BILL ANALYSIS
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|SENATE RULES COMMITTEE | SB 683|
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THIRD READING
Bill No: SB 683
Author: Calderon (D)
Amended: As introduced
Vote: 21
SENATE BANKING, FINANCE & INSURANCE COMM : 9-0, 4/1/09
AYES: Calderon, Runner, Correa, Cox, Florez, Kehoe, Liu,
Lowenthal,
Padilla
NO VOTE RECORDED: Harman
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
SUBJECT : Workers compensation: group self-insurers:
audits
SOURCE : Associated California Self Insured Businesses
DIGEST : This bill requires each group self-insurer to
annually file with the director of the Office of Self
Insured Plans (OSIP) an annual audit of the financial
accounts and records of the group self-insurer by an
independent, certified public accountant. The annual audit
shall be made available to the Director. No individual
group self insured members' audited financial or claim
information will be included in this disclosure to the
guarantee fund or be made available to the public.
ANALYSIS :
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Existing law:
1.Establishes a workers' compensation system, administered
by the Administrative Director of the Division of
Workers' Compensation, to compensate an employee for
injuries sustained in the course of his or her
employment.
2.Requires the administrative director to conduct audits of
insurers, self-insured employers, and 3rd-party
administrators to ensure that injured workers are
promptly and accurately receiving the full measure of
compensation they are entitled to receive.
This bill:
1.Requires a group self-insurer to annually file with the
director an annual audit by an independent, certified
public accountant of the financial accounts and records
of the group self-insurer.
2.Prohibits audited financial or claim information of
individual members of the group self-insurer from being
made public.
Background
A group self-insurer or self insured group (SIG) is a
California Non-Profit Mutual Benefit Corporation formed
exclusively for the purpose of providing workers'
compensation under Chapter 8, Section 2 of the California
Code of Regulations. Group members are joint and severally
liable. Group members make contributions to the SIG, and
the SIG pays all expenses, provides safety & loss control
services, and pays claims for injured workers.
The funds left over are called "Surplus," the equivalent to
an insurance company's profit. In a SIG the members own the
surplus and it can be used for dividends, rate reductions,
or even payment holidays. Members of the SIG and the SIG
itself are audited annually. In addition to the audits, an
actuarial study is performed to ensure that members are
contributing correctly. SIGS believe that because the
entire SIG is at financial exposure if members are not
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carefully reviewed and screened, SIGs are thorough in
assuring their groups are at minimum risk.
In 2008 an effort was commenced by some insurers to mandate
that SIGs must disclose their financials to the public.
This effort was directed at the SIG regulator, the OSIP
which rejected this request based upon their lack of
regulatory authority.
At the direction of the Assembly Insurance Committee, the
Commission on Health and Safety and Workers' Compensation
(CHSWC) is currently evaluating the regulatory oversight in
California of SIGs. The CHSWC report has not yet been
released.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
SUPPORT : (Verified 4/21/09)
Associated California Self Insured Businesses (source)
Acclamation Insurance Management Services
California Chapter of the American Fence Contractors'
Association
California Fence Contractors' Association
Engineering Contractors' Association
Flasher/Barricade Association
OPPOSITION : (Verified 4/21/09)
Association of California Insurance Companies
California Applicants' Attorneys Association
California Chamber of Commerce
California Society of Industrial Medicine and Surgery
ARGUMENTS IN SUPPORT : Associated California Self Insured
Businesses (ACSIB), which manages the self insured workers'
compensation in California for five groups: contractors,
growers, farm labor contractors, food processors, and
livestock producers is the source of this bill. ACSIB
supports providing the financial information to the
director, but would oppose legislation that would make the
information public. Financial information from publicly
traded entities is already public. However, similar
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financial information on privately held entities is, and
should remain, private. Providing such information to a
regulator for purposes of administration of the program is
appropriate. Going beyond and making it public would have
negative effects on various industries by providing
proprietary information to competitors.
ARGUMENTS IN OPPOSITION : The Association of California
Insurance Companies opposes the bill unless it is amended,
and states, "While we agree with the statement in the bill
that none of the information of a member of a Self Insured
Group [SIG] should made public, we think that the audited
financial information and certification of actuarial
analysis of the Self Insured Group should be made public
upon request.
"We believe that amending the bill to require the release
of SIG audited financial statements and an actuarial
analysis places an extremely limited obligation on the Self
Insured Group community and gives lawmakers, stakeholders
and the public some assurance that Self Insured Groups have
the resources necessary to administer claims and benefits."
JA:nl 4/21/09 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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