Calif. Insurance Guarantee Association Could Issue Bonds to 2013

The California Senate has passed a bill to extend extend from Jan. 1, 2011, to Jan. 1, 2013, the sunset date on the authority of the California Insurance Guarantee Association (CIGA) to issue revenue bonds to pay workers’ compensation claims.

CIGA has been established in California to provide coverage against losses arising from the failure of an insolvent property/casualty or workers’
compensation insurer to discharge its obligations under its insurance
policies. Existing law gives CIGA the ability to request the issuance of bonds by the California Infrastructure and Economic Development Bank to more expeditiously and effectively provide for the payment of covered claims arising from the insolvencies of insurance companies providing workers’ compensation insurance. Existing law requires that any bonds that provide funds for covered
claim obligations for workers’ compensation claims be issued prior to Jan.1, 2011.

SB 1242 would extend the date for those bonds to be issued to Jan. 1, 2013.

The bill passed the Senate floor 34-0 and was sent to the Assembly for committee assignment.