text:
(a) Subject to subdivision (b), a licensed rating organization shall make available any policy information contained in its records to the following:

(1) The Department of Industrial Relations.

(2) Any other governmental agency if the Insurance Commissioner, after consultation with the licensed rating organization, approves the release of the policy information requested to the agency.

(b) The Department of Industrial Relations and any other governmental agency shall specify to the licensed rating organization, in writing, the information requested, that the information requested is to be used to facilitate the agency’s performance of its constitutional or statutory duties, and that the information received will not be released to others, except in the discharge of a specific statutory or constitutional duty, or published without the prior written consent of the licensed rating organization. In addition, if the Insurance Commissioner’s approval is required for the release of the policy information requested, a written copy of the approval shall be submitted to the licensed rating organization.

(c) As used in this section, “policy information” means information which is contained in a workers’ compensation policy, including, but not limited to, the identity and address of the employer, the identity of the insurer, the policy number, and the policy period.

(d) Information obtained by a governmental agency pursuant to this section shall be confidential and not subject to public disclosure under any other law of this state.

(e) No licensed rating organization or member thereof, or member of a committee of a licensed rating organization when acting in its capacity as a member of the committee, or officer or employee of a licensed rating organization, when acting within the scope of his or her employment, shall be liable to any person for injury, personal or otherwise, or damages caused or alleged to have been caused, either directly or indirectly, by the disclosure of information to a governmental agency pursuant to this section, or for the accuracy or completeness of the information so disclosed.

(f) This section shall not be construed as implying the existence of liability in circumstances not defined in this section, nor as implying a legislative recognition that, except for enactment of this section, a liability has existed or would exist in the circumstances stated in this section.

(g) This section shall not be construed as limiting any authority of a licensed rating organization to disclose information contained in its records to others.

history: (History: Amended by Stats. 2006, Ch. 452, Sec. 5. Effective January 1, 2007.)

article: 3. Rating and Other Organizations


kind: section

code: INS

text:
(a) A licensed rating organization shall make available, in writing, to an employer insured under a workers’ compensation policy, all policyholder information contained in its records upon request of the employer and after notice to the employer’s insurer.

(b) As used in this section, “policyholder information” means all information relating to the employer’s loss experience, claims, classification assignments, and policy contracts. Policyholder information also includes information relating to rating plans, rating systems, manual rules, and any other information that impacts the policyholder’s pure premium rates.

(c) If a licensed rating organization rejects an employer’s request for policyholder information, the rating organization shall notify the employer in writing of the reasons for the rejection. An employer whose request has been rejected in whole or in part may appeal to the commissioner in accordance with Section 11753.1. If the commissioner finds that the reasons for the rejection are not justified, he or she may order the rating organization to furnish that information to the employer.

(d) No licensed rating organization or member of the organization, or member of a committee of a licensed rating organization when acting in its capacity as a member of the committee, or officer or employee of a licensed rating organization, when acting within the scope of his or her employment, is liable to any person for injury, personal or otherwise, or damages caused or alleged to have been caused, either directly or indirectly, by the disclosure of information to an employer under this section or for the accuracy or completeness of the information disclosed.

(e) This section does not imply the existence of liability in circumstances not defined in this section, nor does it imply a legislative recognition that, except for enactment of this section, a liability has existed or would exist in the circumstances stated in this section.

(f) This section does not limit any authority of a licensed rating organization to disclose information contained in its records to others.

(g) There shall be established in all licensed rating organizations a policyholder ombudsman. The policyholder ombudsman shall be a person with sufficient knowledge of the workers’ compensation ratemaking process to provide information and assistance to policyholders in obtaining and evaluating the information provided in Article 2 (commencing with Section 11730) and this article, and in Sections 3761 and 3762 of the Labor Code. Every rating organization licensed in this state shall provide compensation for the ombudsman and necessary staff and other necessary resources to allow the ombudsman to provide prompt and complete service to workers’ compensation policyholders of this state. The policyholder ombudsman may advise the policyholder in any dispute with insurers or the rating organization that the ombudsman serves, or on appeal to the commissioner as provided in Section 11737.

(h) For all policies of insurance issued or renewed on or after January 1, 1994, the insurer shall advise the policyholder in writing of the following:

(1) The policyholder’s right to request a written report containing the information set forth in this section from the licensed rating organization of which the insurer is a member, and the policyholder’s right to contact the policyholder ombudsman to assist in obtaining and evaluating information relating to rates, together with the telephone number and address of the ombudsman, as well as the policyholder’s right to contact the department to resolve a dispute with an insurer, as provided in this section and Section 11737.

(2) If a participating policy, that upon payment or nonpayment of a dividend the policyholder shall be provided a written explanation, in clear and understandable language, setting forth the basis of the calculation and expressing any dividend in both dollar amount and as a percentage of earned premium under the policy.

(3) The date when the insurer is required to file the first unit statistical report with the licensed rating organization designated by the commissioner.

history: (History: Amended by Stats. 1995, Ch. 582, Sec. 5. Effective January 1, 1996.)

division: 2. CLASSES OF INSURANCE

article: 3. Rating and Other Organizations

path: 2. CLASSES OF INSURANCE > 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE > 3. Regulation of Business of Workers’ Compensation Insurance > 3. Rating and Other Organizations


text:
(a) A licensed rating organization may make available experience rating information contained in its records to any insurer admitted to transact workers’ compensation insurance in this state or to any insurance agent or broker that is licensed to transact workers’ compensation insurance in this state, if the insurer, agent, or broker submits a written request to the licensed rating organization stating all of the following:

(1) The requesting insurer is admitted to transact workers’ compensation insurance in this state or that the requesting agent or broker is licensed to transact workers’ compensation insurance in this state.

(2) The information requested.

(3) The information requested will be used to facilitate the transaction of workers’ compensation insurance by the insurer, agent, or broker.

(4) The information received will not be released by the agent or broker to others, except to facilitate the transaction of workers’ compensation insurance by the requesting agent or broker.

(b) The licensed rating organization may, but shall not be required to, verify that an insurer requesting information under this section is admitted to transact workers’ compensation insurance in this state or that an insurance agent or broker requesting information under this section is licensed to transact workers’ compensation insurance in this state.

(c) For purposes of this section:

(1) “Experience rating information” means information released on microfiche, at an Internet Web site or other electronic format, or in other forms or media by a licensed rating organization that identifies all experience-rated employers, and the experience ratings and classifications or experience modifications that apply or applied to those employers.

(2) “Transaction,” as applied to workers’ compensation insurance, includes any of the following:

(A) Solicitation.

(B) Negotiations preliminary to execution of a contract of insurance.

(C) Execution of a contract of insurance.

(D) Resolution of matters arising out of the contract and subsequent to its execution.

(d) Experience rating information made available pursuant to this section shall be confidential and shall not be used for any purpose other than to facilitate the transaction of workers’ compensation insurance by the insurer, agent, or broker receiving the information pursuant to this section.

(e) Notwithstanding any other provision of law, including this section, a licensed rating organization may not enter into a contract or other agreement, including its constitution, articles of incorporation, or bylaws that prohibits information services companies in the business of publishing or providing experience rating information immediately prior to September 15, 1989, from continuing on or after September 15, 1989, to receive and provide to others experience rating information from whatever sources and in whatever forms or media.

(f) No licensed rating organization, member of a licensed rating organization, member of a committee of a licensed rating organization when acting in its capacity as a member of the committee, or officer or employee of a licensed rating organization when acting within the scope of his or her employment, shall be liable to any person for injury, personal or otherwise, or damages caused or alleged to have been caused, either directly or indirectly, by the disclosure of information pursuant to this section, or to the members of those organizations, or for the accuracy or completeness of the information disclosed.

(g) This section shall not be construed as implying the existence of liability in circumstances not defined in this section, nor as implying a legislative recognition that, except for the enactment of this section, a liability has existed or would exist in the circumstances stated in this section.

(h) This section shall not be construed as limiting any authority of a licensed rating organization to disclose information contained in its records to others.

history: (History: Amended by Stats. 2002, Ch. 879, Sec. 2. Effective January 1, 2003.)

part: 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE

chapter: 3. Regulation of Business of Workers’ Compensation Insurance

article: 3. Rating and Other Organizations


text:
(a) For all policies of insurance issued, or renewed for the first time on or after January 1, 1995, the insurer shall provide a notice, approved by the commissioner, to the policyholder, explaining in easily understandable language the workers’ compensation rating laws. For policies issued or renewed between January 1, 1994, and January 1, 1995, inclusive, the insurer shall include a notice to the policyholder, in easily understandable language, containing a summary of the changes in the rating laws enacted during the 1993–94 Regular Session of the Legislature.

(b) The notice required by this section may be combined with the notice required by subdivision (h) of Section 11752.6.

history: (History: Amended (as added by Stats. 1993, Ch. 121) by Stats. 1993, Ch. 1242, Sec. 12. Effective January 1, 1994.)

article: 3. Rating and Other Organizations


text: Notwithstanding subdivision (d) of Section 11750.3, a rating organization shall provide a policyholder with written notification if it imposes a change in the classification assignment of the policyholder. The written notification shall be provided to the policyholder at the same time that it is provided to the insurer. A rating organization may satisfy this requirement by furnishing the policyholder with a copy of the notice that it provides to the insurer regarding the change in classification assignment.

history: (History: Added by Stats. 2003, Ch. 121, Sec. 1. Effective January 1, 2004.)

article: 3. Rating and Other Organizations


text:
(a) (1) Notwithstanding any other provision of law, a licensed rating organization shall, pursuant to regulations adopted by the commissioner after notice and hearing, establish and maintain an Internet Web site for the purposes of assisting any person to determine whether an employer is insured for workers’ compensation.

(2) An Internet Web site developed pursuant to this section shall not include any links to a commercial, for-profit Internet Web site, other than a link to the licensed rating organization’s homepage, and shall not contain any advertising other than the name, logo, and contact information of the licensed rating organization.

(b) The Internet Web site shall:

(1) Permit a person to submit a query for coverage information concerning a specified employer on a specified date. The specified date shall be within five years of the date of query.

(2) Permit the query to specify an employer, using the name, address, or other identifying information of the employer, or combinations of identifying information, as may be provided by regulations adopted by the commissioner. Other identifying information may include, but need not be limited to, the employer’s federal employer identification number.

(3) In response to the query, provide the name of the workers’ compensation insurer or insurers for the employer on the date specified in the query according to the most recent information available to the rating organization, subject to paragraph (7), and provide a contact address for the insurer from information available to the rating organization, or by providing a hypertext link to insurer information available on the department’s Internet Web site.

(4) Be accessible for inquiries without charge. However, the commissioner may, at his or her discretion, permit the rating organization to impose access restrictions as necessary to deter the use of the Internet Web site for purposes other than those for which it was intended.

(5) Contain a hypertext link to the Department of Industrial Relations’ Internet Web site for the purpose of locating employers who may be self-insured.

(6) Include any disclaimers that the commissioner may prescribe.

(7) Be updated to reflect policy information as soon as is reasonably feasible following submission of that information by insurers to the rating organization, as the commissioner shall require.

(8) Include a disclaimer stating that the search results may not reflect recent changes in information.

(9) Include a disclaimer stating that the failure of an employer to appear in response to a query does not mean that the employer does not have insurance or is operating in violation of California law.

(10) Include the date that the Internet Web site was last updated.

(c) A rating organization shall not be required to disclose on the Internet Web site any policy numbers, inception or expiration dates, or confidential information, as defined by the commissioner.

(d) The Internet Web site specified in this section shall become operative no later than one year after the effective date of regulations adopted by the commissioner implementing this section.

(e) The commissioner shall adopt regulations to implement this section no later than January 1, 2011. These regulations shall specify a method by which an employer may dispute through the rating organization or the employer’s insurance company the accuracy of the information displayed on the Internet Web site.

(f) No rating organization, member of a rating organization, or member of a committee of a rating organization when acting within his or her capacity as a member of the committee, or officer or employee of a rating organization when acting within the scope of his or her employment, shall be liable to any person for injury, personal or otherwise, or damages caused, or alleged to have been caused, either directly or indirectly, by the good faith disclosure of information pursuant to this section, or for the accuracy or completeness of any information disclosed in good faith.

(g) This section shall not be construed to create liability except as provided in this section, nor as a legislative recognition that, except for the enactment of this section, a liability would exist.

(h) Nothing in this section shall be construed as limiting the authority of a rating organization to disclose information contained in its records to others.

(i) The commissioner shall conduct a review and evaluation of the establishment and operation of the Internet Web site and an assessment of whether it is achieving its intended purpose and provide a written report on his or her findings no later than July 1, 2013. The report shall include, to the extent possible, statistics on usage, error rates, user complaints, and efforts undertaken by the commissioner to improve the operation of the Internet Web site. The commissioner shall present a copy of the report to the office of the President pro Tempore of the Senate, the Speaker of the Assembly, the Senate Committee on Banking, Finance and Insurance, the Assembly Committee on Insurance, the Department of Finance, and the Department of Industrial Relations and shall make it available on the Internet Web site of the Department of Insurance.

history: (History: Added by Stats. 2009, Ch. 241, Sec. 1. (AB 483) Effective January 1, 2010.)

article: 3. Rating and Other Organizations


text:
No advisory organization shall conduct its operations in this State unless and until it has filed with the commissioner:

a. A copy of its constitution, articles of incorporation, agreement of association, and of its by-laws, rules and regulations governing its activities, all duly certified by the custodian of the originals thereof.

b. A list of its members and subscribers.

c. The name and address of a resident of this State upon whom notices or orders of the commissioner or process may be served.

Every such advisory organization shall notify the commissioner promptly of every change in its constitution, its articles of incorporation, agreement of association, and of its by-laws, rules and regulations governing the conduct of its business; its list of members and subscribers; and the name and address of the resident of this State designated by it upon whom notices or orders of the commissioner or process affecting such organizations may be served.

No such advisory organization shall engage in any unfair or unreasonable practice with respect to its activities.

history: (History: Added by Stats. 1951, Ch. 1123.)

article: 3. Rating and Other Organizations


text:
(a) Any person aggrieved by any decision, action, or omission to act of a rating organization may request that the rating organization reconsider the decision, action, or omission. If the request for reconsideration is rejected or is not acted upon within 30 days by the rating organization, the person requesting reconsideration may, within a reasonable time, appeal from the decision, action, or omission of the rating organization. The appeal shall be made to the commissioner by filing a written complaint and request for a hearing specifying the grounds relied upon. If the commissioner has information on the subject appealed from and believes that probable cause for the appeal does not exist or that the appeal is not made in good faith, the commissioner may deny the appeal without a hearing. The commissioner shall otherwise hold a hearing to consider and determine the matter presented by the appeal.

(b) Any insurer adopting a change in the classification assignment of an employer that results in an increased premium shall notify the employer in writing, or if the insurance was transacted through an insurance agent or broker, the insurer shall notify the agent or broker who shall notify the employer in writing of the change and the reasons for the change. Any employer receiving this notice shall have the right to request reconsideration and appeal the reclassification pursuant to this section. The notice required by this section shall inform the employer of his or her rights pursuant to this section. No notification shall be required when the change is a result of a regulation adopted by the Department of Insurance or other action by or under the authority of the commissioner.

An insurer shall provide written notification of the revised classification assignment to an employer within 30 days after adoption.

history: (History: Amended by Stats. 2002, Ch. 873, Sec. 6. Effective January 1, 2003.)

article: 3. Rating and Other Organizations


text:
(a) If a change in a classification assignment on a workers’ compensation insurance policy is due to an erroneous classification and results in a decreased premium, the classification change shall become effective as of the inception date of a policy in effect on the date the revised classification assignment is published by an insurer or, if the classification is assigned by the designated rating organization, when the insurer and insured are notified in writing by the designated rating organization that the erroneous classification assignment is under review. The revised classification assignment shall be applied as of the inception date of a policy that expired no more than 12 months prior to the date the revised classification assignment was published or the insurer and insured were notified in writing by the designated rating organization that assigned the classification that the erroneous classification assignment was under review, provided that the erroneous classification assignment was applicable to that policy.

(b) If a change in a classification assignment on a workers’ compensation insurance policy is due to an erroneous classification and results in an increased premium, the classification change shall become effective on the effective date of the erroneous classification assignment provided any of the following conditions occur:

(1) The revised classification assignment is published within three months of the effective date or publication date of the erroneous assignment.

(2) The insurer or, where applicable, the designated rating organization, was notified in writing within three months of the effective date or publication date of the erroneous classification assignment of a possible error.

(3) The designated rating organization notified the insurer in writing within three months of the effective date or publication date of the erroneous classification assignment that the erroneous classification assignment was under review.

If one or more of the conditions set forth in paragraphs (1), (2), and (3) do not occur, the revised classification assignment shall become effective as of the date it is published unless the publication date is less than three months prior to the expiration date of the outstanding policy, in which case the revised classification assignment shall become effective as of the inception date of the policy that replaced the outstanding policy.

(c) If a change in a classification assignment on a workers’ compensation policy is due to an insured’s change of operations, any resulting increase or decrease in premium shall become effective on the date of the change of operations.

(d) Any insurer that violates this section shall be subject to civil penalties in an amount of up to five thousand dollars ($5,000) per violation.

history: (History: Amended by Stats. 1995, Ch. 375, Sec. 3. Effective January 1, 1996.)

article: 3. Rating and Other Organizations


text:
Notwithstanding Section 1851.1, a workers’ compensation insurance rating organization licensed pursuant to the provisions of this article which does not make rates, rating plans or rating systems for insurance covering employers against their liability for compensation or damages under the United States Longshoremen’s and Harbor Workers’ Compensation Act (33 U.S.C. 901, et seq.) shall not be required to be licensed as a rating organization or registered as an advisory organization pursuant to the provisions of Chapter 9 (commencing with Section 1850) of Part 2 of Division 1, and shall have authority under its license as a workers’ compensation insurance rating organization issued pursuant to this article to:

(a) Collect and tabulate loss and expense experience statistics and other information and data relating to insurance covering employers against their liability for compensation under the United States Longshoremen’s and Harbor Workers’ Compensation Act.

(b) Furnish or exhange such information and experience data to or with rating organizations, advisory organizations and insurers in this and other states.

(c) Adopt and enforce compliance by its insurer members with reasonable rules and statistical plans to be used in the recording and reporting by insurer members of their California longshoremen and harbor workers’ insurance loss and expense experience in order that such experience of all of its insurer members shall be available in such form and detail as will be of aid to the commissioner in the enforcement of and to its insurer members in complying with the provisions of Chapter 9 (commencing with Section 1850) of Part 2 of Division 1.

(d) Engage in the same activities and carry out the same functions with respect to insurance covering the liability of employers for compensation or damages under the United States Longshoremen’s and Harbor Workers’ Compensation Act that it is authorized to engage in or carry out with respect to California workers’ compensation insurance generally under the provisions of this article other than the making of rates, rating plans and rating systems.

history: (History: Added by Stats. 1978, Ch. 813.)

article: 3. Rating and Other Organizations


text: If the commissioner has good cause to believe that a rating or advisory organization or an insurer does not comply with the requirements of this article applicable to it, he shall, unless he has good cause to believe that such noncompliance is wilful, give notice in writing to such organization or insurer, stating therein in what manner and to what extent such noncompliance is alleged to exist and specifying therein a reasonable time, not less than 10 days thereafter, in which such noncompliance may be corrected. Notices under this section shall be confidential as between the commissioner and the organization or insurer unless a hearing is held under Section 11754.1.

article: 3. Rating and Other Organizations


text: If the commissioner has good cause to believe such noncompliance to be wilful, or if within the period prescribed by the commissioner in the notice required by Section 11754 the organization or insurer does not make such change as may be necessary to correct the noncompliance specified by the commissioner or establish to the satisfaction of the commissioner that such noncompliance does not exist, then the commissioner may hold a public hearing in connection therewith, provided that within a reasonable period of time, which shall not be less than 10 days before the date of such hearing, he shall mail written notice specifying the matters to be considered at such hearing to such organization or insurer. Such notice shall conform to the requirements for an accusation as prescribed by Section 11503 of the Government Code. If no notice has been given as provided in Section 11754 such notice shall state therein in what manner and to what extent noncompliance is alleged to exist. The hearing shall not include any additional subjects not specified in the notices required by Section 11754 or this section.

article: 3. Rating and Other Organizations


text:
If, after a hearing pursuant to Section 11754.1, the commissioner finds:

a. That any rating or advisory organization or other organization authorized by this article or any insurer has violated the provisions of this article applicable to it, he may issue an order to such organization or insurer which has been the subject of the hearing, specifying in what respect such violation exists and stating when, within a reasonable period of time, the violation shall cease.

b. That any conditions prerequisite to the granting of a license to a rating organization no longer exist, he may issue an order to such organization which has been the subject of the hearing specifying the condition which has ceased to exist and stating when within a reasonable time the condition shall be complied with. If the condition is not complied with within the time specified the commissioner may suspend or revoke the license of such organization, in addition to any other penalty provided in this article.

c. That any rating organization has wilfully engaged in any fraudulent, dishonest act or practice, he may suspend or revoke the license of such organization, in addition to any other penalty provided for in this article.

article: 3. Rating and Other Organizations


text: In addition to other penalties provided in this code the commissioner may suspend or revoke the license of any rating organization or insurer which fails to comply within the time limited by such order or extension thereof which the commissioner may grant, with an order of the commissioner lawfully made by him pursuant to Section 11754.1 and effective pursuant to Section 11754.5.

article: 3. Rating and Other Organizations


text: Except as otherwise provided in this article, all proceedings in connection with the denial, suspension or revocation of a license of a rating organization or insurer under this article shall be conducted in accordance with the provisions of Chapter 5 of Part 1 of Division 3 of Title 2 of the Government Code and the commissioner shall have all the powers granted to him therein.

article: 3. Rating and Other Organizations


text: Any finding, determination, rule, ruling, or order made by the commissioner under this article or Article 2 (commencing with Section 11730) shall be subject to review by the courts of the state pursuant to Section 1094.5 of the Code of Civil Procedure.

history: (History: Amended by Stats. 1995, Ch. 582, Sec. 6. Effective January 1, 1996.)

article: 3. Rating and Other Organizations


text:
No person, insurer, rating or advisory organization shall willfully withhold information from, or knowingly give false or misleading information to, the commissioner or to any rating organization, which will affect the rates, rating systems or premiums for workers’ compensation insurance and employer’s liability insurance incidental thereto and written in connection therewith.

In the event of the refusal by any insured employer to permit an audit or an examination provided for in subdivision (f) of Section 11750.3, the commissioner shall, upon the verified petition of the rating organization concerned, take such action as the commissioner may be authorized to take pursuant to and subject to the provisions of this code and of the Government Code.

history: (History: Amended by Stats. 1981, Ch. 714, Sec. 303.)

article: 3. Rating and Other Organizations


text:
(a) Any person, insurer, or organization, who fails to comply with a final order of the commissioner under this article shall be liable to the state in an amount not exceeding fifty dollars ($50), but if the failure is willful, he, she, or it shall be liable to the state in an amount not exceeding five thousand dollars ($5,000) for the failure. The commissioner shall collect the amount so payable and may bring an action in the name of the people of the state of California to enforce collection. These penalties may be in addition to any other penalties provided by law.

(b) A willful violation of the provisions of this article by any person is a misdemeanor.

history: (History: Amended by Stats. 1982, Ch. 454, Sec. 122.)

article: 3. Rating and Other Organizations


text: Nothing in this article shall be construed to prohibit or regulate the payment of dividends, savings or unabsorbed premium deposits allowed or returned by insurers to their policyholders, members or subscribers. A plan for the payment of dividends, savings or unabsorbed premium deposits allowed or returned by insurers to their policyholders, members or subscribers shall not be deemed a rating plan or system.

article: 3. Rating and Other Organizations


text: No act done, action taken or agreement made pursuant to the authority conferred by this article shall constitute a violation of or grounds for prosecution or civil proceedings under any other law of this State heretofore or hereafter enacted which does not specifically refer to insurance.

article: 3. Rating and Other Organizations


text: The provisions of this article shall not apply to the workers’ compensation insurance covering those persons defined as employees by subdivision (d) of Section 3351 of the Labor Code.

history: (History: Added by Stats. 1977, Ch. 17.)

article: 3. Rating and Other Organizations


text:
The Legislature hereby finds and declares as follows: The Legislature pursuant to its plenary power over workers’ compensation granted by Section 4 of Article XIV of the California Constitution has authorized classification of risks and premium rates and systems of merit rating for workers’ compensation insurance. The selective and discretionary inspection of locations, plants and operations of employers for classification and rating purposes, the gathering and compiling of experience statistics and other data by rating organizations licensed by the Insurance Commissioner, and the application of standards predicated upon the reliability of such classifications and merit rating data are essential to the proper functioning of the classifications of risks and premium rates and systems of merit rating which are regulated by the Insurance Commissioner as authorized by the Legislature.

In order to implement and facilitate the proper and adequate administration of such classifications of risks and rates and systems of rating by such licensed rating organizations and the Insurance Commissioner, it is important and in the public interest that licensed rating organizations and their officers and employees shall not be liable for injury or death or other damage caused or alleged to have been caused by their failure to inspect, or negligent or incomplete inspection of, an employer’s location, plant or operation for classification or rating purposes.

No licensed rating organization or member thereof in its character as a member, or officer or employee of such licensed rating organization when acting within the scope of his employment, shall be liable for injury or death or other damage proximately caused by a failure to inspect, or the manner or extent of inspection of, an employer’s locations, plants or operations for classification or rating purposes, or by such person’s comment, or failure to comment, on the subject matter or object of such inspection.

This section shall not be construed as implying the existence of liability in circumstances not defined in this section; nor as implying a legislative recognition that, except for the enactment of this section, a liability has existed or would exist in circumstances stated in this section.

history: (History: Amended by Stats. 1977, Ch. 579.)

article: 3. Rating and Other Organizations


text:
A rating organization shall, no later than June 1 of each year, notify the Governor and the Legislature that a report containing an analysis of all losses and expenses for the prior year by all insurers who are members of the organization is available on request. The first report shall be due June 1, 1996. The report shall include, but not be limited to, the following:

(a) An analysis of all medical costs identifying separately the amounts paid for medical treatment to hospitals and physicians, and the amounts paid for medical-legal expenses. The amounts paid for medical treatment to physicians shall also identify the amounts paid for each specialty authorized to provide medical services pursuant to Sections 3209.3, 3209.5, and 3209.8 of the Labor Code. The amounts paid for medical-legal evaluations shall also be subcategorized by specialty and shall identify average costs paid per claim.

(b) An analysis of indemnity benefits paid for temporary disability, permanent total disability, permanent partial disability, life pensions, death benefits, and funeral expenses. The permanent partial disability benefits also shall be reported according to the degree of impairment in the following categories: .25 to 24.75 percent, 25 to 69.75 percent, and 70 to 99.75 percent.

(c) An analysis of amounts paid for vocational rehabilitation subcategorized by amounts paid for maintenance allowance, evaluation, education and training.

(d) An analysis of expenses of insurers categorized by loss adjustment, acquisition, general expenses, profit, and taxes. Amounts spent for defense attorneys’ expense shall be separately identified.

(e) An analysis of attorney’s fees paid to applicant attorneys.

(f) An analysis of workers’ compensation costs by the type of injury or illness generally following the injury classification in the Annual Redesigned Occupational Safety and Health Statistical Program used by the Department of Industrial Relations in its annual report on California work injuries and illnesses.

history: (History: Amended by Stats. 1995, Ch. 556, Sec. 2. Effective January 1, 1996.)

article: 3. Rating and Other Organizations


text:
(a) A licensed rating organization designated as the Insurance Commissioner’s statistical agent shall prepare a report to be submitted to the Insurance Commissioner by April 1, 2003, on the potential underreporting of workers’ compensation exposure in the taxicab industry. The report shall include an analysis of workers’ compensation exposure, loss, and premium in the taxicab industry. The licensed rating organization shall submit a report to the Governor, the Legislature, and the commissioner by May 1, 2003, that describes its findings.

(b) A licensed rating organization designated as the insurance commissioner’s statistical agent may confer with state agencies, including, but not limited to, the Employment Development Department, in the preparation of the study. The state agencies shall provide all necessary statistical or other information requested by the licensed rating organization designated as the Insurance Commissioner’s statistical agent.

history: (History: Added by Stats. 2002, Ch. 893, Sec. 1. Effective January 1, 2003.)

article: 3. Rating and Other Organizations


text:
(a) It is unlawful to make or cause to be made any knowingly false or fraudulent statement, whether made orally or in writing, of any fact material to the determination of the premium, rate, or cost of any policy of workers’ compensation insurance, for the purpose of reducing the premium, rate, or cost of the insurance. Any person convicted of violating this subdivision shall be punished by imprisonment in a county jail for one year, or pursuant to subdivision (h) of Section 1170 of the Penal Code for two, three, or five years, or by a fine not exceeding fifty thousand dollars ($50,000), or double the value of the fraud, whichever is greater, or by both that imprisonment and fine.

(b) Any person who violates subdivision (a) and who has a prior felony conviction of the offense set forth in that subdivision shall receive a two-year enhancement for each prior conviction in addition to the sentence provided in subdivision (a). The existence of any fact that would subject a person to a penalty enhancement shall be alleged in the information or indictment and either admitted by the defendant in open court, or found to be true by the jury trying the issue of guilt or by the court where guilt is established by plea of guilty or nolo contendere or by trial by the court sitting without a jury.

history: (History: Amended by Stats. 2011, Ch. 15, Sec. 217. (AB 109) Effective April 4, 2011. Operative October 1, 2011, by Sec. 636 of Ch. 15, as amended by Stats. 2011, Ch. 39, Sec. 68.)

article: 4. Penalties for Misrepresentation

path: 2. CLASSES OF INSURANCE > 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE > 3. Regulation of Business of Workers’ Compensation Insurance > 4. Penalties for Misrepresentation


text:
(a) If an employer fails to provide for access by the insurer or its authorized representative to its records, to enable the insurer to perform an audit to determine the remuneration earned by the employer’s employees and by any of its uninsured subcontractors and the employees of any of its uninsured subcontractors during the policy period, the employer shall be liable to pay to the insurer a total premium for the policy equal to three times the insurer’s then-current estimate of the annual premium on the expiration date of the policy. The employer shall also be liable, in addition to the premium, for costs incurred by the insurer in its attempts to perform an audit, after the insured has failed upon the insurer’s third request during at least a 90-day period to provide access, and the insured has provided no compelling business reason for the failure. This section shall only apply if the insurer elects to comply with the conditions set forth in subdivision (d).

(b) “Access” shall mean access at any time during regular business hours during the policy period and within three years after the policy period ends. “Access” may also include any other time mutually agreed upon by the employer and insurer.

(c) The insurer shall have and follow regular and reasonable rules and procedures to notify employers of their duty to provide for access to records, and to contact employers to make appointments during regular business hours for that purpose.

(d) Upon the employer’s failure to provide access after the insurer’s third request during at least a 90-day period, the insurer may notify the employer through its mailing of a certified, return-receipt, document of the increased premium and the total amount of the costs incurred by the insurer for its attempts to perform an audit as described under subdivision (a). Upon the expiration of 30 days after the delivery of the notice, collection by the insurer of the amount of premium and costs described under subdivision (a), less all premiums previously paid by the employer for the policy, shall be fully enforceable and executable.

(e) If the employer provides for access to its records after having received the notice described in subdivision (d), and if the insurer then succeeds in performing the audit to its satisfaction, the insurer shall revise the total premium and costs payable for the policy by the employer to reflect the results of its audit.

history: (History: Added by Stats. 2007, Ch. 615, Sec. 1. Effective January 1, 2008.)

article: 4. Penalties for Misrepresentation


text:
(a) The commissioner shall adopt regulations setting forth the minimum standards of training, experience, and skill that workers’ compensation claims adjusters must possess to perform their duties with regard to workers’ compensation claims. The regulations adopted pursuant to this section shall, to the greatest extent possible, encourage the use of existing private and public education, training, and certification programs.

(b) Every insurer shall certify to the commissioner that the personnel employed by the insurer to adjust workers’ compensation claims, or employed for that purpose by any medical billing entity with which the insurer contracts, meet the minimum standards adopted by the commissioner pursuant to subdivision (a).

(c) For the purposes of this section, “medical billing entity” means a third party that reviews or adjusts workers’ compensation medical bills for insurers.

(d) For the purposes of this section, “insurer” means an insurer admitted to transact workers’ compensation insurance in this state, the State Compensation Insurance Fund, an employer that has secured a certificate of consent to self-insure pursuant to subdivision (b) or (c) of Section 3700 of the Labor Code, or a third-party administrator that has secured a certificate of consent pursuant to Section 3702.1 of the Labor Code.

history: (History: Added by Stats. 2003, Ch. 637, Sec. 1. Effective January 1, 2004.)

path: 2. CLASSES OF INSURANCE > 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE > 3. Regulation of Business of Workers’ Compensation Insurance > 5. Standards Applicable to Claims Adjusters


text:
(a) The State Compensation Insurance Fund is continued in existence, to be administered by its board of directors for the purpose of transacting workers’ compensation insurance, and insurance against the expense of defending any suit for serious and willful misconduct, against an employer or his or her agent, and insurance to employees and other persons of the compensation fixed by the workers’ compensation laws for employees and their dependents. Any appropriation made therefrom or thereto before the effective date of this code shall continue to be available for the purposes for which it was made.

(b) (1) The Board of Directors of the State Compensation Insurance Fund is composed of 11 members, nine of whom shall be appointed by the Governor. The Governor shall appoint the chairperson. One of the members appointed by the Governor shall be from organized labor. The members appointed by the Governor, other than the labor member, shall have substantial experience in positions involving workers’ compensation, legal, investment, financial, corporate governance and management, accounting, or auditing responsibilities with entities of sufficient size as to make their qualifications relevant to an enterprise of the financial and operational size of the State Compensation Insurance Fund. At all times the board shall have a member with auditing background for the purposes of fulfilling the responsibility of the chair of the audit committee. A quorum is a majority of those appointed, provided that at no time shall a quorum be established with fewer than five members.

(2) The Speaker of the Assembly shall appoint one member who shall represent organized labor, and the Senate Committee on Rules shall appoint one member who shall have been a policyholder of the State Compensation Insurance Fund, or an officer or employee of a policyholder, for one year immediately preceding the appointment, and must continue in this status during the period of his or her membership.

(3) The Director of Industrial Relations shall be an ex officio, nonvoting member of the board, and shall not be counted as members of the board for quorum purposes or any other purpose.

(4) Notwithstanding subdivision (c), the initial term of the members of the board added in the 2008 portion of the 2007–08 Regular Session shall be as follows:

(A) One of the members appointed by the Governor shall serve an initial term of two years, one shall serve an initial term of four years, and two shall serve an initial term of five years.

(B) The member appointed by the Senate Committee on Rules shall serve an initial term of four years.

(C) The member appointed by the Speaker of the Assembly shall serve an initial term of three years.

(c) The term of office of the members of the board, other than that of the director, shall be five years and they shall hold office until the appointment and qualification of their successors.

(d) (1) Each member of the board shall receive his or her actual and necessary traveling expenses incurred in the performance of his or her duties as a member and, with the exception of the ex officio members, one hundred dollars ($100) for each day of his or her actual attendance at meetings of the board.

(2) (A) Each member of the board appointed pursuant to paragraphs (1) and (2) of subdivision (b) shall receive the compensation fixed pursuant to subparagraph (B).

(B) Each board member described in subparagraph (A) shall be paid an annual compensation of fifty thousand dollars ($50,000), to be automatically adjusted beginning January 1, 2010, by multiplying the compensation in effect the prior June 30 by the percentage of inflation that occurred during the previous year, adding this amount to the annual compensation from the previous year, and rounding off the result to the nearest dollar. “Percentage of inflation” means the percentage of inflation specified in the Consumer Price Index for All Urban Consumers, as published by the Department of Industrial Relations, or its successor index.

(e) Each member of the board of directors shall attend training approved by the board of directors that covers topics, including, but not limited to, the duties and obligations of members of a board of directors, corporate governance, ethics, board of director legal issues, insurance, finance and investment, and information technology. The training shall be conducted by persons or entities not affiliated with the State Compensation Insurance Fund.

(f) No person who has had a direct or indirect interest in any transaction with the State Compensation Insurance Fund since the beginning of the last fiscal year of the fund, or who has a direct or indirect material interest in any proposed transaction with the fund, where the amount involved in the transaction exceeds one hundred twenty thousand dollars ($120,000) shall be eligible for appointment as a member of the board of directors of the fund. Once appointed, no member of the board of directors shall have a financial conflict of interest, as defined in Chapter 7 of Title 9 (commencing with Section 87100) of the Government Code, and every member shall be subject to Article 4 (commencing with Section 1090) of Chapter 1 of Division 4 of Title 1 of the Government Code, provided that the existence of a contract of insurance between the State Compensation Insurance Fund and the policyholder member appointed by the Senate Committee on Rules shall not constitute a conflict of interest pursuant to this subdivision. For purposes of board actions affecting generally applicable rates, a member of the board of directors shall not be deemed to have a financial interest, as defined in Article 4 (commencing with Section 1090) of Chapter 1 of Division 4 of Title 1 of, or pursuant to Chapter 7 (commencing with Section 87100) of Title 9 of, the Government Code, in a contract of insurance between the State Compensation Insurance Fund and an organization of which any member of the board of directors is an owner, officer, or employee.

(g) The appointing authority of a member of the board may remove the member and make an appointment replacing the member for the duration of the term if the member ceases to discharge the duties of his or her office for the period of three consecutive board meetings.

(h) The board of the State Compensation Insurance Fund shall create, at a minimum, an audit committee, an investment committee, a corporate governance committee, and other committees as the board determines are necessary.

history: (History: Amended by Stats. 2012, Ch. 46, Sec. 76. (SB 1038) Effective June 27, 2012.)

article: 1. Organization and Powers

path: 2. CLASSES OF INSURANCE > 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE > 4. The State Compensation Insurance Fund > 1. Organization and Powers


text: The State shall not be liable beyond the assets of the State Compensation Insurance Fund for any obligations in connection therewith.

history: (History: Enacted by Stats. 1935, Ch. 145.)

chapter: 4. The State Compensation Insurance Fund

article: 1. Organization and Powers


text: Any advertising of the State Compensation Insurance Fund shall include the following disclaimer: “The State Compensation Insurance Fund is not a branch of the State of California.”

history: (History: Added by Stats. 2002, Ch. 6, Sec. 8. Effective January 1, 2003.)

article: 1. Organization and Powers


text: There shall not be any liability in a private capacity on the part of the board of directors or any member thereof, or any officer or employee of the fund for or on account of any act performed or obligation entered into in an official capacity, when done in good faith, without intent to defraud and in connection with the administration, management or conduct of the fund or affairs relating thereto.

history: (History: Amended by Stats. 1945, Ch. 1431.)

article: 1. Organization and Powers


text: The fund shall be organized as a public enterprise fund.

history: (History: Amended by Stats. 1979, Ch. 738.)

article: 1. Organization and Powers


text: The assets of the fund shall be applicable to the payment of losses sustained on account of insurance and to the payment of the salaries and other expenses charged against it in accordance with the provisions of this chapter.

article: 1. Organization and Powers


text: The fund shall, after a reasonable time during which it may establish a business, be fairly competitive with other insurers, and it is the intent of the Legislature that the fund shall ultimately become neither more nor less than self-supporting. For that purpose loss experience and expense shall be ascertained and dividends or credits may be made as provided in this article.

article: 1. Organization and Powers


text: The actual loss experience and expense of the fund shall be ascertained on or about the first of January in each year for the year preceding. If it is then shown that there exists an excess of assets over liabilities, necessary reserves, and a reasonable surplus for the catastrophe hazard, then a cash dividend may be declared to, or a credit allowed on the renewal premium of, each employer who has been insured with the fund.

article: 1. Organization and Powers


text: Such cash dividend or credit is to be in an amount which the board of directors in its discretion considers to be the employer’s proportion of divisible surplus.

history: (History: Amended by Stats. 1947, Ch. 520.)

article: 1. Organization and Powers


text: The fund may transact workers’ compensation insurance required or authorized by law of this state to the same extent as any other insurer. The fund shall be subject to the powers and authority of the commissioner to the same extent as any other insurer transacting workers’ compensation insurance, except where specifically exempted by reference. For purposes of Section 700, the fund shall be deemed admitted to transact this class of insurance.

history: (History: Amended by Stats. 2006, Ch. 740, Sec. 13.1. Effective January 1, 2007.)

article: 1. Organization and Powers


text: The fund may insure California employers against their liability for compensation or damages for injury or death under the United States Longshoremen’s and Harbor Workers’ Compensation Act, or other federal or maritime laws, as fully as any private insurer.

history: (History: Repealed and added by Stats. 1978, Ch. 507.)

article: 1. Organization and Powers


text: The fund may also insure an employer against his or her liability for damages under the laws of the State of California arising out of bodily injury to or death of the employer’s employees occurring within the State of California if the fund also issues workers’ compensation insurance to the employer as to his or her employees.

history: (History: Amended by Stats. 1981, Ch. 714, Sec. 306.)

article: 1. Organization and Powers


text:
(a) The fund may also insure a California employer against his or her liability for workers’ compensation benefits, under the law of any other state, for California employees temporarily working outside of California on a specific assignment if the fund insures the employer’s other employees who work within California.

(b) (1) The fund is only authorized under this subdivision to insure an employer whose principal place of business is in California, provided the majority of the employer’s operations and employees are located within California, against his or her liability for workers’ compensation benefits, under the law of any other state, if the fund insures the employer’s employees who work within California.

(2) The fund is only authorized pursuant to this subdivision to contract as a reinsurer with a ceding insurer that has responded to a request for proposal from the fund and is admitted to transact workers’ compensation insurance in California and in the out-of-state jurisdiction where the non-California employees are located. The fund may only contract for purposes of this subdivision if the ceding insurer meets all of the following criteria:

(A) The insurer has an A minus (A-) rating or better from A.M. Best Company.

(B) The insurer has substantial prior experience in transacting workers’ compensation business on another insurer’s behalf.

(C) The insurer has a minimum surplus of one hundred million dollars ($100,000,000).

(c) The fund shall not initiate paid advertising or solicit sponsorship of advertising campaigns to market or promote to prospective insureds the ability to insure qualified employers under the law of any other state.

history: (History: Amended by Stats. 2016, Ch. 206, Sec. 1. (AB 2887) Effective January 1, 2017.)

article: 1. Organization and Powers


text: The board of directors is hereby vested with full power, authority and jurisdiction over the State Compensation Insurance Fund. The board of directors may perform all acts necessary or convenient in the exercise of any power, authority or jurisdiction over the fund, either in the administration thereof or in connection with the insurance business to be carried on by it under the provisions of this chapter, as fully and completely as the governing body of a private insurance carrier. The principal office for the transaction of the business of the State Compensation Insurance Fund is located in the City and County of San Francisco.

article: 1. Organization and Powers


text: The State Compensation Insurance Fund may acquire and own real property for a branch office in the City of Los Angeles when so determined by the board of directors, and may, if necessary, construct suitable buildings thereon in accordance with law.

history: (History: Added by Stats. 1946, 1st Ex. Sess., Ch. 54.)

article: 1. Organization and Powers


text: All business and affairs of the fund shall be conducted in the name of the State Compensation Insurance Fund, and in that name, without any other name or title, the board of directors may perform the acts authorized by this chapter.

article: 1. Organization and Powers


text:
The State Compensation Insurance Fund may:

(a) Sue and be sued in all actions arising out of any act or omission in connection with its business or affairs.

(b) Enter into any contracts or obligations relating to the State Compensation Insurance Fund which are authorized or permitted by law.

(c) Invest and reinvest the moneys belonging to the fund as provided by this chapter.

(d) Conduct all business and affairs and perform all acts relating to the fund whether or not specifically designated in this chapter.

(e) Commission an independent study, with the assistance of an investment banking firm, to determine the feasibility of the State Compensation Insurance Fund issuing bonds or securities. The study may include, among other things, the purpose for issuing bonds and any potential adverse consequences that may arise from that issuance.

history: (History: Amended by Stats. 2002, Ch. 6, Sec. 9. Effective January 1, 2003.)

article: 1. Organization and Powers


text:
In conducting the business and affairs of the fund, the president of the fund may do any of the following:

(a) Enter into contracts of workers’ compensation insurance.

(b) Sell annuities covering compensation benefits.

(c) Decline to insure any risk in which the minimum requirements of the industrial accident prevention authorities with regard to construction, equipment, and operation are not complied with, or which is beyond the safe carrying of the fund. Otherwise, he or she shall not refuse to insure any workers’ compensation risk under state law, tendered with the premium therefor.

(d) Reinsure any risk or any part thereof.

(e) Cause to be inspected and audited the payrolls of employers applying to the fund for insurance.

(f) Make rules for the settlement of claims against the fund and determine to whom and through whom the payments of compensation are to be made.

(g) Contract with physicians and surgeons, and hospitals, for medical and surgical treatment and the care and nursing of injured persons entitled to benefits from the fund.

history: (History: Amended by Stats. 2002, Ch. 6, Sec. 10. Effective January 1, 2003.)

article: 1. Organization and Powers


text:
(a) The board of directors shall appoint a president, a chief financial officer, a chief operating officer, a chief information technology officer, a chief investment officer, a chief risk officer, a general counsel, a chief medical officer, a chief actuarial officer, a chief claims operations officer, and a chief of internal affairs. The board may appoint a chief underwriting officer, a senior vice president of insurance services, an executive vice president of corporate claims, an executive vice president of strategic planning, and a pricing actuary. The board of directors shall set the salary for each position in amounts that are reasonably necessary to attract and retain individuals of superior qualifications. The board shall submit its salary-setting criteria, including salary surveys, to the Department of Human Resources. These positions shall not be subject to otherwise applicable provisions of the Government Code and the Public Contract Code, and for those purposes the fund shall not be considered a state agency or other public entity. The president shall manage and conduct the business and affairs of the fund under the general direction and subject to the approval of the board of directors, and shall perform other duties as the board of directors prescribes.

(b) Section 87406 of the Government Code, the Milton Marks Postgovernment Employment Restrictions Act of 1990, shall apply to the fund. Members of the board, a person who held a position designated in subdivision (a), and any other person designated by the fund shall be deemed to be designated employees for the purpose of that act.

(c) Both the Bagley-Keene Open Meeting Act (Article 9 (commencing with Section 11120) of Chapter 1 of Part 1 of Division 3 of Title 2 of the Government Code) and the California Public Records Act (Division 10 (commencing with Section 7920.000) of Title 1 of the Government Code) shall apply to the fund.

(d) (1) The board shall, by September 1, 2018, and subsequently on a biennial basis, make a report to the Legislature and to the committees of the Senate and Assembly having jurisdiction over insurance that provides any salary-setting criteria and salary surveys submitted to the Department of Human Resources pursuant to subdivision (a), and the salary and total compensation of each position appointed pursuant to subdivision (a), for the previous two fiscal years.

(2) A report submitted pursuant to this subdivision shall be submitted in compliance with Section 9795 of the Government Code.

history: (History: Amended by Stats. 2021, Ch. 615, Sec. 314. (AB 474) Effective January 1, 2022. Operative January 1, 2023, pursuant to Sec. 463 of Stats. 2021, Ch. 615.)

article: 1. Organization and Powers


text:
(a) Notwithstanding any other provision of law to the contrary, the members of the Board of Directors of the State Compensation Insurance Fund and officers of the fund appointed by the board of directors, including, but not limited to, the president, chief financial officer, chief operating officer, chief information technology officer, chief investment officer, chief risk officer, and general counsel, are prohibited from lobbying the fund for two years after leaving employment with the fund.

(b) Notwithstanding any other provision of law to the contrary, any consulting for the fund by former members of the Board of Directors of the State Compensation Insurance Fund and former officers of the fund appointed by the board of directors, including, but not limited to, the president, chief financial officer, chief operating officer, chief information technology officer, chief investment officer, chief risk officer, and general counsel, shall be approved by the board of directors.

history: (History: Added by Stats. 2011, Ch. 53, Sec. 2. (AB 1263) Effective January 1, 2012.)

article: 1. Organization and Powers


text: Before entering on the duties of his or her office, the president shall qualify by giving an official bond approved by the board of directors in the sum of fifty thousand dollars ($50,000) and by taking and subscribing to an official oath. The approval of the board shall be by written endorsement on the bond. The bond shall be filed in the office of the Secretary of State.

history: (History: Amended by Stats. 2002, Ch. 6, Sec. 12. Effective January 1, 2003.)

article: 1. Organization and Powers


text: The board of directors may delegate to the president of the fund, under those rules and regulations and subject to those conditions as it from time to time prescribes, any power, function, or duty conferred by law on the board of directors in connection with the fund or in connection with the administration, management, and conduct of the business and affairs of the fund. The president may exercise those powers and functions and perform those duties with the same force and effect as the board of directors, but subject to its approval.

history: (History: Amended by Stats. 2002, Ch. 6, Sec. 13. Effective January 1, 2003.)

article: 1. Organization and Powers


text: The State Treasurer shall be custodian of all securities belonging to the State Compensation Insurance Fund, except as otherwise provided in this chapter. He or she shall be liable on his or her official bond for the safe keeping thereof.

history: (History: Amended by Stats. 2011, Ch. 426, Sec. 9. (SB 712) Effective January 1, 2012.)

article: 1. Organization and Powers


text: All securities belonging to the fund shall be delivered to the State Treasurer and held by him or her until otherwise disposed of as provided in this chapter. Upon delivery of those securities into the custody of the State Treasurer, the securities shall be credited by the State Treasurer to the fund.

history: (History: Amended by Stats. 2011, Ch. 426, Sec. 10. (SB 712) Effective January 1, 2012.)

article: 1. Organization and Powers


text: Expenditures made by the State Compensation Insurance Fund are exempted from the provisions of Part 3 (commencing with Section 900) of Division 3.6 of Title 1 of the Government Code.

article: 1. Organization and Powers


text:
(a) The board of directors shall cause all moneys in the State Compensation Insurance Fund that are in excess of current requirements to be invested and reinvested, from time to time, in the same manner as provided for private insurance carriers pursuant to Article 3 (commencing with Section 1170) and Article 4 (commencing with Section 1190) of Chapter 2 of Part 2 of Division 1, but excluding Sections 1191, 1191.1, 1191.5, 1192.2, 1192.4, 1192.6, 1192.7, 1192.95, 1192.10, 1194.7, 1194.8, 1194.81, 1194.82, 1194.85, 1198, and 1199, and excluding Section 1192.9, except as provided in subdivision (d). Notwithstanding the foregoing, the State Compensation Insurance Fund may invest or reinvest an aggregated maximum of 20 percent of moneys that are in excess of the admitted assets over the liabilities and required reserves in the investments allowed pursuant to Sections 1191, 1192.4, 1192.6, 1192.10, 1194.7, and 1198.

(b) (1) (A) Notwithstanding any other law, the State Compensation Insurance Fund may purchase general obligation bonds or other evidence of indebtedness issued by the state, including, but not limited to, warrants issued pursuant to Part 4 (commencing with Section 17000) of Division 4 of Title 2 of the Government Code or notes issued pursuant to Part 5 (commencing with Section 17300) of Division 4 of Title 2 of the Government Code, in any amount and to enter into purchase contracts with the state for this purpose.

(B) Notwithstanding any other law, the State Compensation Insurance Fund may purchase Property Assessed Clean Energy (PACE) bonds, as defined in Section 26054 of the Public Resources Code.

(2) The bonds or other evidence of indebtedness specified in paragraph (1), upon delivery to the State Compensation Insurance Fund, shall, for all purposes, be valid and binding obligations of the issuer thereof, be validly issued and outstanding in accordance with their stated terms, and not be deemed to be owned by or on behalf of the issuer thereof.

(c) Notwithstanding any other law, the State Compensation Insurance Fund may invest in the discretionary investments authorized pursuant to Section 1210, but those investments shall not exceed the lesser of 2.5 percent of its admitted assets or 10 percent of moneys that are in excess of the admitted assets over the liabilities and required reserves.

(d) Notwithstanding subdivision (a) or any other law, the State Compensation Insurance Fund may invest in money market mutual funds that comply with Section 1192.9, but shall not invest in a money market mutual fund that holds any assets in foreign investments, as defined in Section 1240. Investments in money market mutual funds made by the State Compensation Insurance Fund shall not exceed the lesser of 2.5 percent of its admitted assets or 10 percent of moneys that are in excess of the admitted assets over the liabilities and required reserves. The commissioner shall retain all remedies available, including the remedies in subdivision (d) of Section 1192.9, to enforce compliance by the State Compensation Insurance Fund with the money market mutual fund investment authority granted by this subdivision.

history: (History: Amended (as amended by Stats. 2021, Ch. 627, Sec. 17) by Stats. 2025, Ch. 558, Sec. 24. (AB 487) Effective January 1, 2026.)

article: 1. Organization and Powers


text: All moneys in the State Compensation Insurance Fund, in excess of current requirements and not otherwise invested, may be deposited by the board of directors from time to time in financial institutions authorized by law to receive deposits of public moneys.

article: 1. Organization and Powers


text: The board of directors may, with the approval of the State Treasurer, authorize the establishment of an account or fund in the State Treasury in the name of the State Compensation Insurance Fund, but such moneys deposited with the State Treasurer are not state moneys within the intent of Section 16305.2 of the Government Code.

history: (History: Added by Stats. 1979, Ch. 738.)

article: 1. Organization and Powers


text: The State Controller shall keep a special ledger account pertaining to the State Compensation Insurance Fund. In the State Controller’s general ledger this account may appear as a cash account, like other accounts of funds in the State Treasury, and only the actual cash credited or deposited to the credit of the State Compensation Insurance Fund shall be entered in the account.

article: 1. Organization and Powers


text: The assets, premiums, reserves, investment income, and any and all property of whatsoever kind derived or acquired by the fund from its transaction of its workers’ compensation insurance business shall not be used, attached or levied upon in any manner whatsoever by any person to satisfy claims or any other obligations or liability incurred, arising out of, or related to, the fund’s transaction of insurance pursuant to the United States Longshoremen’s and Harbor Workers’ Act.

article: 1. Organization and Powers


text: All premiums, reserves, investment income, and all property of whatsoever kind derived or acquired by the fund from its transaction of insurance pursuant to the United States Longshoremen’s and Harbor Workers’ Compensation Act shall be maintained and identified in separate accounts and records.

article: 1. Organization and Powers


text: All claims, costs of doing business, liabilities, expenses, and obligations arising out of or related to the fund’s transaction of insurance pursuant to the United States Longshoremen’s and Harbor Workers’ Compensation Act shall be paid and charged to the income of whatsoever nature derived from its United States Longshoremen’s and Harbor Workers’ Compensation Act insurance business only.

article: 1. Organization and Powers


text: Joint or shared use of office building space, whether owned, leased or rented, and the joint use of all furniture, automobiles, office equipment, supplies and services shall be charged to each class of insurance business on an equitable and proportional basis.

article: 1. Organization and Powers


text: The State Compensation Insurance Fund shall report annually to the Legislature as soon after the close of the calendar year as is feasible, with respect to its experience handling United States longshoremen’s and harbor workers’ insurance pursuant to this chapter, including, but not limited to, a statement of resources and liabilities at the close of each annual period commencing December 31, 1979.

history: (History: Added by Stats. 1978, Ch. 507.)

article: 1. Organization and Powers


text: Subject to the provisions of Article 2 (commencing with Section 11730) of Chapter 3, the board of directors shall establish the rates to be charged by the State Compensation Insurance Fund for insurance issued by it. These rates shall be fixed with due regard to the physical hazards of each industry, occupation, or employment.

history: (History: Amended by Stats. 2002, Ch. 6, Sec. 14. Effective January 1, 2003.)

article: 2. Rates

path: 2. CLASSES OF INSURANCE > 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE > 4. The State Compensation Insurance Fund > 2. Rates


text:
Within each class of business insured such rates shall be fixed, so far as practicable, in accordance with the following elements:

(a) Bodily risk or safety, or other hazard of the plant, premises or work of each insured employer.

(b) The manner in which the work is conducted.

(c) A reasonable regard for the accident experience and history of each such insured.

(d) A reasonable regard for the insured’s means and methods of caring for injured persons.

Such rates shall take no account of the extent to which the employees in any particular establishment have or have not persons dependent upon them for support.

history: (History: Enacted by Stats. 1935, Ch. 145.)

article: 2. Rates


text:
The rates fixed by the board of directors shall be that percentage of the payroll of any employer which, in the long run and on the average, will produce a sufficient sum, when invested in a way as to realize the maximum return consistent with safe and prudent management practices:

(a) To carry all claims to maturity. The rates shall be based upon the “reserve” and not upon the “assessment” plan.

(b) To meet the reasonable expenses of conducting the business of the fund.

(c) To produce a reasonable surplus to cover the catastrophe hazard.

history: (History: Amended by Stats. 2002, Ch. 6, Sec. 15. Effective January 1, 2003.)

article: 2. Rates


text: The insurance contracts or policies of the State Compensation Insurance Fund may be either limited or unlimited. The insurance contracts or policies may be issued for like periods as are allowed by law to other workers’ compensation insurers or, in the form of stamps or tickets or otherwise, for one month, for any number of months less than one year, for one day, for any number of days less than one month or during the performance of any particular work, job or contract. The rates charged shall be proportionately greater for a shorter than for a longer period and a minimum premium charge shall be fixed in accordance with a reasonable rate for insuring one person for one day.

history: (History: Amended by Stats. 1981, Ch. 714, Sec. 308.)

article: 3. Policies

path: 2. CLASSES OF INSURANCE > 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE > 4. The State Compensation Insurance Fund > 3. Policies


text:
Nothing in this chapter shall prevent:

(a) Any applicant for insurance from being covered temporarily until the application is finally acted upon.

(b) An insured from surrendering any policy at any time and having returned to him the difference between the premium paid and the premium at the customary short term for the shorter period which such policy has already run.

article: 3. Policies


text: The State Compensation Insurance Fund may issue policies including, with their employees, employers who perform labor incidental to their occupations, and including also members of the families of such employers engaged in the same occupation.

article: 3. Policies


text: Such policies covering employers shall insure to such employers and working members of their families the same compensations provided for their employees, and at the same rates.

article: 3. Policies


text: The estimations of the wage values, respectively, of such insured employers and members of their families shall be reasonable and shall be separately stated in and added to the valuation of the pay rolls upon which their premium is computed.

article: 3. Policies


text: The policies may likewise be sold to self-employing persons and to casual employees. The insureds, for the purpose of the insurance, shall be deemed to be employees within the meaning of the workers’ compensation laws.

history: (History: Amended by Stats. 1981, Ch. 714, Sec. 309.)

article: 3. Policies


text: Each quarter the president of the State Compensation Insurance Fund shall make a report to the Governor of the business done by the State Compensation Insurance Fund during the previous quarter and a statement of the fund’s resources and liabilities at the close of that previous quarter. The State Compensation Insurance Fund shall, at its own expense, hire a recognized firm of certified public accountants to audit annually the books and records of the State Compensation Insurance Fund and cause an abstract summary thereof to be published one or more times in at least two newspapers of general circulation in the state. The president of the fund shall additionally provide the commissioner with all reports required by law to be made to him or her by other insurers.

history: (History: Amended by Stats. 2002, Ch. 6, Sec. 17. Effective January 1, 2003.)

article: 4. Reports and Statements

path: 2. CLASSES OF INSURANCE > 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE > 4. The State Compensation Insurance Fund > 4. Reports and Statements


text: The state, any agency, department, division, commission, board, bureau, officer or other authority thereof, and each county, city and county, city, school district, irrigation district, any other district established by law, or other public corporation or quasi public corporation within the state, including any public utility operated by a private corporation may insure against its liability for compensation with the State Compensation Insurance Fund. Where the state or any agency, department, division, commission, board, bureau, officer or authority thereof is the insured, the premium for that insurance shall be a proper charge against any moneys appropriated for the support of or expenditure by the insured, except that in the case of an insured supported by or authorized to expend moneys appropriated out of more than one fund, the insured, with the approval of the Director of Finance, may determine the proportion of the premium to be paid out of each fund. In that case the insured, with the approval of the Director of Finance, may pay the entire premium out of any of those funds and thereafter the funds used for payment shall be reimbursed in proper proportion out of the other funds. In case a county, city and county, city, school district, irrigation district, or other district established by law, or other public corporation or quasi public corporation within the state is the insured, the premium therefor shall be a proper charge against the general fund of the insured.

history: (History: Amended by Stats. 1994, Ch. 373, Sec. 1. Effective January 1, 1995.)

article: 5. Coverage of Public Employers

path: 2. CLASSES OF INSURANCE > 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE > 4. The State Compensation Insurance Fund > 5. Coverage of Public Employers


text:
The State Compensation Insurance Fund may enter into a master agreement with the Department of Human Resources to render services in the adjustment and disposition of claims for workers’ compensation to any state agencies, including any officer, department, division, bureau, commission, board or authority, not insured with the fund.

The master agreement shall provide for rendition of services at a uniform rate to all agencies, except that the rate for the Department of the California Highway Patrol may be fixed independently of the uniform rate.

The fund may, in accordance with the agreement, adjust and dispose of claims for workers’ compensation made by an officer or employee of any state agency not insured with the fund.

The fund may make all expenditures, including payment to claimants for medical care or for adjustment or settlement of claims, necessary to the adjustment and final disposition of claims. The agreement shall provide that the state agency whose officer or employee is a claimant shall reimburse the fund for the expenditures and for the actual cost of services rendered.

The fund may in its own name, or in the name of the state agency for which the services are performed, do any and all things necessary to recover on behalf of the state agency for which it renders service any and all amounts which an employer might recover from third persons under Chapter 5 (commencing with Section 3850) of Part 1 of Division 4 of the Labor Code, or which an insurer might recover pursuant to Section 11662 including the right to commence and prosecute actions, to file, pursuant to Chapter 5 (commencing with Section 3850) of Part 1 of Division 4 of the Labor Code, liens for whatever sums would be recoverable by suit against a third person, to intervene in other court proceedings, and to compromise claims and actions before or after commencement of suit or after entry of judgment when in the opinion of the fund full collection cannot be enforced.

history: (History: Amended by Stats. 2012, Ch. 665, Sec. 173. (SB 1308) Effective January 1, 2013.)

article: 5. Coverage of Public Employers


text: The fund may annually enter into agreements with state agencies for service to be rendered to the fund. These state agencies include, but shall not be limited to: the Department of Finance, Department of General Services, State Personnel Board, and the Public Employees’ Retirement System. If these agencies and the fund cannot agree upon the cost of services provided by the agreements, the Department of General Services shall be requested to arrive at an equitable settlement.

history: (History: Amended by Stats. 2016, Ch. 31, Sec. 177. (SB 836) Effective June 27, 2016.)

article: 5. Coverage of Public Employers


text:
(a) Except as provided by subdivision (b), the fund shall not be subject to the provisions of the Government Code made applicable to state agencies generally or collectively, unless the section specifically names the fund as an agency to which the provision applies.

(b) The fund shall be subject to the provisions of Chapter 10.3 (commencing with Section 3512) of Division 4 of Title 1 of, Division 10 (commencing with Section 7920.000) of Title 1 of, Chapter 6.5 (commencing with Section 8543) of Division 1 of Title 2 of, Article 9 (commencing with Section 11120) of Chapter 1 of Part 1 of Division 3 of Title 2 of, the Government Code, and Division 5 (commencing with Section 18000) of Title 2 of the Government Code, with the exception of all of the following provisions of that division:

(1) Article 1 (commencing with Section 19820) and Article 2 (commencing with Section 19823) of Chapter 2 of Part 2.6 of Division 5.

(2) Sections 19849.2, 19849.3, 19849.4, and 19849.5.

(3) Chapter 4.5 (commencing with Section 19993.1) of Part 2.6 of Division 5.

(c) Except as provided in subdivisions (d) and (e) for the period from July 1, 2012, to June 30, 2013, inclusive, and for the period from July 1, 2020, to June 30, 2021, inclusive, and notwithstanding any provision of the Government Code or any other provision of law, the positions funded by the State Compensation Insurance Fund are exempt from any hiring freezes and staff cutbacks otherwise required by law. This subdivision is declaratory of existing law.

(d) Notwithstanding any other law, employees of the fund shall, without limitation, be subject to any and all reductions in state employee compensation imposed by the Legislature on other state employees for the period from July 1, 2012, to June 30, 2013, inclusive, and for the period from July 1, 2020, to June 30, 2021, inclusive, regardless of the means adopted to effect those reductions.

(e) With the exception of the reductions authorized in subdivision (d), if any provision of this section, or any practice or procedure adopted pursuant to this section, is in conflict with the provisions of a memorandum of understanding reached pursuant to Section 3517.5 of the Government Code, the memorandum of understanding shall be controlling without further legislative action, except that if the provisions of a memorandum of understanding require the expenditure of funds, the provisions shall not become effective unless approved by the Legislature in the annual Budget Act.

history: (History: Amended by Stats. 2021, Ch. 615, Sec. 315. (AB 474) Effective January 1, 2022. Operative January 1, 2023, pursuant to Sec. 463 of Stats. 2021, Ch. 615.)

article: 5. Coverage of Public Employers


text: On the effective date of this act the Controller shall draw his or her warrant in favor of the State Compensation Insurance Fund for the total amount of the funds in the custody of the Treasurer belonging to the State Compensation Insurance Fund, and the Treasurer shall pay that warrant.

history: (History: Amended by Stats. 2011, Ch. 426, Sec. 11. (SB 712) Effective January 1, 2012.)

article: 5. Coverage of Public Employers


text:
(a) It is unlawful to make or cause to be made any knowingly false or fraudulent statement, whether made orally or in writing, of any fact material to the determination of the premium, rate, or cost of any policy of workers’ compensation insurance issued or administered by the State Compensation Insurance Fund for the purpose of reducing the premium, rate, or cost of the insurance. Any person convicted of violating this subdivision shall be punished by imprisonment in a county jail for one year, or pursuant to subdivision (h) of Section 1170 of the Penal Code for two, three, or five years, or by a fine not exceeding fifty thousand dollars ($50,000), or double the value of the fraud, whichever is greater, or by both that imprisonment and fine.

(b) Any person who violates subdivision (a) and who has a prior felony conviction of the offense set forth in that subdivision shall receive a two-year enhancement for each prior conviction in addition to the sentence provided in subdivision (a). The existence of any fact that would subject a person to a penalty enhancement shall be alleged in the information or indictment and either admitted by the defendant in open court, or found to be true by the jury trying the issue of guilt or by the court where guilt is established by plea of guilty or nolo contendere or by trial by the court sitting without a jury.

history: (History: Amended by Stats. 2011, Ch. 15, Sec. 218. (AB 109) Effective April 4, 2011. Operative October 1, 2011, by Sec. 636 of Ch. 15, as amended by Stats. 2011, Ch. 39, Sec. 68.)

article: 6. Penalties

path: 2. CLASSES OF INSURANCE > 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE > 4. The State Compensation Insurance Fund > 6. Penalties


text: Whenever in Chapter 4, Part 3, Division 2 of the Insurance Code the term “State Industrial Accident Commission” or “Industrial Accident Commission” or “commission” or “director” or similar designation occurs, it means the Board of Directors of the State Compensation Insurance Fund except when such meaning is inconsistent with the intent and context of said chapter.

history: (History: Added by Stats. 1945, Ch. 1431.)

article: 6. Penalties


text:
(a) The Director of Finance is hereby authorized to act as agent for the state and, in that capacity, to sell a portion of, or otherwise obtain value for, the State Compensation Insurance Fund’s assets and liabilities. That authorized sale or other disposition shall be transacted with an entity that the director, in consultation with the State Treasurer, determines will provide the best combination of each of the following:

(1) The highest price for the State Compensation Insurance Fund’s workers’ compensation insurance assets and liabilities or the best value to the General Fund, or both.

(2) The greatest security for the payment of the purchase price.

(3) Demonstrated competence and professional qualifications for the continued satisfactory performance of the workers’ compensation insurance services offered for sale or other disposition.

(b) Prior to releasing any Notice of Request for Qualifications, a majority of the State Compensation Insurance Fund Board of Directors shall concur that the assets and liabilities that are identified by the Director of Finance, in consultation with the State Treasurer, in subdivision (a) are appropriate for sale or other disposition.

(c) Notwithstanding any other law, the process for sale or other disposition shall include the steps the director, in consultation with the State Treasurer, deems necessary or convenient to achieve the ends set forth in this section. The process shall include, but not necessarily be limited to, all of the following:

(1) The satisfaction of criteria established by the director, in consultation with the State Treasurer, consistent with achieving the best price or other value for those workers’ compensation insurance assets and liabilities. These criteria shall include any pertinent requirements of the State Compensation Insurance Fund Board of Directors.

(2) A Notice of Request for Qualifications sent by the Director of Finance to each firm currently providing workers’ compensation insurance coverage to California employers and any entity proposed by the State Compensation Insurance Fund Board of Directors. In addition, it shall be advertised in the State Contracts Register pursuant to Sections 14827.1 and 14827.2 of the Government Code. This notice shall include a description of the workers’ compensation insurance program, a summary description of the workers’ compensation insurance assets and liabilities offered for sale or other disposition, and a description of the due diligence review process to provide potential purchasers with further information regarding the workers’ compensation insurance assets and liabilities offered for sale or other disposition, the selection criteria on which the transaction will be based, the submission requirements and deadlines, and a Department of Finance contact name and telephone number for more information. A copy of the Notice of Request for Qualifications shall be provided to the Joint Legislative Budget Committee within seven days of its release.

(3) The evaluation by the director, in consultation with the State Treasurer, of all statements timely submitted in response to the Notice of Request for Qualifications sent pursuant to paragraph (2), using the criteria contained in the notice, and, based on those statements, the establishment of a qualified participant list.

(4) For purposes of Section 11772, any action by the board of directors related to any transaction contemplated by this article, including, but not limited to, any approvals of such transactions, shall be deemed to be in good faith.

(5) The Director of Finance shall notify the Joint Legislative Budget Committee in writing within seven days of completing a sale pursuant to subdivision (a).

history: (History: Added by Stats. 2009, 4th Ex. Sess., Ch. 12, Sec. 21. Effective July 28, 2009.)

article: 7. Transfer of Ownership

path: 2. CLASSES OF INSURANCE > 3. LIABILITY, WORKERS' COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE > 4. The State Compensation Insurance Fund > 7. Transfer of Ownership


text: In order to accomplish the purpose of this article, the State Compensation Insurance Fund and its board of directors shall participate fully in good faith with the Director of Finance, and the Director of Finance shall act in good faith in carrying out the duties prescribed by this article.

article: 7. Transfer of Ownership


text: Notwithstanding any other law, the approval of neither the Attorney General, nor the Insurance Commissioner, nor the Director of General Services is required for execution and implementation of the sale or other disposition of the assets and liabilities of the State Compensation Insurance Fund or any other agreement authorized by this article.

article: 7. Transfer of Ownership


text:
(a) The Director of Finance shall deposit all proceeds of any sale of, or any funds achieved through any other disposition of, the State Compensation Insurance Fund’s workers’ compensation insurance assets and liabilities under this article, less any costs related to that transaction, into the General Fund.

(b) The proceeds of any sale of, or any funds achieved through any other disposition of, the State Compensation Insurance Fund’s workers’ compensation insurance assets and liabilities are not “proceeds of taxes” as that term is used in subdivision (c) of Section 8 of Article XIIIB of the California Constitution. The disbursement of these proceeds is not subject to the limitations imposed by that article.

article: 7. Transfer of Ownership


text:
(a) Notwithstanding any other law, the Director of Finance is authorized to enter into agreements with firms or individuals to act as advisers to the state in the transactions contemplated by this article. Section 14838 of the Government Code and Article 4 (commencing with Section 10335) of Chapter 2 of Part 2 of Division 2 of the Public Contract Code do not apply to any agreement entered into by the director with advisers pursuant to this section.

(b) Notwithstanding any other law, the Director of Finance is also authorized to enter into legal services agreements to obtain specialized legal advice related to the transactions contemplated by this article. Section 11040 of the Government Code and Section 6072 of the Business and Professions Code shall not apply to the legal services agreements entered into by the director pursuant to this section.

article: 7. Transfer of Ownership