THIS WEEK IN SACRAMENTO

January 30, 2026

WCAN Up & Running

A broad-based coalition of employers, public entities, nonprofits, trade associations, insurers, and agents and brokers, including the American Insurance Association (AIA), Liberty Mutual Insurance Company, American Insurance, AIG, and Insurance Agents and Brokers of the West (IBA West) have come together to provide the funding to establish the Workers’ Compensation Action Network (WCAN). The goal of WCAN will be to coordinate the efforts of all segments of the employer community into one well-funded effort to urge continue to push the Legislature to enact real workers’ compensation reform in California and to support based on the Governor’s effort to accomplish reform as soon as possible proposals. WCAN is A continuation of the continuation of a successful grassroots action network which lastpreviously employed helped to bringto bring about reform to the workers’ compensation system in 1993.

WCAN has retained APCO Worldwide and Schubert Communications will be responsible to manage the campaign. for WCAN has undertaken an aggressive media and research and developing materials to support the need for workers’ compensation reform and provide the necessary information, talking points and materials to assist a broad-based grassroots efforts to inform educate legislators and the public with regard to the critical need for comprehensive workers’ compensation reform. WCAN employer teams will hold in-district meetings with legislators over the next few weeks to encourage the lawmakers to and to create pressure in key legislative districts to enact such legislation this year. The coalition will also take the lead in undertaking a public affairs and media program to support this effort. The WCAN website, www.fixworkerscompnow.org, is now up and running. The website includes a wealth of information about the problems plaguing in the workers’ compensation system and an action plan for what the public can do to get involved in the WCAN campaign for real reform.

Already, trade associations such as the California Chamber of Commerce and IBA West are in the process of putting out a grassroots action request to their members utilizing materials prepared by the coalition.

Labor, Physicians and Applicant Attorneys Pledgean Schwarzenegger Defeat

On the other side of the isle however, lLabor, attorneys and medical interests appear to be organizing coalescing around their own coalition. Approximately Over 1,2650 applicant attorneys, health care providers and representatives of labor met last weekend in Indian Wells, California to organize their own effortsformulate their plan to block any workers’ compensation reform bill in the Legislature and to defeat the an initiative effort contemplated promised by the Governor. After numerous rousing demonstrations and speeches supportive of labor efforts by Senate President Pro Tempore of the Senate John Burton (D-San Francisco) and Assembly Speaker-elect of the Assembly Fabian Nunez (D- Los Angeles), lawyers and physicians reportedly paraded to the microphone one by one and committed over $2 million to fight the Governor’s workers’ compensation initiative initiative, which is expected to be on the November general election ballot.

It is likely that if efforts by the WCAN coalition and the Governor are blocked in the Legislature, that the coalition’s role and duties will roll over into an organization to back a workers’ compensation initiative on the November ballot. As reported last week, the Governor is already is conducting town hall meetings throughout California to raise the funding necessary to back his referendum and initiative efforts, including workers’ compensation., through the California Recovery Team.

Businesses Join to Promote Workers’ Compensation Initiative

It was also announced this week that the Small Business Action Committee (SBAC), the Independent Business Coalition (IBC) and Grimmway Farms, which each of which had filed been individually backing the four workers’ compensation initiatives already filed with the Attorney General, have now have come together behind agreed to back a single workers’ compensation initiative filed with the Attorney General on January 9, 2026. The initiative, entitled the Workers’ Compensation Reform and Accountability Act, contains provisions from each of the previously filed initiatives.

Workers’ Compensation Clean-UpCleanup

As reported lat week, there has been no recent activity in regard to In spite of foot dragging on reform, there was an indication this week that the Senate Labor & Industrial Relations Committee will move ahead with a limited a clean-up bill to AB 227 (Vargas) and SB 228 (AlarconAlarcón). That changed this week as Two two key issues have taken center stage. First, Senator Alarcón (D-Sun Valley) seems willing to modify a A provision in SB 228 (Alarcon) requiring insurers to provide a written assessment of all employers to have an independently developed IIPP (Insurance Injury Prevention Plans (IIPP) that all employers have been required to have since 1993. The provision in SB 228 has been are a major concern for of small business, agents and brokers, and insurers. The Governor’s workers’ compensation reform bill would repeal this requirement, but labor is strongly opposed. to this provision. However, efforts of those concerned with this requirement have resulted in a compromise proposal by Senator AlarconAlarcón (D-Sun Valley) appears willing to compromise, limiting to limit the application of the requirement law to employers with a 2.0 experience modification (ex-mod) or higher and to easing the limitation on those who could allow do the assessments such plans to include to be developed by those working employees of for insurers. Efforts were alsoAdvocates representing agents and brokers are encouraginged undertaken to confirm that the Governor to would entertain signing such a bill, that contains just this compromise, despite his veto last week of two workers’ compensation bills last week where because he indicated he did not want piece-meal reform would not be acceptable..

However, anotherA second issue emerged this week that may be included in the limited clean-up bill. that will likely affect any discussion of a standalone bill. A provision in AB 227 (Vargas) that requires employers to provide 100% funding for the Division of Workers’ Compensation (DWC) was apparently mistakenly repealed by a later budget bill. As sucha result, the DWC, which administers workers’ compensation benefits and operates the Workers’ Compensation Appeals Board (WCAB), could be out of money by mid-February. Legislators are currently scrambling to find and approve $54 million to keep the agency going through the fiscal year, which ends in June 30. Apparently, Senator AlarconAlarcónAlarcon reportedly is nowhas included this in hias draft legislationeding a bill to incorporate both the user funding of the DWC and the modifications of the IIPP requirement to be considered and plans to hear the bill in his committee withwithin the next two weeks. The questions is whether the Aadministration will utilize the funding faux pas as leverage to try to break the legislative deadlock on a broader clean-up bill. that would address additional topics. The Administration may have a An regulatory alternative to repealing the IIPP requirement. The would be for the Department of Industrial Relations could to propose emergency regulations to limit the application of the IIPP statute in the manner as proposed by the Senator AlarconAlarcón revision. This wcould allow the aAdministration to use the leverage on the funding issue for other purposes. if they so desire.

Senator Speier to Hold Workers’ Compensation District HearingWorkshop

In the state Senate, While workers’ compensation issues are the jurisdiction of the Senate Labor & Industrial Relations Committee, chaired by Senator Richard Alarcon (D-Sun Valley). However, Senator Jackie Speier (D-Hillsborough), chair of the Senate Insurance Committee, has scheduled an in- district hearing workshop on on February 3^rd to hear collect testimony on issues relative to ideas on workers’ compensation issues. In the hearing announcement, the The Senator invited indicated that this hearing was scheduled to provide labor, business, medical, insurance and government representatives with the opportunity to discuss how the workers’ compensation affects all of them and present their concerns with the workers’ compensation system.

In an effort to kick off the discussion, the Senator included a list of the Top 10 issues in workers’ compensation that . The list of key issues that the Senator would like input on includeds insurance industry re--regulations, workers’ compensation rates and capping ofcaps on broker-agents and brokers fees and commissions. IBA West plans to participate in the workshop.

Judge Throws Out Persistency Law

Late last week, Los Angeles County Superior Court Judge Dzintra Janavs threw out legislation passed last year that would have allowed automobile insurers to reward drivers who haven’t had lapses in insurance coverage. The bill permitted insurers to offer a persistency discount for individuals who continuously maintain insurance, even with different insurers, a so-called portable persistency discount.

SB 841 by Senator Don Perata (D-Oakland) was signed into law by Governor Davis last August; however, consumer and civil rights groups filed a lawsuit claiming that the bill violated Proposition 103 and unfairly targeted low-income drivers.

The Office of State Attorney General Bill Lockyer defended the measure in court, contending that SB 841 (Perata) furthers Proposition 103’s the purposes of Proposition 103 and could save Californians a lot of money. Deputy Attorney General Stephen Lew argued that the law would have boost ed competition within the insurance industry and lowered rates for insured drivers.

Nevertheless, Judge Janavs agreed with the consumer and civil rights groups, ruling that . He ruled that the law directly contravened Proposition 103, which specifically prohibits insurers from penalizing uninsured motorists trying to buy insurance. Judge Janavs also stated that the Legislature overstepped their its authority to amend Proposition 103 in by passing SB 841. (Perata).

The judgment invalidating SB 841 (Perata) is expected to become final in early February. Deputy Attorney General Stephen Lew said the state willwould likely appeal. the judge’s ruling. SB 841 (Perata) was supported by Mercury, Progressive and 21^st Century Insurance Companies and the Insurance Agents and Brokers Legislative Council.

Garamendi Claims Zip Code Rating is Discriminatory

California Insurance Commissioner John Garamendi, Aafter completing his six automobile insurance workshops throughout the state on the topic of geographical rating, California Insurance Commissioner John Garamendi is claiming claimed that automobile insurance pricing guidelines used in California that allow territorial rating as a significant factor are discriminatory and cause wide discrepancies in the cost of insurance.

During his last town hall meeting in San Diego, Garamendi said current pricing guidelines often rank residency, gender and marital status as more important than driving records in establishing insurance rates. The Foundation for Taxpayer and Consumer Rights agreed with Garamendi and further stated argued that the current pricing guidelinesterritorial rating has have a particularly negative impact on the poor and ion communities of color. Commissioner Garamendi said he hopes to design and implement new pricing guidelines by the middle of this year. However, the insurance industry, various community interest groups and elected officials from the great majority of the state where the rate would substantially increase if the Commissioner did implement new pricing guidelines are opposed to any change.

Assembly Insurance Committee Holds Hearing on Unemployment Insurance

The Assembly Insurance Committee held a hearing this week to discuss the impending imminent insolvency of the Unemployment Insurance Fund (UIF). Over the past two years, UIF payouts have increased a substantially increase in pay-outs have been made by the UIF for several reasons, including the economic downturn, increased claim duration, and an increase in benefit levels through 2005. As a result, the UIF is currently teetering on the edge of bankruptcy. Although the Fund UIF will seek federal assistance, this solution is only a short -term fix. The Assembly Insurance Committee met this week in an attempt to determine some long termlong-term solutions for restoring the solvency of the UIF.

At the hearing, Deborah Bronow of the Employment Development Department (EDD) provided the committee with a quick overview of the unemployment insurance system, its current financing structure, the status of the UIF, and the federal loan. She stated that by the end of 2005, the UIF will run a deficit of $2.6 billion.

Upon completion of the overview of the system, Tthe committee then heard from a panels of employer and worker representatives. and a panel of worker representatives. The employer panel included representatives from the California Taxpayer’s Association, the California Chamber of Commerce, the California Manufacturers and Technology Association, and the Western Grower’s Association. These representatives criticized the current sliding tax rate, which rises and falls with changes in when the unemployment rolls. swell and declines when the rolls shrink. Assemblymember Juan Vargas (D-Chula Vista), Chairman of the Assembly Insurance Committee, agreed stating, “It seems to me ludicrous that when times are good you (employers) pay less and when times are bad you pay more.” The California Chamber of Commerce recommended the committee look at tightening rules on eligibility, cracking down on fraud and freezeing benefits to the unemployed.

The worker panel, which included representatives from the California Labor Federation, the California Building Trades Association, the Service Employees International Union, and the California Rural Legal Assistance, rebutted rebuked the employers’ employer’s claims that they pay the highest unemployment insurance tax rate in the country and that eligibility guidelines were liberal. Labor leaders suggested that the Legislature raise additional revenue by requiring employers to pay more in periods of employment stability.

Legislative Update

AB 700 (Diaz), relating torelating to financial guaranty insurance, passed the Assembly this week on the Consent Calendar. The bill will now move to the Senate for committee assignment. The bill will be assigned to the Senate Insurance Committee. We and we expect the first hearing to take place some time in March.

SB 766 (Florez), relating to securities violations, died in the Senate this week. SB 766 This bill would have provided that a person may be found liable for securities fraud violations even if they did not directly engaged in market activity. This bill was strongly opposed by a coalition of business and insurance interests lead by the California Civil Justice Association.

© 2004 Norwood & Associates All Rights Reserved

[email protected]