Calif. Legislature Approves Workers’ Comp Bills

August 23, 2002

The California Legislature is considering a package of three measures that will improve the delivery of workers’ compensation benefits in the state, according to the American Insurance Association (AIA). One measure is pending in the Assembly and two bills now await the signature of Governor Gray Davis (D).

AB 1985, authored by Tom Calderon (D), was given final approval Aug. 21 and is designed to give the California Insurance Commissioner authority to deny inadequate workers’ compensation rates.

“AB 1985 is one of three key measures that will give the California Department of Insurance (CDI) the authority and tools necessary to ensure that workers’ compensation benefits are paid on time,” Mark Webb, AIA vice president, western region, commented. “AB 1985 will also change California law to include the State Compensation Insurance Fund within the requirements of Risk-Based Capital.”

The California Legislature also recently approved AB 2007, authored by Calderon, which will continue the two percent (2%) assessment charged to workers’ compensation insurance premiums. These funds are deposited into the California Insurance Guaranty Fund (CIGA), which pays for the outstanding claims of insolvent workers’ compensation carriers. California enacted a measure in 2001 to raise the surcharge from one percent (1%) to two percent (2%). This increased surcharge is scheduled to sunset at the end of 2002.

“The passage of AB 2007 is a win for employers and injured workers in California,” Webb said. “When insurance companies are insolvent we must have a system in place to safeguard employers who are obligated to provide benefits and continue payments to the injured workers who need to have these benefits paid without interruption.”

Another workers’ compensation measure under consideration in the 2002 session is SB 2093, authored by Senate Jackie Speier (D), which reforms the workers’ compensation insurance deposit law in California.

“The purpose of these deposits is to make certain that benefits can be paid to injured workers immediately whenever an insurer becomes insolvent. SB 2093 will provide a reasonable and balanced approach to the need for a readily accessible deposit while not adding significant additional financial burdens to insurers,” Webb concluded.

AB 1985 was approved by a vote of 47-29 in the State Assembly and a vote of 22-11 in the State Senate. AB 2007 passed on a vote of 53-24 in the State Assembly and 25-12 in the State Senate. SB 2093 was currently awaiting a vote on the Assembly floor.

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