NAII Urges Calif. Gov. to Veto Workers’ Comp Bill

February 11, 2002

To avoid further crippling California’s weakened economy, Gov. Gray Davis should veto workers’ compensation legislation that is significantly out of balance according to the National Association of Independent Insurers.

In a letter to Gov. Davis, the NAII notes that it recognizes the need for a boost in workers’ comp benefits levels, but that benefit increases must be in step with cost saving reforms.

“The huge costs in Assembly Bill 749 would hurt California’s economic environment and would overwhelm California’s already troubled workers’ compensation system,” Sam Sorich, NAII vice president and western regional manager, wrote.

“AB 749 was rushed to passage with little regard for legislative due process. A proposal with such great significance for California’s future deserves a more deliberative legislative process with the involvement of all interested parties and the public.” AB 749 raises the maximum benefits for injured workers from the current $409 a week to $602 in 2003 and to $840 in 2006. Automatic increases after that would be based on the state’s average wage increases. The provisions of the measure- which are expected to increase employer costs by about $3.5 billion over four years- were not made public until Jan. 31. A legislative committee heard the bill on Feb. 4, for which little public notice was given. On that same day, the Legislature rushed to pass the bill and sent the measure to Gov. Davis for his consideration.

“The passage of AB 749 falls far short of the ideal of public participation in the political process,” Sorich wrote in the letter sent to Davis this week.

Sorich notes that the timing of AB 749 could not be worse, as California businesses are already reeling from the global recession and, in particular, insurance companies are recovering from the economic implications of the Sept. 11 events.

“AB 749 would impose new costs that would make it more difficult for California businesses to compete with businesses in other states and around the world,” Sorich wrote. “Workers’ compensation costs are hurting California businesses. It is estimated that total workers’ compensation costs increased by 75 percent in just the last two years. AB 749 would make it even tougher for California employers to afford insurance protection for their workers.”

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