Davis Signs Laws To Regulate WC Solvency

One bill, AB 1985, authored by Assemblyman Tom Calderon, D-Montebello, gives the California insurance commissioner authority to deny inadequate workers' comp rates.

Under AB 1985, Commissioner Low "will have the necessary authority to ensure that insurers are charging adequate rates to cover future losses," said Mark Sektnan, assistant AIA vice president, Western region.

"AB 1985 levels the playing field by requiring the State Compensation Insurance Fund to meet the same requirements of risk-based capital as private insurers," Said Mr. Sektnan.

Nicole Mahrt, director of public affairs for the AIA explained that the organization supported AB 1985, after initially opposing it. "We thought it was rolling back the clock in making a minimum rate law," she said. "But ultimately the author took amendments that we could support."

The bill offers the commissioner "another tool to make sure insurers stay solvent and that claims are paid to injured workers," she said.

Gov. Davis also signed SB 2093, authored by Sen. Jackie Speier, D-San Francisco. The bill reforms the workers' comp insurance deposit law in California.

"Deposits by workers' compensation insurers guarantee that injured workers continue to receive benefits if a carrier becomes insolvent. SB 2093 balances the need to have a readily accessible deposit without imposing significant additional financial burdens on insurers," said Mr. Sektnan.

Both laws will take effect on Jan. 1, 2003.