Sacramento, CA – The California Department of Insurance recently announced a settlement with Zurich American Insurance Company and Zurich American Insurance Company of Illinois over the improper use of workers’ compensation insurance agreements. Zurich’s agreements forced California employers to arbitrate commercial disputes in Chicago where Zurich is headquartered and also required the application of New York law. Under the settlement, California employers can choose to arbitrate disputes in California under California law.
“Zurich’s practices required California employers to resolve disputes in Zurich’s backyard, under unfavorable law and circumstances and at added expense to employers,” said Commissioner Jones. “This settlement gives California employers the opportunity to level the playing field by arbitrating disputes in California, under California law.”
The Department filed an order to show cause against Zurich in 2012, asserting Zurich failed to file workers’ compensation large deductible agreement forms with the department as required by the California Insurance Code.
Zurich never filed its large deductible agreements for review, even after the department advised all insurers in 2011 that filing was required. Zurich’s agreements were generally offered on a take it or leave it basis to employers. The agreements also required that New York law apply to disputes, and disputes be resolved in Chicago, regardless of whether the employer’s business was based entirely in California.
A copy of the settlement is available here: CA DOI and Zurich Settlement (PDF)
Source: CA DOI