California
Governor Gray Davis has signed a measure that
guarantees employers and injured workers will
continue to receive workers' compensation
benefits if an insurance carrier becomes
insolvent, according to the American Insurance
Association (AIA).
"This
new law maintains an important backup benefit
system for California's employers and injured
workers," Mark Sektnan, AIA assistant
vice president, state affairs, said. "The
Department of Insurance has the necessary
tools and systems in place to prevent carriers
from becoming insolvent; but when that
regulatory system fails, we must have an
alternative system to protect employers and
employees."
The
bill, AB 2007 authored by Assemblyman Tom
Calderon (D), will continue the two percent
assessment charged to workers' compensation
insurance premiums until 2007. These funds are
deposited into the California Insurance
Guaranty Fund (CIGA), which pays the
outstanding claims of insolvent workers'
compensation carriers. California enacted a
measure in 2001 to raise the surcharge from
one percent to two percent. This increased
surcharge is scheduled to sunset at the end of
2002.
"Most
other states already support their guaranty
funds with a two percent assessment,"
Sektnan remarked. "This measure brings
California in line with the rest of the
country."
The
State Assembly approved AB 2007 on a vote of
53 to 24 and the state Senate voted 25 to 12
to approve the measure. The new law will take
effect Jan. 1, 2003.
California
Governor Gray Davis (D) has approved a measure
requiring homeowners to notify builders of
construction defects before they can initiate
litigation, according to the American
Insurance Association (AIA).
"While this bill is not the final
solution, it is an important step toward
reducing the skyrocketing litigation that is
driving the high costs and unpredictability of
construction insurance," said Mark
Sektnan, AIA assistant vice president, western
region. "This bill was designed to give
consumers what they want—a home that works.
Under current law, builders find out about
defects when a lawsuit is filed. Now a builder
will be notified of a defect and given an
opportunity to quickly correct the problem,
thus avoiding potential litigation."
SB 800, authored by Senate President Pro Tem
John Burton (D) and Assembly Speaker Herb
Wesson (D), establishes specific definitions
of construction defects. The bill also
requires homeowners to give notice to their
builder if they discover defects. Once
notified, builders will then have the right to
repair any purported defect within a specified
amount of time. Homeowners will have the right
to pursue litigation if the repairs are not
made or are found to be inadequate.
"SB 800 was not designed to address the
ongoing issues facing the construction
insurance market," added Sektnan.
"Next year, legislative leaders will
reconvene the team that negotiated SB 800 to
seek solutions to other concerns insurers have
with the issue. We look forward to continuing
this negotiating process and identifying
reforms that will bring predictability back
into this line of coverage."
California Gov. Gray Davis
has signed a bill (SB 1661) that permits
workers to take six weeks off to care for a
new baby, a newly adopted child or a family
member who has fallen ill. With the signing,
California becomes the first state to put into
law a comprehensive paid family leave program.
Nicole Mahrt, public affairs director western
region, for the American Insurance
Association, told Insurance Journal that,
"the impact on insurers' and every
business in California is the same. AIA was
part of the coalition, led by the California
State Chamber of Commerce, in opposing the
bill. Basically, it will put another burden on
employers to hold up a job or find a
replacement."
The bill goes into law July of 2004 and will
make employees eligible to receive a little
more than half (percent) of their wages
covering the time of their absence.
"There was a large business coalition
that did oppose it and did negotiate some
amendments to the bill," Mahrt added.
"Initially, the bill called for employers
to have to pay an amount equivalent to what
employees contribute. The leave was going to
be 12 weeks and was changed to six, and
employees make the contributions. California
loves to be the leader on big issues as
always. It just adds to an increasingly
difficult business climate in
California."
When asked the impact on small business, Mahrt
added, "There are some thresholds where
if you're under 50 employees, you don't have
to hold the job open, but you most likely have
to hire the person back on in a different
position. That is ultimately the impact on a
small business. Their person goes out and they
have to find someone to do the work, but they
have to bring the person back. In a small
shop, that can be a significant impact. People
are going to have to change the way they think
when people have kids."
