AB 2230, as introduced, Cooley. Insurance: Workers’ Comp Bond Fund: assessments.
Existing law creates the California Insurance Guarantee Association (CIGA) and requires all insurers admitted to transact insurance in this state to become members. CIGA is required to collect premium payments from members to discharge its obligations to cover claims of an insolvent insurer. CIGA is required to allocate its claim payments and costs based on categories of insurance, including, but not limited to, workers’ compensation claims and homeowners’ claims. The premium payments from each category are separate and required to be used to pay the claims and costs allocated to that category.
Existing law authorizes CIGA to request the issuance of bonds by the California Infrastructure and Economic Development Bank to pay for covered claims that arise as a result of the insolvency of workers’ compensation insurers. Proceeds from the sale of the bonds are deposited in the Workers’ Comp Bond Fund, and CIGA distributes this money to pay covered claims. Principal and interest on the bonds are paid from special bond assessments levied by CIGA on workers’ compensation insurers, as provided.
This bill would prohibit, once all the bonds issued pursuant to these provisions are redeemed, further special bond assessments from being levied or made. The bill would require that any premium adjustments applicable to the special bond assessments continue to be made and determined, and that any credits or charges that result from the premium adjustments be credited or charged to the workers’ compensation assessments that the insurers are otherwise required to pay CIGA.
Vote: majority. Appropriation: no. Fiscal committee: no. State-mandated local program: no.
The people of the State of California do enact as follows:
Section 1063.74 of the Insurance Code is
2amended to read:
(a) Notwithstanding any other limits on assessments,
4CIGA shall have the authority to levy upon member insurers special
5bond assessments in the amount necessary to pay the principal of
6and interest on the bonds, and to meet other requirements
7established by agreements relating to the bonds. The assessments
8shall be collected only from the member insurers providing
9workers’ compensation insurance, in the same manner as separate
10premium payments are used to pay the claims and costs allocated
11to that category pursuant to Section 1063.5. Special bond
12assessments made pursuant to this section shall also be subject to
13the surcharge provisions in Sections 1063.14 and 1063.145.
14(b) Notwithstanding any other law, after all bonds issued
15pursuant to this article have been redeemed, no further special
16bond assessments shall be levied or made. Any premium
17adjustments called for and described in Section 1063.5, as applied
18to special bond assessments initially charged, shall continue to be
19made and determined. Any credits or charges that result from the
20premium adjustments on the special bond assessments shall be
21credited or charged to the assessments called for and described
22in Section 1063.5.
23(b)
end delete
24begin insert(c)end insert In addition to the special bond assessments provided for in
25 this
section, the board in its discretion and subject to other
26obligations of the association, may utilize current funds of CIGA,
27premium assessments made under Section 1063.5, and advances
28or dividends received from the liquidators of insolvent insurers to
29pay the principal and interest on any bonds issued at the board’s
30request and shall utilize, to the extent feasible, the recoveries from
P3 1the liquidators of the estates of insolvent workers’ compensation
2carriers to pay bonds issued at the board’s request to fund workers’
3compensation claims.
O
99