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Calif. seeks to force Zurich units to get workers comp agreements reviewed

Posted On: Feb. 29, 2012 12:00 AM CST

Calif. seeks to force Zurich units to get workers comp agreements reviewed

SACRAMENTO—California's Department of Insurance is seeking to force units of Zurich Financial Services Ltd. to cease issuing workers compensation “large-deductible agreements” that have not been properly reviewed.

The California Insurance Code requires insurers to submit workers comp policy forms and endorsements to the Department of Insurance and to the Workers' Compensation Insurance Rating Bureau of California for legal review before they are issued to policyholders.

However, Zurich American Insurance Co. and Zurich American Insurance Co. of Illinois may have evaded such a review, the Insurance Department said Tuesday in announcing that it had begun an administrative enforcement action.

“The unreviewed agreements have been the subject of litigation between the Zurich (California) companies and employers because they include a requirement for arbitration of disputes in Illinois, where the Zurich companies are located,” the Insurance Department said in a statement.

The Department of Insurance said it will seek an order requiring the Zurich companies to immediately cease issuing agreements that they have not filed for review and will seek an order that such agreements may not be enforced by Zurich.

“We are currently reviewing the enforcement action and will look to resolve with the Department any concerns contained therein,” a Zurich spokesman said.