California legislators are ready to pass a bill to entice insurance companies to invest in “green” technology projects in low- and moderate-income urban and rural communities.

The bill – “AB 1011” – would authorize insurers to claim a tax credit against the gross premiums tax equal to 20% percent of qualified investments that emphasize clean energy projects, energy efficiency improvements, environmental technology projects and other investments that conserve natural resources or reduce green house gas emissions.  For a complete copy of the current proposed bill, click here.

AB 1011 would make findings and declarations concerning California’s role in greenhouse gas emission reduction, and would include green investments, as defined, as “community development investments.”  The bill requires the California Insurance Commissioner –  on the Insurance Department’s website – to biennially identify those insurers that make investments that qualify as green investments as well as the cumulative amount of identified insurer investments in green investments.

“By increasing incentives for reduced driving, the building of ‘green buildings,’ investments in energy efficiency improvements and renewable energy projects, and the conservation of natural resources, the insurance industry can help reduce greenhouse gas emissions,” according to the text of the bill.

AB 1011 would add environmentally friendly investments to a list of allowed projects under the California Organized Investment Network (“COIN”) program. COIN is a collaboration between insurance regulators, the insurance industry, community affordable housing and economic development organizations and others. COIN was established in 1996 as an industry-preferred voluntary substitute to state legislation that would have required insurance companies to invest in under-served communities, similar to the federal Community Reinvestment Act that applies to the banking industry, according to the California Department of Insurance.

Initially, apprehension about creating a revenue shortfall dimmed prospects for passing AB 1011, but negotiators worked out a solution, said Assemblyman Dave Jones, D-Sacramento.

The Association of California Insurance Companies, an affiliate of the Property Casualty Insurers Association of America (PCI) which represents more than 300 property/casualty insurance companies doing business in California, says it supports the bill.  The American Insurance Association and the Association of California Insurance Companies had early concerns about the legislation when it appeared to be mandatory on insurers, but currently have no objections to a purely voluntary program with tax incentives.

AB 1011 should clear final legislative hurdles and be sent to Gov. Arnold Schwarzenegger before the end of the legislative session on August 31, 2010, according to Assemblyman Jones.