,
Native Americans, and Asian Pacific Americans.
(c) "Disabled veteran business enterprise" has the same meaning as
defined in subparagraph (A) of paragraph (7) of subdivision (b) of
Section 999 of the Military and Veterans Code.
(d) To "control" means exercise the power to make policy
decisions.
(e) To "operate" means to be actively involved in the day-to-day
management and not merely officers or directors.
927.2. (a) (1) Each insurer admitted in California, with gross
annual revenues exceeding twenty-five million dollars ($25,000,000),
and their regulated subsidiaries and affiliates, shall be required to
submit annually to the commissioner a detailed and verifiable plan
for increasing procurement from women, minority, and disabled veteran
business enterprises.
(2) These annual plans shall include short- and long-term goals
and timetables, but not quotas, and shall include methods for
encouraging contractors to engage women, minority, and disabled
veteran business enterprises in subcontracts in all areas that
provide subcontracting opportunities.
(b) The commissioner shall establish guidelines for all admitted
insurers with gross annual revenues exceeding twenty-five million
dollars ($25,000,000) and their regulated subsidiaries and
affiliates, to be utilized in establishing programs pursuant to this
article.
(c) Each admitted insurer, with gross annual revenues exceeding
twenty-five million dollars ($25,000,000), shall furnish an annual
report to the commissioner regarding the implementation of programs
established pursuant to this article in a form that the commissioner
shall require, and at the time that the commissioner shall annually
designate.
(d) (1) Notwithstanding Section 10231.5 of the Government Code,
the commissioner shall provide a report to the Legislature on
September 1 of each year on the progress of activities undertaken by
each admitted insurer with gross annual revenues exceeding
twenty-five million dollars ($25,000,000) pursuant to this article in
the implementation of women, minority, and disabled veterans
business enterprise development programs. The report shall include
information about which procurements are made from women, minority,
and disabled veteran business enterprises with at least a majority of
the enterprise's workforce in California, to the extent that
information is readily accessible. The commissioner shall recommend a
program for carrying out the policy declared in this article,
together with recommendations for legislation that the commissioner
deems necessary or desirable to further that policy.
(2) In regard to disabled veteran business enterprises, the
commissioner shall ensure that the programs and legislation
recommended pursuant to paragraph (1) are consistent with the
disabled veteran business enterprise certification eligibility
requirements imposed by the Department of General Services and that
the recommendations address themselves to only those disabled veteran
business enterprises certified by the Department of General
Services.
(3) A report to be submitted pursuant to this subdivision shall be
submitted in compliance with Section 9795 of the Government Code.
(e) The Legislature declares that each admitted insurer that is
not required to submit a plan pursuant to subdivision (a) is
encouraged to voluntarily adopt a plan for increasing women,
minority, and disabled veteran business enterprise procurement.
927.3. (a) (1) The commissioner shall, by regulation, adopt
criteria for verifying and determining the eligibility of women and
minority business enterprises for procurement contracts.
(2) The commissioner shall adopt the Department of General
Services' disabled veteran business enterprise certification
eligibility requirements for verifying and determining the
eligibility of disabled veteran business enterprises for procurement
contracts, and shall not deem eligible those disabled veteran
business enterprises that are not certified by the Department of
General Services.
(b) The commissioner shall develop and require each admitted
insurer with gross annual revenues exceeding twenty-five million
dollars ($25,000,000) and their regulated subsidiaries and affiliates
to implement an outreach program to inform and recruit women,
minority, and disabled veteran business enterprises to apply for
procurement contracts under this article.
927.4. Any person or corporation, through its directors,
officers, or agents, that falsely represents a business as a women,
minority, or disabled veteran business enterprise in the procurement
of, or attempt to procure, a contract from an admitted insurer with
gross annual revenues exceeding twenty-five million dollars
($25,000,000), or a regulated subsidiary or affiliate subject to this
article, shall be punished by a fine of not more than five thousand
dollars ($5,000), by imprisonment in a county jail for not more than
one year or in the state prison, or by both that fine and
imprisonment. In the case of a corporation, the fine or imprisonment,
or both, shall be imposed on every director, officer, or agent
responsible for the false statements.
927.5. In order to facilitate the participation of women-owned
businesses, minority-owned businesses, disabled veteran-owned
businesses, and small businesses in contract procurement, any
corporation subject to this article may consider the following
measures to include those businesses in all phases of their
contracting:
(a) Timely or progressive payments to those businesses.
(b) The provision of assistance to those businesses by securing
contract payments to those businesses with letters of credit,
negotiable securities, or other financing arrangements or measures.
SEC. 2. No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of the
Government Code, or changes the definition of a crime within the
meaning of Section 6 of Article XIII B of the California
Constitution.