Insurers to pay NY nearly $120 mln workers comp overcharge

NEW YORK | Fri Dec 31, 2010 4:39pm EST

NEW YORK Dec 31 (Reuters) – Four insurance groups have agreed to pay the state of New York nearly $120 million because their companies collected too much in surcharges related to workers compensation, the state Attorney General’s office said on Friday.

Under the settlements, the ACE companies, part of the Swiss ACE Ltd (ACE.N) group, have agreed to pay $70 million. The Zurich companies, part of Zurich Financial Services AG (ZURN.VX), agreed to pay $37.5 million.

The Pennsylvania Manufacturers companies agreed to pay $5.9 million and the CNA companies, part of CNA Financial Corp (CNA.N), will pay $5.75 million, the Attorney General’s office said.

Among the 10 Ace insurers are Pacific Employers Insurance Co and ACE American Insurance Co. The nine Zurich insurers include Northern Insurance Co of New York and American Zurich Insurance Co. The 14 CNA companies include Buckeye Union Insurance Co and National Fire Insurance Co of Hartford

The three Pennsylvania Manufacturers insurers are Manufacturers Alliance Insurance Co., Pennsylvania Manufacturers’ Association Insurance Co and Pennsylvania Manufacturers Indemnity Co.

The Workers’ Compensation Board charges annual fees to workers’ compensation insurers, who cover the fees by charging policyholders a surcharge on premiums.

Beginning in 2000, the board used a different calculation than the one used to determine the surcharges to policyholders. As a result, some insurers including ACE, Zurich, Pennsylvania Manufacturers and CNA collected too much from 36 of their member insurance companies.

A change in the law in 2009 and 2010 allowed the state to recover the excess funds that the insurers had collected.

The companies fully cooperated with the investigation, the Attorney General office said.

“These four groups of insurance companies have done the responsible thing by agreeing to resolve their disputes with the State,” Attorney General Andrew Cuomo, slated to be sworn in as governor on Friday evening, said in a statement. “Other insurers who still retain excess funds should follow their lead or they will be brought to justice.”

Representatives of ACE and Pennsylvania Manufacturers were not available for comment. A spokesman for Zurich in an email confirmed the agreement. A CNA spokeswoman did not immediately return a phone call. (Reporting by Ilaina Jonas; Editing by Gary Hill)