DEPARTMENT OF INSURANCE
45 FREMONT STREET
SAN FRANCISCO, CA 94105
Bulletin No. 2002-5
October 31, 2002
TO: All Workers' Compensation Insurers and Other Interested Parties
SUBJECT: SB 2093 - Workers' Compensation Deposit; Legislative Changes;
Workers' Compensation Deposit Surety Bond Eliminated; Minimum Deposit Increased
SB 2093 was recently passed by the Legislature and signed by the Governor. The full text of SB 2093 can be found at http://www.leginfo.ca.gov. The bill changes some of the workers' compensation deposit requirements contained in Insurance Code Section 11690 et seq. The bill takes effect on January 1, 2003.
HIGHLIGHTS OF SB 2093 CHANGES
1. Workers' compensation deposit surety bond eliminated.
2. Minimum deposit increased from $25,000 to $100,000.
3. Commissioner may demand an additional deposit at any time.
4. Special California Schedule P (SCASP) filing date is March 1 instead of May 1.
5. Revised SCASP will include information from assuming companies about their cedants.
6. Deposit deadline is April 1 instead of July 1.
7. Late filing fee for the deposit is no longer a flat fee but based on the amount of the deficiency.
8. If an insurer cedes workers' compensation and the reinsurer has not maintained the a deposit in an amount equal to the amount claimed by the ceding company, the ceding company and the reinsurer will be notified by the commissioner of the deficiency. If the deficiency has not been cured in 15 days, then the ceding company will not get the reserve credit.
9. As in current law, the commissioner, both before and during a conservation, has access to the workers' compensation deposit in the event the insurer is unable to pay its workers' compensation claims. The changes in the law highlight the role of the California Insurance Guarantee Association when an order of receivership or liquidation and a finding of insolvency has been issued by a court of competent jurisdiction.
ELIMINATION OF THE BOND/MINIMUM DEPOSIT INCREASE
Due to the elimination of the workers' compensation bond, any insurer that currently has a workers' compensation bond posted to meet its deposit requirement will have to replace it with either an approved letter of credit and/or acceptable securities. Due to the increase in the minimum deposit requirement, an insurer may have to increase its deposit. If you need to change your deposit or add to it, consult our website at www.insurance.ca.gov. Any insurer needing to make a change to its deposit should initiate the process as soon as possible so that the changes can be completed by January 1, 2003 . Any documentation that must be filed with the Department to accomplish the change should be filed with the Department by December 1, 2002 in order to allow enough time to process the transaction before the deadline.
HARRY W. LOW