Recently enacted legislation requires each admitted insurer in California that writes California premiums of $100,000,000 or more to develop and file with the Insurance Commissioner a Policy Statement on Community Development Investments and Community Development Infrastructure Investments.

Insurers may invest a minimum of $50,000 on deposit with a Community Development Financial Institution (CDFI) for 60 months at zero percent interest. In exchange, the investor receives a 20% state tax credit with an approximately 4.5% annual percentage rate of return. The new law encourages insurers to invest in such CDFI’s and to create goals for such investments biennially.

The Initial Community Development Investment Policy Statement required by Section 926.3 is intended to include general or specific investment goals or thresholds for community investments during 2011 and 2012. These filings are public information and will be made available on the California Department of Insurance’s web site.

Community Development Investment Policy Statements may include the following elements:

  • Statement of principles intended to influence decisions
  • Goals for community development investments
  • Outcomes community could expect from investments
  • Investment criteria the company may consider for investments
  • Expected return on community investments, typical term of investment, minimum amount per investment or other liquidity requirements.
  • Decision-making process for which community investments are made
  • Application process for investment consideration
  • Identification of key decision makers

However, the report may be significantly more general in nature than the above information.

As a reminder, this report is due no later than July 1, 2011. Upon request, we can provide additional help or support in preparing this report.