BILL ANALYSIS
AB 2396
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Date of Hearing: April 21, 2010
ASSEMBLY COMMITTEE ON GOVERNMENTAL ORGANIZATION
Joe Coto, Chair
AB 2396 (Solorio) - As Amended: April 8, 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)Prohibits the Insurance Commissioner from designating a rating
organization as his or her statistical agent unless the rating
organization agrees to comply with the Bagley-Keene Open
Meeting Act and the California Public Records Act, with regard
to those activities that are associated with its role as the
commissioner's statistical agent.
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
d) Recommending a "pure premium" rate level (the
AB 2396
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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.
1)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 :
Purpose of the bill : 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.
An amendment was taken in the Assembly Insurance Committee to
clarify that the public records and open meeting provisions
apply to the WCIRB in its role as the IC's designated
statistical agent.
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.
REGISTERED SUPPORT / OPPOSITION :
AB 2396
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Support
None on file
Opposition
None on file
Analysis Prepared by : Eric Johnson / G. O. / (916) 319-2531