Calif. Commissioner Reacts to Work Comp Bills

California Insurance Commissioner Steve Poizner issued the following statement regarding Governor Arnold Schwarzenegger's signing of Senate Bill (SB) 1145 (Machado, D-Linden) and Assembly Bill (AB) 1874 (Coto, D-San Jose), which help reform the State Compensation Insurance Fund (SCIF), one of the largest workers' compensation insurance companies in the country and California's workers' comp insurer of last resort,.

"California's employers and employees both depend on a healthy workers' compensation insurance marketplace, and reforming SCIF is key to helping maintain that competitive marketplace," said Poizner. "SCIF was cooperative during this process and has been diligently working with CDI to address a number of concerns as we help them restructure for the 21^st century."

After working with SCIF on this legislation, the California Department of Insurance (CDI) urged the Governor to sign SB 1145 and AB 1874. Copies of the letters are attached.

CDI has been heavily involved in improving the performance of SCIF, including a top-down review of the institution. These bills are part of that larger effort.

SB 1145 would facilitate the transformation of SCIF into a modern operation with the executive talent necessary to run such an establishment. SB 1145 reforms SCIF by allowing the appointment of additional executive staff to provide expertise needed for its effective, efficient management. The bill also subjects SCIF board meetings to the Bagley-Keene Open Meeting Act and the California Public Records Act, recognizing it as a public enterprise.

AB 1874 introduces significant changes to SCIF's board of directors, which is still structured as it was when it was established 70 years ago. AB 1874 increases the number of board members, commensurate with similar-sized organizations, to allow for appropriate governance. It also requires reasonable qualifications for board members and provides for remuneration consistent with those qualifications and time commitment to the organization.

The bill brings greater accountability to the SCIF board by establishing training requirements for board members, and requiring board members to take active governing roles or be subject to replacement. Finally, AB 1874 creates conflict of interest requirements for board members.