Insurers fared reasonably well during California's recently concluded legislative session for 2006, although some potentially troubling bills are waiting on Gov. Arnold Schwarzenegger's desk, company associations said.
For the most part, said Sam Sorich, president of the Association of California Insurance Companies, an affiliate of Des Plaines, Ill.-based Property Casualty Insurers Association of America, the industry saw many of the bills it opposed fail to win lawmakers' approval.
"California's insurance climate was enhanced by the defeat of a number of bills during the year," he said. "One measure that failed, for instance, would have regulated workers' compensation rates. Another would have made it more difficult for insurers to determine fair auto repair rates."
"Overall, it was a good year," said Nicole Mahrt, a spokeswoman for the American Insurance Association in Sacramento.
Perhaps the most notable bill opposed by the industry to be sent to the governor by the legislature is Senate Bill 815, sponsored by state Sen. Don Perata, D-East Bay. SB 815 would increase the number of weeks an injured worker could collect benefits.
Ms. Mahrt said the increases being proposed in SB 815 are "premature." The state Division of Workers' Compensation is conducting a study of disability ratings under the rating scheme enacted in recent years and return to work statistics.
"We think that study should be completed, and then we could have a discussion" about increasing benefits, she said.
The AIA has joined a coalition with 51 other entities, including businesses, municipalities and nonprofit organizations, asking Gov. Schwarzenegger to oppose the bill. While it appears unlikely the governor would approve a scaling back of the workers' compensation reforms that were among his top early priorities, Ms. Mahrt said insurers are not taking anything for granted.
"You can never predict what a governor is going to do," she said.
Also a potential problem for insurers, as noted by both the ACIC and the AIA, is Senate Bill 832. The bill would mandate that 75 percent of all punitive damage awards be paid to the state. SB 832 was passed by the legislature and is awaiting the governor's action.
The concern for insurers, Ms. Mahrt noted, is that as more people become aware of such a law, juries would award increasingly high punitive damages.
"It would increase the costs of litigation, without providing any real social benefit," she said.
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