BILL ANALYSIS Ó
AB 2887
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Date of Hearing: April 20, 2016
ASSEMBLY COMMITTEE ON INSURANCE
Tom Daly, Chair
AB 2887
(Committee on Insurance) - As Introduced February 25, 2016
SUBJECT: State Compensation Insurance Fund: out-of-state-risks
SUMMARY: Repeals the sunset date on the statute that authorizes
the State Compensation Insurance Fund (SCIF or State Fund) to
provide limited coverage for out-of-state employees of
California employers.
EXISTING LAW:
1)Requires every employer to provide workers' compensation
benefits for its employees, either by purchasing a policy of
workers' compensation insurance or by obtaining a certificate
of self-insurance, in the event of injuries to employees that
arise out of or in the course of employment.
2)Establishes SCIF as a quasi-state entity to provide workers'
compensation insurance to California employers, both in
competition with private insurers and as the insurer of last
resort for employers that are unable to obtain workers'
compensation insurance from private insurers.
AB 2887
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3)Authorizes SCIF to provide workers' compensation insurance
covering California employees who are temporarily working
outside of California (and are therefore subject to the
workers' compensation laws of those other states).
4)Authorizes SCIF to provide workers' compensation insurance
covering employees who work permanently outside of California
(and are therefore subject to the workers' compensation laws
of those other states) if:
a) The employer's principal place of business is in
California, and
b) The majority of the employer's operations and employees
are in California; and
c) SCIF provides the workers' compensation insurance for
those California operations and employees; and
d) SCIF has a reinsurance agreement with a qualified
insurer that is authorized to transact insurance in
California and the state where the employees are employed.
FISCAL EFFECT: None.
COMMENTS:
1)Purpose . The Committee introduced this bill to make permanent
a moderate expansion of SCIF's authority to provide coverage
for non-California employees that was enacted in 2011, with a
sunset clause. AB 228 (Fuentes) - Statutes 2011, Chapter 670
AB 2887
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-- the legislation that authorized this expansion, required
the Insurance Commissioner to report on the effects of SCIF
covering more out-of-state employees. That report was
completed, and concluded that the program was operating as
hoped, without any unintended consequences. Accordingly, to
ensure the continued benefits for some California employers,
the Committee determined that the sunset date ought to be
repealed.
2)Background . In general, SCIF provides workers' compensation
insurance only for California employers employing California
employees. However, many businesses have incidental
out-of-state business, even though they are primarily
California companies. If these employers are unable to obtain
coverage from private insurers, which have more flexibility to
provide multi-state coverage, they must turn to SCIF as the
insurer of last resort. Prior to 2012, these employers, in
the event they were covered by a SCIF policy in California,
had to obtain a separate insurance policy from a different
insurer to cover the non-California employees. That necessity
came with a price in both dollars and administrative
inconvenience. The limited authorization for SCIF to cover
non-California employees was intended to provide relief for
this class of California employer, without allowing SCIF to
routinely compete for non-California business. The consensus
reached in 2011 on AB 228 remains, and there are no concerns
expressed by any stakeholder by allowing SCIF to continue with
this practice.
REGISTERED SUPPORT / OPPOSITION:
Support
AB 2887
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State Compensation Insurance Fund
Opposition
None received
Analysis Prepared by:Mark Rakich / INS. / (916) 319-2086