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Mar 23, 2004 - 09:35 AM

Can Arnold Say 103?

by Jamie Court and Doug Heller
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?

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