California insurance head supports workers comp arbitration bill

SACRAMENTO—California’s Insurance Commissioner has urged Gov. Jerry Brown to sign legislation that would require insurers to warn workers compensation policyholders that they have a right to negotiate contract dispute-resolution provisions.

Under S.B. 684 that has been approved by both chambers in the California Assembly, insurers would have to notify employers in writing when underwriters intend to use arbitration to resolve disputes with insurance buyers.

Out-of-state arbitration

The bill, sponsored by California’s Department of Insurance, also would give employers the right to resolve arbitration disputes in California under the state’s laws.

Currently, when insurers provide workers comp policy quotes, the employer may not know insurers that will require dispute arbitration to take place out of state, Insurance Commissioner Dave Jones said Tuesday.

“This bill will create an important protection for California's employers by no longer allowing insurers to force businesses, small and large, to arbitrate out of state without their foreknowledge and consent," Mr. Jones said in a statement. “S.B. 684 will ensure that both employers and insurers both freely and mutually agree to terms of the workers' compensation policy.”

Last year, former Gov. Arnold Schwarzenegger sided with workers comp insurers and vetoed legislation that would have required them to specify that California law applies in coverage disagreements involving California employers.

A legislative update issued by Gov. Brown on Tuesday shows he had not acted on S.B. 684.