BILL ANALYSIS
SENATE COMMITTEE ON BANKING, FINANCE,
AND INSURANCE
Senator Ronald Calderon, Chair
AB 2396 (Solorio) Hearing Date: June 16, 2010
As Amended: May 12, 2010
Fiscal: Yes
Urgency: No
VOTES: Asm. Floor(05/28/10)59-0/Pass
Asm. Appr.
(05/19/10)16-0/Pass
Asm. G.O. (04/21/10)21-0/Pass
Asm. Ins. (04/07/10)12-0/Pass
SUMMARY Would subject the Workers' Compensation Insurance
Rating Bureau (WCIRB) to the Open Meetings and Public Records
laws that govern public entities in California.
DIGEST
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 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
AB 2396 (Solorio), Page 2
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 Insurance Commissioner.
3.Requires the Insurance Commissioner to designate a rating
organization to perform services as the Insurance
Commissioner's designated statistical agent to assist in
gathering and analyzing industry-wide data in carrying out the
functions listed above.
This bill
1. Would provide the Insurance Commissioner shall not
designate a rating organization as his or her statistical
agent unless it agrees to comply with the Bagley-Keene Open
Meeting Act and the California Public Records Act with
regard to it's activities associated with the role of
commissioner's statistical agent;
2. Would provide, notwithstanding a law that authorizes
appeals to be made to the Insurance Commissioner by any
person aggrieved by a decision of the rating organization,
that any dispute between the rating organization and a party
seeking to enforce California's Open Meeting Act or Public
Records Act shall be resolved in a court of competent
jurisdiction; the commissioner is not obligated to defend or
represent the designated rating organization in such
proceedings;
3. Would specify that a designated rating organization, as the
commissioner's statistical agent, shall not release any
information or communications determined to be confidential
pursuant to any provision of this code pursuant to either
the Bagley-Keene Open Meeting Act or the California Public
Records Act.
COMMENTS
1.Purpose of the bill To ensure that a designated statistical
agent, to the extent that they are performing public
AB 2396 (Solorio), Page 3
functions, operate in the same transparent manner as if these
functions were performed by a public agency.
2.Background According to the author, the WCIRB is performing
public functions on behalf of the Insurance Commissioner, and
these public functions should not be shielded from the Open
Meetings and Public Records laws that would apply if the
Insurance Commissioner 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.
3.It is apparent that the scale and variety of governmental and
private or at least non-public sector partnerships has
increased as former governmental functions are delegated to
non-public entities where deliberations and decisions and
analyses will be made that can affect matters intimately
connected with public policy. In the realm of workers'
compensation insurance, the subject matter impinges on a right
established in nothing less than California's Constitution. As
such, in the conduct of governmental-type activities which may
entail cost and other impacts on the public, the
accountability of those delegatees for fair processes, the
appropriate use of public resources, and the diligent
performance of assigned duties becomes increasingly important.
4.The recent trend to subject such entities to California's Open
Meeting Act and Public Records law appears support such
accountability according to norms the activity would be
subject to if it were conducted in the public realm.
5.Questions None
6.Suggested Amendments None
7.Prior and Related Legislation
a. SB 1145 (Machado), Statutes 2008, Chapter 322,
applied these laws to the State Compensation Insurance
Fund.
b. SB 1467 (Machado), Statutes 2008, Chapter 407,
AB 2396 (Solorio), Page 4
applied these laws to the California Insurance Guarantee
Association.
c. AB 2268 (Fuentes) of the 2007-2008 session
proposed to require the WCIRB to waive any copyright
claim to materials it produced pursuant to a regulation
or order of the Insurance Commissioner in its role as
the Commissioner's designated statistical agent. AB
2268 was never set for a hearing in its committee of
reference.
POSITIONS
Support
None
Oppose
None
Consultant: Kenneth Cooley (916) 651-4102