Roxborough Comments in Workers’ Comp Executive Article About New Oder Barring Applied Underwriters’ EquityComp Program

Workers’ Comp Executive recently reached out to Nicholas Roxborough to comment on the new cease and desist order signed by California Insurance Commissioner Dave Jones, barring Applied Underwriters from selling its EquityComp program in California.

Roxborough told Workers’ Comp Executive that, “the Order provides additional evidence that Applied has engaged in wrongdoing. It provides exquisite foundational evidence for existing lawsuits, and on a going forward basis, it may provide some sort of assurance that Berkshire may act properly like other carriers.”

The order also prevents Applied from enforcing its unusually high runoff loss development factors, or LDFs, and other important provisions in its existing unfiled and unapproved reinsurance participation agreements (RPAs) in California. It calls for CDI and Berkshire actuaries to come up with an acceptable set of LDFs that will apply to policies and RPAs.

“The devil is in the details,” Roxborough warned. “Applied Underwriters’ is changing things and modifying the LDFs etc. shows that it acknowledges some problems. It will be very helpful in the courts.”For California employers involved in disputes with Applied, Roxborough reminded them of the provision requiring that arbitrations under current and past RPAs will now take place in California, rather than out of state. The matter of enforcing arbitration, which is not always advantageous for employers, is currently at the court of appeal, he said.

“Fortunately, this issue remains at the court of appeal for both the CDI and our client Luxor Cabs who already – and successfully – argued that the arbitration clauses are unenforceable as a matter of law.”

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