BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 879
                                                                  Page  1

          Date of Hearing:   May 13, 2009

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                Kevin De Leon, Chair

                  AB 879 (Hernandez) - As Amended:  April 28, 2009  

          Policy Committee:                               
          InsuranceVote:10-0

          Urgency:     No                   State Mandated Local Program:  
          Reimbursable:

           SUMMARY  

          This bill requires workers' compensation self-insurers to file  
          an annual audited financial statement and an actuarial analysis  
          with the Office of Self-Insurance Programs (OSIP) within the  
          California Department of Industrial Relations (DIR). In addition  
          this bill requires these financial records be made available to  
          the public.  

           FISCAL EFFECT  

          No direct fiscal impact to DIR to comply with the requirements  
          of this bill by making several dozen sets of financial documents  
          of self-insurers available to the public. 

           COMMENTS  

           1)Rationale  . This bill is sponsored by the Self-Insurers  
            Security Fund (SIF), which pays claims on behalf of  
            self-insured private employers who default on workers'  
            compensation claims. This bill dovetails with current and  
            future OSIP efforts to increase the transparency about the  
            financial stability of self-insured entities. Increasing the  
            amount of oversight and review of this financial data may  
            reduce risks seen in other states when self-insured groups  
            have been driven to deficits of hundreds of millions of  
            dollars and requiring governmental intervention. 

           2)Background  . California employers must provide workers'  
            compensation benefits to their employees under state labor  
            laws. Employers must purchase workers' compensation insurance  
            from either a licensed insurance company or through the State  








                                                                  AB 879
                                                                  Page  2

            Compensation Insurance Fund (SCIF), or employers may choose to  
            self-insure, which means they use a pay-as-you go model,  
            paying benefits to and on behalf of workers as costs are  
            incurred. 


           Analysis Prepared by  :    Mary Ader / APPR. / (916) 319-2081