Insurance: Workers' Comp Bond Fund: assessments.

Existing law creates the California Insurance Guarantee Association (CIGA) and requires all insurers admitted to transact insurance in this state to become members. CIGA is required to collect premium payments from members to discharge its obligations to cover claims of an insolvent insurer. Existing law provides that CIGA shall be a party in interest in all proceedings involving a covered claim, and has all of the rights an insolvent insurer would have if the insurer was not in liquidation. CIGA is required to allocate its claim payments and costs based on categories of insurance, including, but not limited to, workers' compensation claims and homeowners' claims. The premium payments from each category are separate and required to be used to pay the claims and costs allocated to that category. Existing law provides that the premium charged to a member insurer for any of the categories of insurance is 1% of the net direct written premium, as defined, written in the category by the member per year. Existing law authorizes CIGA to request the issuance of bonds by the California Infrastructure and Economic Development Bank to pay for covered claims that arise as a result of the insolvency of workers' compensation insurers. Proceeds from the sale of the bonds are deposited in the Workers' Comp Bond Fund, and CIGA distributes this money to pay covered claims. Principal and interest on the bonds are paid from special bond assessments levied by CIGA on workers' compensation insurers, as provided. This bill would, commencing January 1, 2015, provide that the premium charged to a member insurer for a category of insurance would be 2% of the net direct written premium, unless there are outstanding bonds, as specified, in which case the premium would not exceed 1% of the net direct written premium for any category of insurance for which the bond proceeds are being used to pay claims and expenses. The bill would prohibit, once all the bonds issued pursuant to these provisions are redeemed, further initial special bond assessments from being levied or made. The bill would require that any premium adjustments applicable to the special bond assessments continue to be made and determined, and that any credits or charges that result from the premium adjustments be credited or charged to the workers' compensation assessments that the insurers are otherwise required to pay CIGA.