Commissioner’s enforcement action against W.R. Berkley Corporation results in multi-million dollar settlement
News: 2017 Press Release
Admiral Insurance Company, Admiral Risk Insurance Services, Inc. nka BXM Insurance Services, Inc., and other self-disclosed entities agreed to settlements for licensing violations and unlawfully transacting surplus line insurance in California.
"Businesses and individual consumers should have confidence that companies selling insurance in California are doing so in compliance with our consumer protection laws," said Insurance Commissioner Dave Jones. "Our enforcement action has resulted in Admiral and W.R. Berkley Corporation paying a substantial monetary settlement for their licensing violations and ensures that they are now complying with all of California's insurance laws and regulations. Failure to continue compliance will result in additional automatic penalties and sanctions."
The case came to the California Department of Insurance as a referral from the Surplus Line Association of California (SLA). The original parties involved Admiral Insurance Company, an operating unit of W.R. Berkley Corporation; Admiral Risk Insurance Services, Inc.; and, three of Admiral Risk's now-former employees. The department began its investigation in 2011 and found that Admiral Risk and its employees transacted surplus line insurance without holding requisite surplus line broker licenses from approximately November 2003 through June 2011. Further, Admiral Risk impermissibly acted as a managing general agent for affiliated company Admiral Insurance Company, an insurer not admitted to transact business in California.
After the department began its investigation, Admiral Risk and its employees obtained the necessary licensing. W.R. Berkley Corporation later hired outside counsel to conduct an independent review of its operations, and self-disclosed compliance issues to the Department.
"As California's largest consumer protection agency, we must ensure that consumer protections laws are followed," added Jones. "The department's duties also include helping companies come into compliance. W.R. Berkley Corporation has taken the right steps toward remediating its former practices."
The settlement agreement specifies that Admiral Risk Insurance Services, Inc. nka BXM Insurance Services, Inc., in lieu of license suspension, will pay a monetary settlement of $1.5 million and also pay a cost recovery fee of $42,500 to reimburse the Department for expenses incurred. Admiral Insurance Company will pay the same monetary settlement and cost recovery fees for its actions.
W.R. Berkley Corporation has also agreed to pay a $9 million settlement and $15,000 for cost recovery. In recognition of the self-reporting and remedial actions already implemented by W.R. Berkley Corporation, the settlement provides that $6 million of the settlement is suspended.
- Signed Settlement Order
- Stipulation and Waiver
- Accusation served on Admiral Risk Insurance Services et al
- Order to Show Cause served on Admiral Insurance Company et al
- The $12 million settlement marks the largest assessed by any commissioner against W.R. Berkley Corporation and one of the largest penalties for licensing violations ever assessed in the Department's history.
- Surplus line insurance transactions involve placement of insurance by a licensed surplus line broker with a nonadmitted insurer–an out-of-state insurer not licensed to transact in California–on behalf of a person whose home state is in California. Surplus line insurance is typically specialty insurance that is difficult to obtain in a customer's home state. The SLA maintains a list of eligible surplus line insurers. Surplus line brokers must act in the best interests of the client as a broker and not as an agent acting on behalf of a particular insurer.
- The suspended portion of the monetary settlement will be reinstated if W.R. Berkley Corporation fails to confirm continued compliance with licensing and regulatory mandates based on an examination as soon as reasonably possible to verify information in the self-disclosure report and an examination no sooner than 24 months from the date of the Commissioner's signed Order and no later than 36 months from such date to review licensing compliance and review conduct of surplus line business.
- Monetary settlement amounts go to California's general fund; cost recovery amounts only reimburse the Department for expenses.
The California Department of Insurance, established in 1868, is the largest consumer protection agency in California. Insurers collect $310 billion in premiums annually in California. Since 2011 the California Department of Insurance received more than 1,000,000 calls from consumers and helped recover over $469 million in claims and premiums. Please visit the Department of Insurance website at www.insurance.ca.gov. Non-media inquiries should be directed to the Consumer Hotline at 800.927.4357. Telecommunications Devices for the Deaf (TDD), please dial 800.482.4833.