Schwarzenegger, Garamendi Call for State Fund Regulations
Gov. Arnold Schwarzenegger (R) and Insurance Commissioner John Garamendi (D) on Tuesday sent a letter to legislative leaders asking them to approve amendments to AB 2125 that would allow for regulation of the State Compensation Insurance Fund, California's workers' compensation insurer of last resort.
Schwarzenegger and Garamendi write that the amendments were developed over two years of discussions about the "oversight, governance and regulatory issues" raised in a 2004 lawsuit filed by State Fund against Garamendi. Under the amendments, State Fund would be subject to the same regulations as other workers' compensation insurers.
According to Schwarzenegger and Garamendi, the amendments would:
- Require the insurance commissioner to report to the governor and the Legislature when State Fund reaches a certain financial threshold;
- Mandate that the insurance commissioner recommend a plan of action to the governor and Legislature, rather than order a liquidation if risk-based capital is insufficient; and
- Expand the type of investments State Fund can make that are similar to those of other private insurance carriers.
Schwarzenegger and Garamendi urge lawmakers to pass the amendments before the current session ends, saying the amendments are "vital to the integrity of the workers' compensation insurance market" (Office of the Governor release, 8/15). This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.