Zurich settles workers comp arbitration dispute with California

Zurich American Insurance Co. will stop requiring California workers compensation policyholders to arbitrate disputes in Illinois as part of a settlement reached with the California Department of Insurance.

The agreement announced Thursday addresses allegations that Zurich failed to file workers comp large-deductible agreement forms with the Department of Insurance as required by California code. The Department of Insurance said it advised all insurers in 2011 that the filings are required.

Schaumburg, Ill.-based Zurich denied the allegations that it violated California law by failing to file deductible agreements.

But in lieu of the Department of Insurance continuing to proceed with the form-filing issue, Zurich agreed to waive enforcement of its contractual rights requiring employers to arbitrate agreements in Schaumburg, Ill.

The agreements allegedly required the application of New York law, according to the Department of Insurance.

“Zurich's practices required California employers to resolve disputes in Zurich's backyard, under unfavorable law and circumstances and at added expense to employers,” Insurance Commissioner Dave Jones said in a statement. “This settlement gives California employers the opportunity to level the playing field by arbitrating disputes in California, under California law.”