BILL NUMBER: AB 1922	AMENDED
	BILL TEXT

	AMENDED IN ASSEMBLY  APRIL 28, 2016

INTRODUCED BY   Assembly Member Daly

                        FEBRUARY 11, 2016

   An act to amend Section 11658 of the Insurance Code, relating to
workers' compensation insurance.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 1922, as amended, Daly. Workers' compensation policies.
   Existing law requires that a workers' compensation insurance
policy or endorsement not be issued by an insurer unless the insurer
files a copy of the form or endorsement with a rating organization
and 30 days have expired from the date the form or endorsement is
received by the Insurance Commissioner from the rating organization
without notice from the commissioner, unless the commissioner gives
written approval of the form or the endorsement prior to that time.

   This bill would exempt policies or endorsements offering
deductibles to policyholders for all or part of benefits payable
under the policy if the estimated nationwide standard premium is
$250,000 or more, and documents that do not alter, amend, or
otherwise provide for the payment of compensation or benefits,
coverage, or rating under the policy, from filing under the above
provisions.  
   This bill would prohibit, except as provided, an ancillary
agreement to a workers' compensation insurance policy from being
issued or renewed by an insurer to a California employer, as defined,
on or after January 1, 2017, unless the insurer files a copy of the
ancillary agreement with a rating organization and 30 days have
expired from the date the ancillary agreement is received by the
commissioner from the rating organization without notice from the
commissioner unless the commissioner gives written approval of the
ancillary agreement prior to that time. The bill would define
"ancillary agreement" to mean an agreement that is a supplementary
writing or contract relating to a policy or endorsement form that
adds to, subtracts from, or revises the obligations of either the
insured or the insurer regarding any terms of an insurance policy,
including, but not limited to, dispute resolution agreements, policy
premium amounts or rates, expense or tax reimbursement or allocation,
deductible amounts, policy duration, cancellation, or claims
administration. The bill would also make conforming changes. 
   Vote: majority. Appropriation: no. Fiscal committee:  no
  yes  . State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

   SECTION 1.    Section 11658 of the  
Insurance Code   is amended to read: 
   11658.  (a) A workers' compensation insurance policy or
endorsement shall not be issued by an insurer to any person in this
state unless the insurer files a copy of the form or endorsement with
the rating organization pursuant to subdivision (e) of Section
11750.3 and 30 days have expired from the date the form or
endorsement is received by the commissioner from the rating
organization without notice from the commissioner, unless the
commissioner gives written approval of the form or endorsement prior
to that time. 
   (b) (1) An ancillary agreement shall not be issued by an insurer
to a California employer unless the insurer files a copy of the
ancillary agreement with the rating organization pursuant to
subdivision (e) of Section 11750.3 and 30 days have expired from the
date the ancillary agreement is received by the commissioner from the
rating organization without notice from the commissioner unless the
commissioner gives written approval of the ancillary agreement prior
to that time.  
   (2) For the purposes of this section, a "California employer"
means an employer whose principal place of business is in California
and whose California payroll constitutes the majority of the employer'
s payroll for purposes of determining premium under the policy. 

   (3) This section shall not apply to an ancillary agreement between
an insurer and a California employer issued in conjunction with a
workers' compensation policy or endorsement that contains a
deductible obligation or retention obligation equal to or greater
than two hundred fifty thousand dollars ($250,000) and the California
employer meets three or more of the following criteria: (A) has a
full-time risk manager; (B) is represented by counsel during
negotiations; (C) has 500 or more employees; (D) has annual gross
revenue in excess of twenty million dollars ($20,000,000); or (E) has
a workers' compensation manual standard premium on a countrywide
basis in excess of seven hundred fifty thousand dollars ($750,000).
 
   (4) Under no circumstances, however, may an ancillary agreement
amend or revise the coverage provided, or the benefits payable, under
a workers' compensation policy unless it is filed and approved in
accordance with this section. 
   (5) This subdivision shall apply to ancillary agreements issued or
renewed on or after January 1, 2017. 
   (b)
    (c)  If the commissioner notifies the insurer that the
filed  form or endorsement   policy form,
endorsement, or ancillary agreement  does not comply with the
requirements of law, specifying the reasons for his or her opinion,
it is unlawful for the insurer to issue any policy  or
endorsement   form,   endorsement, or ancillary
agreement  in that form. 
   (c) 
    (d) The withdrawal of a policy  form or
endorsement   form,   endorsement, or ancillary
agreement  by the commissioner pursuant to this section shall
not affect the status of the policyholder as having secured payment
for compensation or affect the substitution of the insurer for the
policyholder in workers' compensation proceedings as set forth in the
provisions of Chapter 4 (commencing with Section 3700) of Part 1 of
Division 4 of the Labor Code during the period of time in which the
policy  form or endorsement   form,  
endorsement, or ancillary agreement  was in effect. 
   (e) "Ancillary agreement" means an agreement that is a
supplementary writing or contract relating to a policy or endorsement
form that adds to, subtracts from, or revises the obligations of
either the insured or the insurer regarding any terms of an insurance
policy, including, but not limited to, dispute resolution
agreements, policy premium amounts or rates, expense or tax
reimbursement or allocation, deductible amounts, policy duration,
cancellation, or claims administration. "Ancillary agreements" do not
include: (1) limiting and restricting endorsements as defined in
subdivision (g) of this section; (2) customized limiting and
restricting endorsements as defined in subdivision (h) of this
section; or (3) agreements specifying only terms described in
subparagraphs (A) to (F), inclusive, following, but only if those
terms are disclosed and negotiated contemporaneously with the
inception or renewal of the underlying policy and any revisions or
additions to those terms subsequent to the inception or renewal of
the policy are mutually agreed upon by the parties: (A) the method
for making payments; (B) the method for funding deductible amounts or
other policy-related charges due under a policy; (C) the amounts of
collateral or security the insured is required to maintain for claims
that do not exceed the deductible; (D) payment due dates; (E)
payment transmittal information; or (F) the method of selecting a
claims administrator, provided that the claims administrator may only
administer claims that do not exceed the deductible.  
   (d) 
    (f)  This section shall not apply to limited policies
submitted for approval to the commissioner pursuant to Section 11657.

   (g) "Limiting and restricting endorsement" means an endorsement
that excludes from coverage some portion of workers' compensation
liability for which the employer is required to secure payment
pursuant to the Labor Code that, after approval of the endorsement by
the Insurance Commissioner, may be endorsed to a workers'
compensation policy.  
   (h) "Customized limiting and restricting endorsement" means an
endorsement unique to a specific policy used (1) when the employer's
business is conducted in such a manner that it is impossible or
impracticable to determine the nature, scope, and extent of
employment covered by the insurer; or (2) to prevent the performance
of work in such an extremely hazardous manner or under such hazardous
conditions as would reflect a reckless disregard by the employer for
the welfare of its employees; or (3) to prevent the issuance of an
unrestricted policy if it would encourage an operation that is
contrary to law or to the rules of a regulatory agency. 

  SECTION 1.    Section 11658 of the Insurance Code
is amended to read:
   11658.  (a) A workers' compensation insurance policy or
endorsement shall not be issued by an insurer to any person in this
state unless the insurer files a copy of the form or endorsement with
the rating organization pursuant to subdivision (e) of Section
11750.3 and 30 days have expired from the date the form or
endorsement is received by the commissioner from the rating
organization without notice from the commissioner, unless the
commissioner gives written approval of the form or endorsement prior
to that time.
   (b) If the commissioner notifies the insurer that the filed form
or endorsement does not comply with the requirements of law,
specifying the reasons for his or her opinion, it is unlawful for the
insurer to issue any policy or endorsement in that form.
   (c) The withdrawal of a policy form or endorsement by the
commissioner pursuant to this section shall not affect the status of
the policyholder as having secured payment for compensation or affect
the substitution of the insurer for the policyholder in workers'
compensation proceedings as set forth in the provisions of Chapter 4
(commencing with Section 3700) of Part 1 of Division 4 of the Labor
Code during the period of time in which the policy form or
endorsement was in effect.
   (d) This section does not apply to limited policies submitted for
approval to the commissioner pursuant to Section 11657.
   (e) This section does not apply to policies or endorsements
offering deductibles to policyholders for all or part of benefits
payable under the policy if the estimated nationwide standard premium
is two hundred fifty thousand dollars ($250,000) or more.
   (f) This section does not apply to documents that do not alter,
amend, or otherwise provide for the payment of compensation or
benefits, coverage, or rating under the policy.