ACIC President Sam Sorich said the bill, SB 316 by Sen. Leland Yee (D-San Francisco), “would foster greater competition among insurers by eliminating an unnecessary and duplicative reserve requirement.”
“The requirement, which was created nearly 40 years ago, has been superseded by modern laws that more effectively regulate insurer solvency. Eliminating the requirement will release capital so insurers can write more business in California,” added Sorich.
SB 316 won final legislative approval on a unanimous Senate vote Sept. 7. During its consideration in the Legislature, the bill never received a “no” vote. The governor can either sign the bill into law, veto it or to allow it to become law without his signature.
Sorich stressed that the bill would not jeopardize benefits for injured workers. The insurance commissioner will continue to have the authority to make certain that insurance company reserves are adequate to pay claims.
"This bill helps California’s workers compensation system. It allows insurers to shed an unnecessary reserve requirement and, therefore, have greater flexibility for competing in the marketplace. Injured workers, meanwhile, will continue to receive their workers compensation benefits. And because SB 316 fosters greater competition, businesses are likely to have more choices in obtaining workers compensation insurance to protect their workers,” said Sorich.
If approved by the governor, the bill will become effective Jan. 1, 2008.
The Association of California Insurance Companies (ACIC) is an affiliate of the Property Casualty Insurers Association of America (PCI) and represents more than 300 property/casualty insurance companies doing business in California. ACIC member companies write 41.8 percent of the property/casualty insurance in California, including 57.3 percent of personal auto insurance, 45.7 percent of commercial automobile insurance, 40 percent of homeowners insurance, 32.5 percent of business insurance and 43.4 percent of the private workers compensation insurance. PCI is composed of more than 1,000 member companies, representing the broadest cross-section of insurers of any national trade association.