BILL ANALYSIS
AB 2396
Page 1
Date of Hearing: April 7, 2010
ASSEMBLY COMMITTEE ON INSURANCE
Jose Solorio, Chair
AB 2396 (Solorio) - As Introduced: February 18, 2010
SUBJECT : Workers' Compensation Insurance Rating Bureau: Open
Meetings
SUMMARY : Subjects the Workers' Compensation Insurance Rating
Bureau (WCIRB or Bureau) to the Open Meetings and Public Records
laws that govern public entities in California. Specifically,
this bill :
1)Specifies that the Insurance Commissioner shall not designate
an entity as his or her statistical agent, unless the entity:
a) Agrees to be subject to the Bagley-Keene Open Meeting
Act, and
b) Agrees to be subject to the California Public Records
Act.
EXISTING LAW :
1)Establishes a licensing requirement for insurance "rating
organizations" that allows a licensed entity to acquire,
analyze, and use collective insurer information in a manner
that, absent state licensing and oversight, would constitute a
violation of federal anti-trust laws.
2)Requires the Insurance Commissioner (IC) to perform a variety
functions associated with rate making for workers'
compensation insurance, including:
a) Establishing a uniform statistical plan that identifies
the nature and form of data to be submitted by each
insurer;
b) Establishing a system of experience modification that
incentivizes safe workplaces and disincentivizes unsafe
workplaces;
c) Establishing a system of employee classification that
insurers must use in their rating plans; and
AB 2396
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d) Recommending a "pure premium" rate level (the
industry-wide benchmark for benefit payment and loss
adjustment expenses) that forms an advisory rate for
insurers to use, if they so choose, in developing and
filing their rates with the IC.
3)Requires the IC to designate a rating organization to perform
services as the IC's designated statistical agent to assist in
gathering and analyzing industry-wide data in carrying out the
functions listed above.
FISCAL EFFECT : Undetermined.
COMMENTS :
1)Purpose . According to the author, the WCIRB is performing
public functions on behalf of the IC, and these public
functions should not be shielded from the Open Meetings and
Public Records laws that would apply if the IC performed these
function on his or her own. In the insurance arena, there are
a number of quasi-public or private entities that perform
public functions. There has been a trend in recent years to
ensure that these entities, to the extent that they are
performing public functions, operate in the same transparent
manner as if these functions were performed by a public
agency.
2)Prior legislation . Two pieces of legislation in 2008 expanded
the application of the Public Records Act and the Bagley-Keene
Open Meetings laws to insurance institutions that were not
previously subject to these rules. SB 1145 (Machado),
Statutes 2008, Chapter 322, applied these laws to the State
Compensation Insurance Fund. SB 1467 (Machado), Statutes
2008, Chapter 407, applied these laws to the California
Insurance Guarantee Association. Another measure from 2008,
AB 2268 (Fuentes), proposed to require the WCIRB to waive any
copyright claim to materials it produced pursuant to a
regulation or order of the IC in its role as the IC's
designated statistical agent. The author chose not to present
the bill in the Assembly Insurance Committee.
3)Clarifying amendment . WCIRB is both a licensed rating
organization and the IC's designated statistical agent. The
intent of the bill is to enhance the transparency of the
AB 2396
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Bureau's activities as the IC's designated statistical agent.
However, the bill's language does not limit the scope of the
public records or open meeting rules to this portion of the
Bureau's activities. An amendment is recommended to clarify
that the public records and open meeting provisions apply to
the WCIRB in its role as the IC's designated statistical
agent.
REGISTERED SUPPORT / OPPOSITION :
Support
>
Opposition
None received.
Analysis Prepared by : Mark Rakich / INS. / (916) 319-2086