The Senate Banking, Finance and Insurance Committee today passed an Assembly bill with amendments that strip State Compensation Insurance Fund of its enhanced investment authority and give the governor greater leeway to remove the State Fund president. Jim Tudor, acting president of the quasi-governmental insurer, told the committee today that SCIF would respond to the amendments by dropping its lawsuit against the California Department of Insurance, a case State Fund has spent $1.8 million litigating.
Sen Jackie Speier (D-San Mateo) introduced the amendments to AB 2125 (Vargas D-Chula Vista), the Department\’s clean up bill that subjects SCIF to many of the same requirements as commercial workers\’ comp carriers, short of allowing the insurance commissioner to take it over. The bill will be amended with new amendments on the Senate Floor tomorrow.
Speier is a relentless champion of sunshine laws and accountability for the state-created entity. Her amendments further eviscerate the ability of SCIF management to flaunt Risk-Based Capital (RBC) laws.
The proposed amendments agreed to by Speier, Governor Schwarzenegger and Insurance Commissioner John Garamendi strip investment language from the bill that would have allowed SCIF to invest in corporate bonds. The amendments also authorize the governor to remove the State Fund president if SCIF ever reaches an Authorized Control Level Event or worse, under RBC laws. In this event, the governor would have the right to appoint a recovery administrator, while State Fund\’s board of directors becomes an advisory body.
Once the insurance commissioner determines that SCIF is no longer in financial trouble, the board can regain control of SCIF. The insurer actually reached RBC level three in 2002, an event that with any other California workers\’ compensation carrier would have triggered a conservation action by the Department. SCIF\’s litigation challenged the commissioner\’s authority to seize the company under current laws.
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Go to our home page at http://www.wcexec.com to order the print version of the Workers\’ Comp Executive.
Legal Notice:
The editors have made efforts to ensure the accuracy of the information published in each issue. Opinions on financial, legal or other matters are those of the editors and others; professional counsel should be consulted before any action or decision based upon this material is taken.
Workers\’ Comp Executive
FLASH REPORT!
Committee Emasculates SCIF
The Senate Banking, Finance and Insurance Committee today passed an Assembly bill with amendments that strip State Compensation Insurance Fund of its enhanced investment authority and give the governor greater leeway to remove the State Fund president. Jim Tudor, acting president of the quasi-governmental insurer, told the committee today that SCIF would respond to the amendments by dropping its lawsuit against the California Department of Insurance, a case State Fund has spent $1.8 million litigating.
Sen Jackie Speier (D-San Mateo) introduced the amendments to AB 2125 (Vargas D-Chula Vista), the Department\’s clean up bill that subjects SCIF to many of the same requirements as commercial workers\’ comp carriers, short of allowing the insurance commissioner to take it over. The bill will be amended with new amendments on the Senate Floor tomorrow.
Speier is a relentless champion of sunshine laws and accountability for the state-created entity. Her amendments further eviscerate the ability of SCIF management to flaunt Risk-Based Capital (RBC) laws.
The proposed amendments agreed to by Speier, Governor Schwarzenegger and Insurance Commissioner John Garamendi strip investment language from the bill that would have allowed SCIF to invest in corporate bonds. The amendments also authorize the governor to remove the State Fund president if SCIF ever reaches an Authorized Control Level Event or worse, under RBC laws. In this event, the governor would have the right to appoint a recovery administrator, while State Fund\’s board of directors becomes an advisory body.
Once the insurance commissioner determines that SCIF is no longer in financial trouble, the board can regain control of SCIF. The insurer actually reached RBC level three in 2002, an event that with any other California workers\’ compensation carrier would have triggered a conservation action by the Department. SCIF\’s litigation challenged the commissioner\’s authority to seize the company under current laws.
-30-
Go to our home page at http://www.wcexec.com to order the print version of the Workers\’ Comp Executive.
Legal Notice:
The editors have made efforts to ensure the accuracy of the information published in each issue. Opinions on financial, legal or other matters are those of the editors and others; professional counsel should be consulted before any action or decision based upon this material is taken.
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