Bill Text: CA AB1897 | 2009-2010 | Regular Session | Amended
Bill Title: State Compensation Insurance Fund.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2010-05-28 - In committee: Set, second hearing. Held under submission. [AB1897 Detail]
Download: California-2009-AB1897-Amended.html
BILL NUMBER: AB 1897 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY APRIL 27, 2010
INTRODUCED BY Assembly Member Jones
FEBRUARY 16, 2010
An act to amend Section 11770 of, to add Sections 11806
and 11807 Section 11806 to, and to repeal
Article 7 (commencing with Section 11885) of Chapter 4 of Part 3 of
Division 2 of, the Insurance Code, relating to the State Compensation
Insurance Fund.
LEGISLATIVE COUNSEL'S DIGEST
AB 1897, as amended, Jones. State Compensation Insurance Fund.
(1) Existing law establishes the State Compensation Insurance Fund
to be administered by a board of directors for the purpose of
transacting workers' compensation insurance and other public
employment related insurances, as specified. The board of directors
is composed of 11 members, 9 of whom are appointed by the Governor.
This bill would require that the Governor's appointments be
subject to confirmation by the Senate.
(2) Existing law requires that the assets of the fund be
applicable to the payment of losses sustained on account of insurance
and to the payment of salaries and other expenses.
This bill would require that each employee of the fund, at no cost
to the employee, obtain the appropriate licenses
an appropriate certificate for transacting workers'
compensation insurance as a condition of employment. The
bill would also require the fund to analyze the workers' compensation
insurance industry standards and practices regarding adjuster
caseload ratios and report to the Legislature, by March 31, 2011, on
the fund's adjuster caseload ratios and a plan to bring the funds'
standards and practices into line with those of other workers'
compensation insurers. The bill would require the
fund, in cooperation with the Insurance Commissioner, to adopt
minimum standards of training, experience, and skills that employees
are required to possess to perform their duties, and would requir
e the fund to become an approved education provider for
those purposes.
(3) Existing law authorizes the Director of Finance, acting as
agent for the state, to sell a portion of or otherwise obtain value
for the State Compensation Insurance Fund assets and liabilities.
Existing law specifies the procedures applicable to the sale or other
disposition of these assets and liabilities, and would require that
the proceeds of any sale or any proceeds achieved through any other
disposition of workers' compensation assets and liabilities, less
transaction costs, be deposited into the General Fund.
This bill would repeal those provisions.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 11770 of the Insurance Code is amended to read:
11770. (a) The State Compensation Insurance Fund is continued in
existence, to be administered by its board of directors for the
purpose of transacting workers' compensation insurance, and insurance
against the expense of defending any suit for serious and willful
misconduct, against an employer or his or her agent, and insurance to
employees and other persons of the compensation fixed by the workers'
compensation laws for employees and their dependents. Any
appropriation made therefrom or thereto before the effective date of
this code shall continue to be available for the purposes for which
it was made.
(b) (1) The Board of Directors of the State Compensation
Insurance Fund is composed of 11 members, nine of whom shall be
appointed by the Governor, subject to confirmation by the Senate. The
Governor shall appoint the chairperson. One of the members appointed
by the Governor shall be from organized labor. The members appointed
by the Governor, other than the labor member, shall have substantial
experience in positions involving workers' compensation, legal,
investment, financial, corporate governance and management,
accounting, or auditing responsibilities with entities of sufficient
size as to make their qualifications relevant to an enterprise of the
financial and operational size of the State Compensation Insurance
Fund. At all times the board shall have a member with auditing
background for the purposes of fulfilling the responsibility of the
chair of the audit committee. A quorum is a majority of those
appointed, provided that at no time shall a quorum be established
with less than five members.
(2) The Speaker of the Assembly shall appoint one member who shall
represent organized labor, and the Senate Committee on Rules shall
appoint one member who shall have been a policyholder of the State
Compensation Insurance Fund, or an officer or employee of a
policyholder, for one year immediately preceding the appointment, and
must continue in this status during the period of his or her
membership.
(3) The Director of Industrial Relations shall be an ex officio,
nonvoting member of the board, and shall not be counted as members of
the board for quorum purposes or any other purpose.
(4) Notwithstanding subdivision (c), the initial term of the
members of the board added in the 2008 portion of the 2007-08 Regular
Session shall be as follows:
(A) One of the members appointed by the Governor shall serve an
initial term of two years, one shall serve an initial term of four
years, and two shall serve an initial term of five years.
(B) The member appointed by the Senate Committee on Rules shall
serve an initial term of four years.
(C) The member appointed by the Speaker of the Assembly shall
serve an initial term of three years.
(c) The term of office of the members of the board, other than
that of the director, shall be five years and they shall hold office
until the appointment and qualification of their successors.
(d) (1) Each member of the board shall receive his or her actual
and necessary traveling expenses incurred in the performance of his
or her duties as a member and, with the exception of the ex officio
members, one hundred dollars ($100) for each day of his or her actual
attendance at meetings of the board.
(2) (A) Each member of the board appointed pursuant to paragraphs
(1) and (2) of subdivision (b) shall receive the compensation fixed
pursuant to subparagraph (B).
(B) Each board member described in subparagraph (A) shall be paid
an annual compensation of fifty thousand dollars ($50,000), to be
automatically adjusted beginning January 1, 2010, by multiplying the
compensation in effect the prior June 30 by the percentage of
inflation that occurred during the previous year, adding this amount
to the annual compensation from the previous year, and rounding off
the result to the nearest dollar. "Percentage of inflation" means the
percentage of inflation specified in the Consumer Price Index for
All Urban Consumers, as published by the Department of Industrial
Relations, Division of Labor Statistics and Research, or its
successor index.
(e) Each member of the board of directors shall attend training
approved by the board of directors that covers topics, including, but
not limited to, the duties and obligations of members of a board of
directors, corporate governance, ethics, board of director legal
issues, insurance, finance and investment, and information
technology. The training shall be conducted by persons or entities
not affiliated with the State Compensation Insurance Fund.
(f) No person who has had a direct or indirect interest in any
transaction with the State Compensation Insurance Fund since the
beginning of the last fiscal year of the fund, or who has a direct or
indirect material interest in any proposed transaction with the
fund, where the amount involved in the transaction exceeds one
hundred twenty thousand dollars ($120,000) shall be eligible for
appointment as a member of the board of directors of the fund. Once
appointed, no member of the board of directors shall have a financial
conflict of interest, as defined in Chapter 7 (commencing with
Section 87100) of Title 9 of the Government Code, and every member
shall be subject to Article 4 (commencing with Section 1090) of
Chapter 1 of Division 4 of Title 1 of the Government Code, provided
that the existence of a contract of insurance between the State
Compensation Insurance Fund and the policyholder member appointed by
the Senate Committee on Rules shall not constitute a conflict of
interest pursuant to this subdivision. For purposes of board actions
affecting generally applicable rates, a member of the board of
directors shall not be deemed to have a financial interest, as
defined in Article 4 (commencing with Section 1090) of Chapter 1 of
Division 4 of Title 1 of, or pursuant to Chapter 7 (commencing with
Section 87100) of Title 9 of, the Government Code, in a contract of
insurance between the State Compensation Insurance Fund and an
organization of which any member of the board of directors is an
owner, officer, or employee.
(g) The appointing authority of a member of the board may remove
the member and make an appointment replacing the member for the
duration of the term if the member ceases to discharge the duties of
his or her office for the period of three consecutive board meetings.
(h) The board of the State Compensation Insurance Fund shall
create, at a minimum, an audit committee, an investment committee, a
corporate governance committee, and other committees as the board
determines are necessary.
SEC. 2. Section 11806 is added to the Insurance Code, to read:
11806. (a) The fund shall require each
employee who solicits, negotiates, or effects contracts of workers'
compensation insurance, or acts in any of the capacities defined in
Article 1 (commencing with Section 1621) of Chapter 5 of Part 2 of
Division 1, to obtain all appropriate licenses
an appropriate certificate from the department as a
condition of employment. The employee shall not bear the cost of
obtaining these licenses, including any applicable education
and licensing fees. this certificate. The fund, in
cooperation with the Insurance Commissioner, shall adopt minimum
standards of training, experience, and skills that employees are
required to possess to perform their duties pursuant to this section.
(b) The fund shall become an approved education provider for the
purposes of this section.
SEC. 3. Section 11807 is added to the Insurance
Code, to read:
11807. The fund shall analyze the workers' compensation insurance
industry standards and practices regarding adjuster caseload ratios
and report to the Legislature, by March 31, 2011, on the fund's
adjuster caseload ratios and a plan to bring the funds' standards and
practices into line with those of other workers' compensation
insurers.
SEC. 4. SEC. 3. Article 7
(commencing with Section 11885) of Chapter 4 of Part 3 of Division 2
of the Insurance Code is repealed.
