Attorney General Cuomo Settles With Four Insurance Groups To Pay New York State Nearly $120 Million
NEW YORK, NY (December 31, 2010) -- Attorney General Andrew M. Cuomo today announced that four insurance groups have agreed to pay nearly $120 million in excess funds to New York State. The Attorney General settled with the four insurance groups -- ACE, Zurich, Pennsylvania Manufacturers, and CNA -- over the excess collections of thirty-six of their member insurance companies.
The Workers' Compensation Board charges annual fees to workers' compensation insurers. The insurers then cover these costs by charging their policyholders a surcharge on premiums. Starting in 2000, the Board used a different calculation than the one used to determine the surcharges to policyholders. As a result, some insurers collected too little in surcharges from their policyholders, while others -- including ACE, Zurich, Pennsylvania Manufacturers, and CNA -- collected too much.
In the 2009 and 2010 New York State Budget bills, the Workers' Compensation Law was changed to prevent such overcharging and allowed the State to recover the excess funds that the insurers had collected.
Under the settlements, the ACE companies have agreed to pay $70 million, the Zurich companies $37.5 million, the Pennsylvania Manufacturer companies $5.9 million, and the CNA companies $5.75 million. According to state law, the funds will be paid to the State of New York. The companies all fully cooperated with the investigation.
"These four groups of insurance companies have done the responsible thing by agreeing to resolve their disputes with the State," said Attorney General Cuomo. "Other insurers who still retain excess funds should follow their lead or they will be brought to justice. I also want to thank Assembly Speaker Sheldon Silver for first bringing this matter to the attention of my Office."
Assembly Speaker Sheldon Silver said, "I congratulate and commend Attorney General Andrew Cuomo and Board Chair Robert Beloten on their settlement with the aforementioned workers’ compensation insurers. I am greatly pleased that the Attorney General acted on my recommendation to investigate this matter and was successful in recouping these excess funds."
Robert Beloten, Chair of the New York State Workers' Compensation Board, said, "I would like to thank Attorney General Cuomo for his hard work in facilitating this agreement. I am pleased these members of the insurance industry and the state were able to reach an accord and hope that spirit continues for the betterment of all New Yorkers."
The ten ACE insurers are: ACE American Insurance Company; ACE Fire Underwriters Insurance Company; ACE Indemnity Insurance Company; ACE Property and Casualty Insurance Company; Bankers Standard Insurance Company; Century Indemnity Company; Century Reinsurance Compan; Indemnity Insurance Company of North America; Insurance Company of North America; and Pacific Employers Insurance Company.
The nine Zurich insurers are: American Guarantee & Liability Insurance Co.; American Zurich Insurance Company; Assurance Company of America; Colonial American Casualty & Surety Co.; Fidelity & Deposit Co. of Maryland; Maryland Casualty Company; Northern Insurance Co. of New York; Universal Underwriters Insurance Co.; and Zurich American Insurance Company.
The three Pennsylvania Manufacturers insurers are: Manufacturers Alliance Insurance Company; Pennsylvania Manufacturers' Association Insurance Company; and Pennsylvania Manufacturers Indemnity Company.
The fourteen CNA companies are: American Casualty Company of Reading, PA; Continental Casualty Company; Continental Insurance Company; National Fire Insurance Company of Hartford; Transcontinental Insurance Company; Transportation Insurance Company; Valley Forge Insurance Company; Buckeye Union Insurance Company; Fidelity & Casualty Company of NY; Firemen's Insurance Company of Newark, NJ; Glenn Falls Insurance Company; Kansas City Fire and Marine Insurance Company; National-Ben Franklin Insurance Company; and Niagara Fire Insurance Company.
The investigation and settlement negotiations were led by Special Deputy Attorney General for Consumer Frauds & Protection Joy Feigenbaum, Assistant Attorney General Melvin Goldberg, Special Counsel Carolyn Fast of the Bureau of Consumer Frauds & Protection, and Deputy Bureau Chief Jeffrey Powell, under the supervision of Executive Deputy Attorney General for Economic Justice Maria Vullo and Deputy Attorney General for Economic Justice Michael Berlin. Financial Management Director Mary Beth Woods and General Counsel Kenneth Munnelly of the Workers' Compensation Board also assisted in the case.