Two Fridays ago was the deadline for introduction of bills in the California legislature. The Workers' Compensation Insurance Rating Bureau of California (WCIRB) is once again the subject of several of these bills. In what seems an eternity ago, various entities or groups would breathe a sigh of relief when a review of the thousands of bills offered up by our lawmakers would not involve them. More recently, the sigh of relief has been replaced by nervous optimism, wondering if the now-dysfunctional lawmaking process would somehow secretly gore their ox in a last-minute offering—known as a spot bill—spirited to the governor with little more than an uninformed mention on the floors of the respective chambers.

Controversial matters used to work their way through the committee process and, potentially, into conference committees. Today, conference committees are a thing of the past—like most public debate on the issues. Insurance rate regulation falls squarely into that category.

While it is considered likely that the issue of insurance rate regulation will percolate in this legislative session, interest in it has waned considerably in light of insurers' responses to recent reforms and the study recently released by the Division of Workers' Compensation.

Senator Richard Alarcon's SB 46, a bill that would profoundly change workers' compensation ratemaking, languishes in the Assembly Insurance Committee. As is the case with many bills, limited discussion on SB 46 did not address the totality of changes that the legislation would have effected. Lost in the inflamed rhetoric over the price of insurance, and how government can best set it, were subtle and profound changes in the governance of rating organizations or, in the case of California, WCIRB.

WCIRB has certain, shall we say, Oz-like qualities to it. It is shrouded in mystery while at the same time playing a critical role in ratemaking and the cost-savings evaluations of the reforms. Picture Dorothy, the Tin Man, the Lion and the Scarecrow without naiveté. Few, if any, California carriers have sat on WCIRB's Governing Board in recent memory, except State Fund—played by the Scarecrow.

It administers the experience rating plan and classification system for the Insurance Commissioner, as his statistical agent. Except for the highly publicized pure premium rate hearings, the Department of Insurance appears to bless the way WCIRB administers its responsibilities. The Bureau seems a venerable institution, created out of a need to respond to the application of antitrust laws to the business of insurance in the late 1940s. It has existed in one form or another for almost 55 years.

It is not without controversy. As evidenced in SB 46, applicants' attorneys and labor want to wrest control of the Bureau from insurers by making its governance subject to a board whose membership is divided equally between insurers and non-insurers. Periodically, the Insurance Commissioner has considered bringing the ratemaking function into the Department of Insurance, essentially calling into question the need for a rating organization at all. Decisions by the Bureau are also sometimes controversial, as evidenced by the fallout from the Schaefer Ambulance decision on data reporting, in which the Bureau and most of its membership clearly did not see eye to eye.

The Bureau is the Achilles' heel of the insurance industry. Regularly, legislation is introduced trying to resolve experience rating or classification issues that have gone unresolved through the arcane and usually unfair administrative hearing process.

Notably, the rules of this process are approved by the Commissioner, and these rules are intended to provide some sense of order out of what otherwise would be chaos in the marketplace. Yet numerous provisions in both the Insurance Code and Labor Code reflect frustration with how the insurance rating system is administered.

Whether experience modifications for labor contractors or various statutory mandates over the past 10 years dealing with corrections to statistical reports and experience modifications, the Bureau has been in the spotlight, even if not on center stage. In 2006, several bills already have been introduced calling for establishment of a proof-of-coverage program to help detect workers' compensation fraud, and legislation for reporting on insurance coverage for roofers was a particular subject of interest last year.

To date, nearly 20 bills have been introduced this session that would affect Bureau operations. Several of them give WCIRB an expanded role in detecting workers' compensation fraud, and already have been signed into law. At least two bills by Senator Alarcon would have ended the single-classification rule for rating businesses, and bills have been introduced by several Republicans addressing various classifications and rating issues for specific employers.

Workers' compensation public policy is increasingly data-driven. That makes the Bureau an attractive target for agencies and individuals that want to gain access to and ultimately control which data are collected, when and how they are disseminated, and to whom.

The history of legislative responses to Bureau activity should also be a call to the industry to consider processes more transparent and accessible to policyholders to whom the industry owes both its financial and political fortunes. Nothing less than moving the entire Bureau into the Department of Insurance will make it finally accountable for its actions.