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AB-974 Workers’ compensation insurance: rates.(2011-2012)

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AB974:v98#DOCUMENT

Amended  IN  Assembly  March 31, 2011

CALIFORNIA LEGISLATURE— 2011–2012 REGULAR SESSION

Assembly Bill
No. 974


Introduced  by  Assembly Member Portantino

February 18, 2011


An act to amend Section 790.02 of the Insurance Code, relating to insurance. An act to amend Section 11732.5 of the Insurance Code, relating to workers’ compensation insurance.


LEGISLATIVE COUNSEL'S DIGEST


AB 974, as amended, Portantino. Insurance: unfair trade practices. Workers’ compensation insurance: rates.
Existing law regulates the rate that may be charged on workers’ compensation insurance and requires every workers’ compensation insurer to adhere to a uniform experience rating plan filed with the Insurance Commissioner by a rating organization designated by the commissioner and subject to his or her disapproval. Existing law requires that a rate be adequate to cover an insurer’s losses and expenses, not tend to create a monopoly, and not be unfairly discriminatory. Under existing law, rates are unfairly discriminatory if, after allowing for practical limitations, price differentials fail to reflect equitably the difference in expected losses and expenses.
This bill would provide that a rate that includes a price differential because the policyholder purchased the policy through a broker is unfairly discriminatory and shall not be approved.

Existing law prohibits a person from engaging in any trade practice that is an unfair method of competition or an unfair or deceptive act or practice in the business of insurance.

This bill would make technical, nonsubstantive changes to that provision.

Vote: MAJORITY   Appropriation: NO   Fiscal Committee: NOYES   Local Program: NO  

The people of the State of California do enact as follows:


SECTION 1.

 Section 11732.5 of the Insurance Code is amended to read:

11732.5.
 Rates shall not be unfairly discriminatory. Rates are unfairly discriminatory if, after allowing for practical limitations, price differentials fail to reflect equitably the difference in expected losses and expenses. A rate that includes a price differential because the policyholder purchased the policy through a broker is unfairly discriminatory and shall not be approved. A rate of an insurer shall not be deemed unfairly discriminatory because different premiums result for policyholders with like loss exposures but different expenses, or like expenses but different loss exposures, as long as the rate reflects the differences with reasonable accuracy.

SECTION 1.Section 790.02 of the Insurance Code is amended to read:
790.02.

A person shall not engage in this state in any trade practice that is defined in this article as, or determined pursuant to this article to be, an unfair method of competition or an unfair or deceptive act or practice in the business of insurance.