Committee Approves Bill for Protecting Solvency of Calif. Workers’ Comp Guaranty Fund

The California Assembly Insurance Committee unanimously approved a measure late last week that would retain the surcharge on workers’ compensation insurance premiums and protect an important safety net for injured workers, according to the American Insurance Association (AIA).

“The workers’ compensation guaranty fund cannot be allowed to fail,” Mark Webb, AIA vice president, western region, commented. “Injured workers must receive benefits on a timely basis, and employers must have the security to know that claims will be paid in the case of an insurance company insolvency.”

AB 2007, authored by Assemblyman Tom Calderon (D-Montebello), would continue the 2 percent assessment surcharge to workers’ compensation insurance premiums. The funds are deposited into the California Insurance Guaranty Fund, which pays for the outstanding claims of insolvent workers’ compensation insurers. California enacted a measure in 2001 that raised the surcharge from 1 percent to 2 percent. The increase is scheduled to sunset at the end of 2002. Since the assessment was raised in 2001, four more insurers have become insolvent.

“This is an ordinary bill that is being discussed under extraordinary circumstances. Most other states already require a 2 percent assessment,” Webb added. “This measure would keep California in line with the rest of the country.”

AB 2007 was approved 18 to 0. The bill will now move to the floor for a full vote by the members of the California State Assembly.