California’s Gov is no friend
of regulation, but it looks like Proposition 103-style insurance
premium regulation may be the answer to legislative gridlock over
workers’ compensation reform. In auto insurance, Prop 103’s system of
premium regulation and price controls have saved California motorists
over $23 billion. The fact that workers’ comp policies are not subject
to Prop 103 is a main reason the market is such a mess.
Now Insurance Commissioner John Garamendi and others in the capitol are
starting to insist insurance premiums be regulated as part of a workers
comp reform package, as Arnold Watch has long recommended.
Here’s one reason Arnold and even insurers may go along. Later this
month US Representative Mike Oxley will be presenting a bill in
Congress to take away the rights of states to regulate insurers,
premiums and practices. The New York Times reports that GOP insurance
commissioners are for the plan, which would create a weak federal
regulatory scheme to replace California’s rigorous Prop 103 rules
across the board. This federal system is essentially insurance
deregulation because it would nix all state price controls, including
Prop 103 and any new workers’ comp reforms.
Last time preemption of state consumer protection laws was at issue on
Capitol Hill, Arnold was MIA, allowing the state’s recently enacted
financial privacy law to slip away. Senators Feinstein and Boxer fought
to protect California’s privacy protections, but the law was gutted by
the powerful financial services lobby before ever taking effect.
Workers comp reform and federal insurance deregulation will be Arnold’s
next big test. Will he fight for California business and consumers or
will he fight for national and international insurers? And will the
Collectinator make sure Californians continue to receive what insurers
owe them under Proposition 103?
