BILL ANALYSIS
AB 2396
Page 1
ASSEMBLY THIRD READING
AB 2396 (Solorio)
As Amended May 12, 2010
Majority vote
INSURANCE 12-0 GOVERNMENTAL ORGANIZATION 21-0
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|Ayes:|Solorio, Blakeslee, |Ayes:|Coto, Anderson, Blakeslee, |
| |Anderson, Caballero, | |Chesbro, Cook, Bradford, |
| |Charles Calderon, Carter, | |Evans, Galgiani, Hall, |
| |Feuer, Hagman, Hayashi, | |Hernandez, Hill, Charles |
| |Niello, Salas, Torres | |Calderon, Ma, Mendoza, |
| | | |Nestande, V. Manuel Perez, |
| | | |Portantino, Silva, Torres, |
| | | |Torrico, Tran |
| | | | |
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APPROPRIATIONS 16-0
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|Ayes:|Fuentes, Conway, Hill, |
| |Bradford, Charles |
| |Calderon, Coto, Davis, |
| |Hall, Harkey, Miller, |
| |Nielsen, Norby, Skinner, |
| |Solorio, Torlakson, |
| |Torrico |
| | |
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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 (IC) 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
AB 2396
Page 2
Act.
2)Limits the above provisions to the Bureau's role as the
designated statistical agent of the IC.
3)Provides that the Department of Insurance (CDI) shall not be
obligated to defend the Bureau or provide a forum for dispute
resolution in the event of a disputes between the Bureau and a
party seeking to enforce the provisions of the bill.
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 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
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 : According to the Assembly Appropriations
AB 2396
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Committee, minor, absorbable costs to CDI.
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), Chapter
322, Statutes 2008, applied these laws to the State
Compensation Insurance Fund. SB 1467 (Machado), Chapter 407,
Statutes 2008, 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.
Analysis Prepared by : Mark Rakich / INS. / (916) 319-2086
FN: 0004420