Two California companies ordered to stop selling insurance policies
News: 2017 Press Release
SACRAMENTO, Calif. — California Insurance Commissioner Dave Jones today issued a Decision and Order requiring a central valley company and its affiliates to stop selling workers' compensation and liability policies because it is not properly licensed with the Department of Insurance.
"My Decision protects California employers who unknowingly purchase insurance from companies that are not licensed by the California Department of Insurance," said Insurance Commissioner Dave Jones. "Companies not properly licensed to transact insurance in California place policyholders at risk because the companies have not met the scrutiny required under state law. These unlicensed entities dangerously undermine consumer protections established by California law."
In October of 2016, the Department of Insurance issued a Cease and Desist Order against the Agricultural Contracting Services Association, Incorporated and its affiliates, the American Labor Alliance and CompOne USA, and Board Chair Marcus Asay. The order alleged they were soliciting, marketing, selling, and issuing to employers statewide what the company claims are valid workers' compensation policies, when in fact the department's Investigation Division found the entities were not properly registered with the regulator and were transacting insurance without proper authority.
The company challenged the department's Cease and Desist Order. After a full evidentiary hearing, Commissioner Jones issued his Decision and Order, affirming the department's 2016 Cease and Desist Order, ordering that the company must continue to refrain from selling insurance policies in California. As part of his order, Jones made the Decision Precedential, which allows future cases to rely on the ruling in this case—sending a clear message that such unlicensed transactions are not permissible in California.
"Employers who purchased insurance from American Labor Alliance or CompOne USA are likely at great financial risk," added Jones. "Employers must protect themselves, their employees, and their business by checking with the Department of Insurance to verify the company and agent or broker's license is valid and the policy they purchased is also valid."
Employers transacting business with Agricultural Contracting Services Association, Inc., American Labor Alliance, or affiliate CompOne USA, should contact the Department of Insurance Investigation Division at 661-253-7500 for assistance in determining the validity of their workers' compensation coverage.
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Media Notes:
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Pursuant to California Insurance Code section 12921.8, the Commissioner may also impose a monetary penalty which shall be the greater of five times the amount of money received by the company for which the license was required, or five thousand dollars ($5,000) for each day the company transacted insurance without a license.
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Link to Federal Department of Labor information on Multiple Employer Welfare Arrangement under the Employee Retirement Income Security Act: http://bit.ly/2zIAwRt
Led by Insurance Commissioner Ricardo Lara, the California Department of Insurance is the consumer protection agency for the nation's largest insurance marketplace and safeguards all of the state’s consumers by fairly regulating the insurance industry. Under the Commissioner’s direction, the Department uses its authority to protect Californians from insurance rates that are excessive, inadequate, or unfairly discriminatory, oversee insurer solvency to pay claims, set standards for agents and broker licensing, perform market conduct reviews of insurance companies, resolve consumer complaints, and investigate and prosecute insurance fraud. Consumers are urged to call 1-800-927-4357 with any questions or contact us at www.insurance.ca.gov via webform or online chat. Non-media inquiries should be directed to the Consumer Hotline at 800-927-4357. Teletypewriter (TTY), please dial 800-482-4833.
