By Allison Plette
SB 655 (Bradford), as amended April 26, 2021, would amend sections 926, 926.1, 927, 927.2, and 927.3 of the Insurance Code. SB 655 encourages insurers to consider making investments with diverse investment managers to the extent possible. The bill defines “diverse investment managers” as California organizations whose investment managers are composed of at least 51% women, veterans, minorities, or lesbian, gay, bisexual, transgender, or queer persons, or a combination of persons in those groups. Under the old version section 927.2, only admitted insurers with premiums equal to or in excess of $100,000,000 were required to provide information to the Insurance Commissioner every 2 years on their minority, women, LGBT, veteran, and disabled veteran-owned business procurement efforts, as well as their governing board and board diversity efforts during the previous 2 years. The new version lowers the California premium “reporting threshold” value for board and supplier diversity data from $100 million to $75 million.
The new law, which goes into effect on January 1, 2022, builds on SB 534 (Bradford) (Chapter 249, Statutes of 2019), which required the commissioner to establish and appoint an Insurance Diversity Task Force (Task Force) to advise the department on the best methods to increase procurement with diverse suppliers and to increase diversity on governing boards within the insurance industry.
The law was championed by the Task Force and Commissioner Lara as part of a renewed focus on the Department’s Insurance Diversity Initiative. The initiative, which was established in 2011, and codified by AB 53 (Solorio) (Chapter 414, Statutes of 2012), identifies insurance companies with premiums in excess of $100 million to participate in a baseline survey to assess insurer diversity practices.
Prior to its passage, the bill was discussed at the March 11th Insurance Diversity Task Force meeting, where Chief Deputy Legislative Director Melissa Gear clarified that by lowering the reporting threshold to $75 million, reporting requirements would be extended to approximately 50 more companies.
The California Insurance Diversity Survey is administered biennially on July 1st of each even-numbered year. The next survey will be administered in 2022 and will include data from 2020–2021.
Governor Newsom signed SB 655 on September 28, 2021 (Chapter 390, Statutes of 2021).