BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 1447
                                                                  Page  1

          Date of Hearing:  May 6, 2009

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                Kevin De Leon, Chair

                 AB 1447 (John A. Perez) - As Amended: April 13, 2009

          Policy Committee:                              Insurance  
          Vote:10-0

          Urgency:     No                   State Mandated Local Program:   
          No     Reimbursable:              

           SUMMARY  

          This bill establishes the State Compensation Insurance Fund  
          (SCIF) as a state agency for the purposes of audits by Bureau of  
          State Audits (BSA) and other oversight functions to which state  
          agencies are subject via Government Code sections. This  
          clarifying bill specifies that SCIF, a quasi-governmental body,  
          is subject to specified public oversight. This bill brings  
          Government Code sections into conformity with Insurance Code  
          sections.  

           FISCAL EFFECT  

          No direct fiscal impact to provide additional oversight of SCIF  
          through audits and other reviews.  

           COMMENTS  
           
          1)Rationale  . This bill clarifies, in the Government Code, rather  
            than in the Insurance Code alone, that SCIF may be scrutinized  
            via public oversight functions, such as those conducted by  
            BSA, for example. 

           2)Background  . SCIF administers California's largest pool of  
            workers' compensation claims. All California employers must  
            provide workers' compensation benefits to their employees  
            under state labor law. Employers must purchase workers'  
            compensation insurance from either a licensed insurance  
            company, or through 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 the costs are  
            incurred. SCIF, created by the Legislature in 1914, is the  








                                                                  AB 1447
                                                                  Page  2

            insurer of last resort in California's private insurance  
            market and is now the largest workers' compensation insurer in  
            the country.
           
          3)Related Legislation  . SB 1452 (Speier), Chapter 452, Statutes  
            of 2006 created CSA oversight in the Insurance Code. AB 1447  
            establishes this oversight in the Government Code. 
           
          Analysis Prepared by  :    Mary Ader / APPR. / (916) 319-2081