Davis Signs Bill to Protect Solvency of Workers’ Comp Insurance Guarantee Fund

September 17, 2001

California Governor Gray Davis has signed legislation to raise the assessments on workers’ compensation insurers and protect an important safety net for injured workers, the American Insurance Association (AIA) reported Sept. 13.

“Governor Davis’ signature on AB 1183 will protect workers injured on the job,” said Mark Webb, AIA vice president, state affairs. “AIA continues to call upon employers and labor representatives to cooperatively work together in order to reform the workers’ compensation system and its benefit structure so legislation like AB 1183 will not be necessary.”

“Sadly, the proposed reforms being debated in the Legislature will not solve the problems in the system that necessitated the implementation of AB 1183,” said Webb.

Recent insolvencies of two major insurers have put the workers’ comp guarantee fund at risk. CIGA estimates that unless more funds are raised through this additional assessment, it could run short of money to pay claims by January 2002.

The bill, AB 1183, sponsored by Assemblyman Tom Calderon (D-Montebello), will raise the assessment charged to workers’ compensation insurance premiums from 1 percent to 2 percent. The additional funds will go toward California’s guarantee fund, which pays for the outstanding claims of insolvent workers’ comp carriers.

The Senate voted 27 to 3 in favor of AB 1183 and the Assembly voted 59 to 3 to concur on the amendments. Governor Davis signed the measure on Wednesday, September 12th (chapter number 296). AB 1183 includes an urgency clause so the bill will take effect immediately.

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