NAII Urges Veto Of Calif. Comp Bill
NU Online News Service, Feb. 8, 4:33 p.m. EST?A national insurance trade group said today it has asked California Gov. Gray Davis to once again veto a measure that would increase workers' compensation benefits.
In a letter to Gov. Davis, the National Association of Independent Insurers in Des Plaines, Ill. said the latest measure is "significantly out of balance" and would further cripple California's weakened economy.
The current measure by some estimates carries a $3.5 billion price tag. Mr. Davis has on three previous occasions vetoed workers' comp legislation that hiked benefits but did not offer a corresponding reduction in overall expenses.
NAII said 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," said Sam Sorich, NAII vice president and Western regional manager, in the letter.
"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," the letter continued.
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 the NAII said 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, with little public notice. On that same day, the legislature pushed through passage of the bill and sent the measure to Gov. Davis.
"The passage of AB 749 falls far short of the ideal of public participation in the political process," Mr. Sorich wrote in his letter.
Mr. Sorich said 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," Mr. Sorich advised.
"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," Mr. Sorich said.
NAII said its members write nearly 32 percent of the property-casualty insurance in California.
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