BILL ANALYSIS
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
483 (Buchanan)
Hearing Date: 8/24/2009 Amended: 8/17/2009
Consultant: Bob Franzoia Policy Vote: B,F&I 8-1 L&IR 4-1
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BILL SUMMARY: AB 483 would require that a licensed workers'
compensation rating organization shall, pursuant to regulations
adopted by the Insurance Commissioner, maintain a Web site for
the purposes of assisting any person to determine whether an
employer is insured for workers' compensation. This bill would
specify who may submit an inquiry and for what purpose, what
information shall be available on the site, and would provide
that confidential information may not be disclosed. This bill
would provide that the site shall be accessible for inquiries
without charge but the Insurance Commissioner may permit the
rating organization to impose access restrictions as necessary
to deter unrelated uses. This bill would require the site be
operational one year after adoption of regulations by the
Insurance Commissioner. The regulations would be required to
provide for dispute resolution regarding the accuracy of the
information displayed on the rating organization's Web site.
The Insurance Commissioner shall review the Web site and report
no later than July 1, 2013.
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Fiscal Impact (in thousands)
Major Provisions 2009-10 2010-11 2011-12 Fund
Internet access to workers' Up to $600 Minor, ongoing
costs Private*
compensation rating
organization database
Customer inquiries and $75 $40 $40 Private*
public information access
* Assessments on member insurers; no General Fund cost pressure
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STAFF COMMENTS: The Commission on Health and Safety and Workers'
Compensation is a joint labor-management body created by
workers' compensation reform legislation and charged with
examining the workers' compensation system and recommending
administrative or legislative modifications to improve its
operation. Providing public access to workers' compensation
insurance coverage information, as proposed by this bill, was a
recommendation of this comission.
The Workers' Compensation Insurance Rating Bureau, an
unincorporated, nonprofit association of all insurance companies
licensed to transact workers' compensation, is the sole rating
organization in the state. The bureau collects and maintains
information about employers' insurance coverage from insurance
providers. The bureau is also the designated statistical agent
for the Department of Insurance. The department estimates the
cost to adopt regulations to implement this bill will be minor,
and absorbable. The regulations could, however, result in a
workload increase on the bureau to resolve coverage disputes.
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Insurers may submit policy information to the bureau
electronically though many submit a hardcopy of the policy,
which is later discarded. The bureau receives the policies,
extracts the information needed (policyholder name, address,
dates, policy number, classification codes, etc) and adds this
information to its database. The same process occurs for
endorsements, which can be received as part of the policy or can
be added later. For example, additional named insureds are
sometimes listed on an endorsement or there can be an
endorsement to add or exclude certain types of workers or
locations. The information from an endorsement, therefore, may
or may not be added to the database depending on the type of
endorsement. After processing, this information would be
available on the proposed Web site. In 2008, the bureau
processed approximately 700,000 policies, 1,300,000
endorsements, 350,000 cancellations, and 150,000 reinstatements.
The California Worker's Compensation Uniform Statistical
Reporting Plan, which sets the operational requirements of the
bureau, requires that insurers submit a policy to the bureau
within 60 days after the policy effective date. Once the policy
is reported to the bureau, the bureau processes the policy in
the manner noted above, normally within five to ten days and
sometimes less.
The bureau currently provides limited access to this information
to parties that need the information as part of a pending
Workers' Compensation Appeals Board claim and to governmental
entities involved in fraud investigations.
Because the bureau's coverage records system was not designed to
be searched by non-workers' compensation professionals and due
to limitations in the bureau's current database, for each policy
written, the bureau is only able to record a maximum of 25 named
insured entities (employers) and one address. If there are more
than 25 insured entities (employers) named on a policy or more
than one policyholder address, it is possible that a Web site
search could result in a false negative. A false negative may
also arise if the person searching does not know the name of the
employer as it is listed on the insurance policy or when
coverage information is not immediately available on the system
due to the 60 day reporting window.
Preliminary information indicates the bureau is contacted fewer
than ten times annually by injured workers employees seeking
workers' compensation insurance information. Staff notes that
when the bureau responds to these written requests, it provides
the name of the insurer, the policy number and initiation and
expiration date since the requester certifies in writing that
they are only using the information for purposes of the
processing of the workers' compensation claim for injury. The
new Web site will not contain information on inception and
expiration dates of insurance policies, which are proprietary
information pursuant to case law and statutes.
The bureau is replacing its computer system and, once completed,
existing limitations will be addressed though at a cost above
what was otherwise planned as part of the system replacement.
Development of the proposed Web site is estimated to take 30 to
40 weeks at a cost of $490,000. This includes extracting the
data from the current system which may require some cleaning to
be uploaded to the new system, building
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and validating the bridges that run between the two systems to
update the system, designing and building the new database to
feed into the Web site, designing and building the security for
the Web site and extensive testing of that security to ensure
safety of the data. New hardware is estimated to cost $112,000.
This bill is similar to AB 507 (De La Torre) 2008 which was
vetoed with the following message:
This measure would establish an Internet website to enable any
person to identify whether or not an employer is insured for
workers' compensation. This is a laudable goal. However, I am
concerned that the website would not be required to post the
effective dates of coverage of a policy, thereby significantly
diminishing the value of the information. More importantly, the
bill does not contain any specified timing in which the
information must be updated, potentially leading to inaccurate
information on the website.
Staff notes that in response to the veto message, this bill
provides that the Web site shall (1) permit a person to submit a
query for coverage information concerning a specified employer
on a specified date with that date being within five years of
the date of query and (2) be updated to reflect policy
information as soon as is reasonably feasible following
submission of that information by insurers to the rating
organization, as the Insurance Commissioner shall require and
shall include the date the Web site was last updated.
This bill also is similar to AB 1883 (De La Torre) 2006 which
was vetoed with a much broader message raising several concerns.