Legislation aimed at bringing more workers' compensation insurers into California has been approved by the legislature and sent to Governor Arnold Schwarzenegger.

Authored by state Senator Leland Yee, D-San Francisco, the legislation would remove workers' compensation from the list of coverages for which insurers must maintain minimum reserves for outstanding losses and loss expenses.

Supporters of SB 316, including the Association of California Insurance Companies, have argued that the reserve requirement has been surpassed by more recent tools to ensure an insurer's solvency.

"The requirement, which was created nearly 40 years ago, has been superseded by modern laws that more effectively regulate insurer solvency," said Sam Sorich, president of the ACIC. "Eliminating the requirement will release capital so insurers can write more business in California."

SB 316 was ultimately approved after the state Senate agreed unanimously to amendments made to the bill by the state Assembly. Throughout the bill's path through the state legislature, the ACIC noted, it never received a "no" vote.

"This bill helps California's workers' compensation system," said Mr. Sorich. "It allows insurers to shed an unnecessary reserve requirement and, therefore, have greater flexibility for competing in the marketplace. Injured workers, meanwhile, will continue to receive their workers' compensation benefits. And because SB 316 fosters greater competition, businesses are likely to have more choices in obtaining workers' compensation insurance to protect their workers."

Gov. Schwarzenegger can sign the bill into law, veto it, or allow it to become law without his signature. If approved, the measure would take effect as of the new year.

Also awaiting action from the governor is a proposal to increase the permanent disability benefit in the state's workers' compensation system. That legislation, SB 936, was approved by the Assembly early yesterday, according to Alicia Trost, a spokesperson for State Senate President Pro Tem Don Perata, D-Oakland, who authored the bill. A similar measure, also introduced by Sen. Perata, was vetoed by the governor in 2006.

Special Reports /

Bill To Lower Calif. Comp Insurer Reserve Requirement

Related Stories

Recommended For You