An industry trade group is trying to weaken Assemblymember Atkins bill on reporting reinvestment in California communities
Insurers are lobbying to effectively destroy the transparency that communities have relied on in the COIN program.
By Paulina Gonzalez & Lori Gay / Capital & Main
Editor Note: SDFP Contributor Jay Powell was appointed to the COIN advisory board by Assemblymember Atkins. We hope to hear from him on this issue.
Twenty years ago, the insurance industry narrowly escaped a requirement to reinvest its premiums in California communities. An alternative, voluntary program was created instead, the California Organized Investment Network (COIN) program. COIN was created at the request of California’s powerful insurance industry, instead of state legislation that would have required insurers to reinvest in the state’s underserved communities, similar to the Community Reinvestment Act (CRA) for the banking industry. But now insurance lobbyists are seemingly working behind the scenes to kill a reporting mechanism in this voluntary program — which begs the question, Why?
By making safe and sound investments in the COIN program, insurance companies can help promote positive social and environmental initiatives, including renewable energy projects, community affordable housing, economic development and small business lending, while receiving a reasonable rate of return.
Throughout its 20-year history, community members have had to repeatedly advocate to keep requirements that compel insurers to report on their investments in COIN to the state insurance commissioner. This transparency ensures that the public has information on how much (if any) their insurance companies are re-investing of their premiums into California communities. After all, the foundation of any successful community investment program is that the public has the right to information in order to hold stakeholders accountable to the communities it is meant to serve.
Now, the insurance lobby seems to be holding California communities and the Department of Insurance hostage as COIN is set to sunset January 1, 2017. The Personal Insurance Federation of California (PIFC), an industry lobbying trade group, is apparently trying to weaken the COIN renewal bill, Assembly Bill 2728 (Atkins, D-San Diego) by lobbying against the annual data reporting requirement, which would effectively destroy the transparency that communities have relied on in the COIN program.
One might ask, Why don’t the insurers want information about their participation in the program shared?
It seems odd that insurers are willing to collect over $250 billion in premiums from California consumers each year, but then don’t want to report on the ways they’re reinvesting those premiums, especially if it’s in ways that benefit communities.
The Department of Insurance recently released a report on COIN investments and it may shed some light. Progressive Insurance, Mercury Insurance and Farmers Insurance — all of which are PIFC members — have abysmal track records when it comes to investing in low- and moderate-income communities via the COIN program.
In 2015, the industry average for all insurers was 4.71 percent of premiums invested in High Impact COIN holdings – which, like CRA investments, are geared towards low- and moderate-income communities. In comparison, Progressive invested zero of its premiums into COIN High Impact Holdings, Mercury invested .7 percent of premiums into High Impact Holdings and Farmers invested 1.27 percent of its premiums into COIN High Impact Holdings.
Several health insurers have recently proposed high profile mega mergers, which are under consideration and being contested by California’s Department of Insurance, its Department of Justice, Attorney General Kamala Harris and U.S. Senator Dianne Feinstein. They also have poor showings in High Impact Holdings under COIN. In 2015, Cigna Health and Life Insurance invested 1.18 percent of premiums into High Impact holdings and Anthem invested .66 percent of premiums in High Impact Holdings. Given the well-documented connections between health and safe and affordable housing, these meager investments are surprising and disappointing.
With such dismal showings, perhaps insurance industry companies prefer to spend money fighting to end reporting requirements rather than reinvesting money in their California communities. COIN was developed as an alternative to a CRA law for insurers in California, so it’s worth comparing the reinvestment records of insurers (without a reinvestment mandate) vs. banks who do have a mandate.
As previously noted, last year the insurance industry had an average of 4.71 percent of their premiums invested in High Impact COIN holdings. In comparison, Banc of California, City National, Mechanics Bank, Bank of Hope (the combination of BBCN and Wilshire banks), and others have agreed to reinvest 10-20 percent of their deposits in low to moderate income California communities. Also telling: For at least the last three years the COIN tax credit program has been oversubscribed, not by insurers, but by banks. In 2015, there were 46 bank investments compared to seven insurer investments and, in 2014, 38 bank investments compared to 11 insurer investments.
The data is clear: Insurers are happy with requirements for California consumers to buy car, home, and health-care insurance, but they don’t want a requirement to reinvest any portion of those premiums back into underserved communities. What’s even more concerning, insurers also don’t want the public to know if they aren’t investing their premiums back into communities. The question is, will our legislature side with the millions of Californians who purchase billions in insurance every year, or with an insurance association that is working behind closed doors to try and eliminate transparency in the COIN program?
Paulina Gonzalez is the executive director of the California Reinvestment Coalition and a COIN advisory board member. Lori Gay is the president and chief executive officer of Neighborhood Housing Services of Los Angeles County. This article was originally posted at Capital & Main.
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The establishment of a Public Bank of California similar to the one in North Dakota would allow for the investment of funds in low income housing and other public goods like student loans. The insurance industry wants maximum returns on its investments even though some of this insurance is required by law. If it’s required by law, there should be a public option for auto insurance. This money could then be funneled through the public bank for low income and affordable housing.
This is a disingenuous power play by one of the wealthiest industries in California. The insurers funding the lobbyists described in this commentary are maintaining that the reporting requirements are onerous. In response the COIN staff outlined five recommendations to streamline the “data call” process. They have rejected those efforts and appear to have succeeded in gutting this important bill offered by our Assembly Member, Speaker Emeritus Toni Atkins.
I was honored that she appointed me to the Advisory Board earlier this year. Ironically, tomorrow we are holding a “COIN Investment Summit” at the California Endowment offices in Los Angeles to look at accomplishments over the past five years and how we can help the insurance industry make greater investments into under served communities in the areas of affordable housing, neighborhood improvements and facilities, economic development and green investments such as solar and energy efficiency and transit oriented development.
I have communicated to Speaker Emeritus Atkins that it will be difficult for me to carry out my assigned and accepted duties if the Advisory Board does not have access to credible, reliable data provided by the insurance industry and vetted by the COIN staff.
I signed on to the following letter to Speaker Emeritus Atkins last week. As of this posting there is no news on whether the necessary amendment will be included by the legislative deadline this week.
August 8, 2016
The Honorable Toni Atkins
Speaker Emeritus,
California State Assembly State Capitol, Room 319
Sacramento, CA 95814
RE: Provisional Withdrawal of Support for Assembly Bill 2728
Dear Speaker Emeritus Atkins:
As community representatives serving on the California Organized Investments Network Advisory Board, we’ve become increasingly concerned that as of yet AB 2728 does not include the Community Investment Survey (CIS) Data Call requirement for insurance companies with California premiums of over $100 million to report their community development investments, green investments, and community development
infrastructure investment holdings to the Commissioner. We are writing to inform you that we feel compelled to provisionally withdraw our support for this bill given the absence of the annual data call requirement pending any update that the data reporting requirement has been included. Although we continue to vigorously support COIN and your efforts to extend this important tool for community development, we cannot in good conscious support a bill that doesn’t allow for communities to participate
fully in its implementation as informed stakeholders.
The foundation of any community investment program is transparency, but without the CIS data call, COIN loses the authority to conduct data calls that track insurer reinvestment in California and it creates a black box leaving the community in the dark and with an inability to track reinvestment by insurers or to have an informed seat at the table. It is quite frankly a step backwards in California reinvestment and community
development for the insurance industry.
We’ve dedicated ourselves to COIN and its success from a point of deep commitment to our communities and the belief that a successful public private partnership is possible in which the insurance industry plays a vital role, together with the insurance department, and community affordable housing and economic development organizations to help benefit California’s LMI and rural communities. But for this to be
successful, transparency is paramount.
We appreciate your continuing efforts to enhance this successful program, but for the reasons listed above,our support of ASSEMBLY BILL 2728 is hereby withdrawn pending an annual data call requirement in the bill. We ask that you please meet with us to find a solution to this matter. We remain hopeful that you will help us find a way forward.
Thank you for your consideration of our concerns in this matter.
Respectfully yours,
Douglas Bystry
President and CEO, Clearinghouse CDFI
COIN Advisory Board, Vice Chair
Paulina Gonzalez,
Executive Director, California Reinvestment
Coalition
COIN Advisory Board, Member
Maurilio Leon
Chief Operating Officer, Community Housing
Opportunities Corporation
COIN Advisory Board, Member
H.C. “Jay” Powell
COIN Advisory Board, Public Member
Nicholas P. Roxborough, Esq.
COIN Advisory Board, Member
Nicholas P. Roxborough, Esq.
COIN Advisory Board, Member
It is a complete surprise that Speaker emeritus Atkins has not included a reporting requirement in her bill. Without the data there is no accountability and in previous experience it is the neighborhoods that Ms Atkins represents that will be denied access to basic homeowners, auto and other required insurance. The industry has s history of discrimination and bias against low income residents causing rapid and often irreversible decline in property values and quality of housing. It is vital that Ms Atkins defend these neighborhoods with this data requirement intact.