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This week IBA West provided testimony to the California Department of Insurance supporting a proposed regulation governing the website that the Workers' Compensation Insurance Rating Bureau (WCIRB) is establishing to permit interested parties to “verify” that businesses have obtained workers’ compensation insurance.
The regulation comes about because various interest groups, including organized labor, have long sought a way for consumers to be able to quickly ascertain whether businesses have comp in place.
"These groups preferred the information publically available to include policy numbers and expiration dates--which would have effectively greatly diminished the value of an agent's ownership of expirations." said Steve Young, IBA West General Counsel. "Thanks to the diligence of IBA West and our legislative advocate John Norwood, the bill contained important exemptions from website disclosure designed to protect producers' proprietary information and ownership interests."
While applauding the CDI for following the intent of the Calfiornia Civil Code to ensure that policy numbers and inception and/or expiration dates of those policies be excluded from whatever information was made available for public inspection, IBA West General Counsel Steve Young suggested the department could further enhance that protection with two simple ammendments that clarify the langauge of the regulation and increase its conformity with state law.
Young's letter to the CDI follows below:
2 December 2010
Mr. Christopher A. Citko
Senior Staff Counsel
California Department of Insurance
300 Capitol Mall, 17th Floor
Sacramento, CA 95814
Re: Proposed REG-2010-00006: WORKERS' COMPENSATION RATING ORGANIZATION INTERNET WEB SITES
Dear Mr. Citko:
On behalf of the Insurance Brokers and Agents of the West, I am writing to express our qualified support for the above-referenced proposed regulations, and to encourage you to make two minor revisions, which I will describe below.
IBA West, as you know, is a trade association representing independent insurance agents and brokers. Our membership—comprised of more than 500 California agencies and brokerages, and tens of thousands of individual broker-agents—sells, services and supports a vast majority of all workers’ compensation policies sold in California. As independent agents and brokers, our members have a vital and very valuable proprietary interest in the work product they develop and maintain for their workers’ compensation clients.
The California Legislature, in enacting California Insurance Code Section 11752.75, recognized this essential proprietary interest by adding subsection (c) to that section, which provides:
(c) A rating organization shall not be required to disclose on the Internet Web site any policy numbers, inception or expiration dates, or confidential information, as defined by the commissioner.
The plain intent of this statutory language was to ensure that policy numbers and inception and/or expiration dates of those policies be excluded from whatever information was made available for public inspection.
The Department of Insurance has attempted to recognize this statutory exemption in proposed Section 2593.3(c) of the regulations. In its current form, Section 2593.3(c) provides:
(c) The rating organization shall limit a person's use of the coverage Internet Web site to prevent unlimited or multiple queries of the information that could be used to determine policy inception or expiration dates or used for other purposes for which it was not intended [ …].
Unfortunately, the language used in the regulation does not conform to the provisions of the statute in two material respects.
First, the proposed regulatory language omits the statutory exemption for “policy numbers.”
Second, the exemption from disclosure of “inception or expiration dates” appears, by a plain reading, to apply only to the extent such information is sought in “unlimited or multiple queries.”
To the extent that the proposed regulation in these regards is arguably unsupported by, and inconsistent with, the underlying statute, we would respectfully submit that the regulation is inconsistent with the authority, consistency and clarity standards of the Administrative Procedures Act.
We believe these problems can be easily remedied with two simple amendments—one supplementing the definition of “coverage information” in proposed Section 2593.1(a); the other adding a new subsection (f) to proposed Section 2593.3 in order to conform the regulatory exemption to the statute:
• § 2593.1. Definitions
For purposes of this Article:
(a) "Coverage" or "Coverage Information" means the name of the employer, the employer's address or other identifying information, the date specified in the query for coverage information, and the name of the insurer on the date of coverage. “Coverage” or “Coverage Information” does not include policy numbers, or coverage inception or expiration dates.
• § 2593.3. Web Site Access Restrictions
(f) The coverage Internet Web site shall not include policy numbers, or coverage inception or expiration dates.
The balance of the CDI’s proposed regulation is extraordinarily well drafted, and IBA West strongly supports its adoption.
If you have any questions or if we can provide any other assistance to the CDI, please do not hesitate to contact me. On behalf of IBA West, I thank you for the opportunity to submit these comments for your consideration.
Very truly yours,
Stephen L. Young
Stephen L. Young