Beacon Mutual insurance Co., which writes workers compensation for about 90 percent of the businesses in Rhode Island, has filed for a 16 percent reduction in rates to cover its workers compensation loss costs.
A company spokesman said that if approved by state officials the reductions would begin in September and produce about $9.2 million in premium savings for its 14,500 customers.
The pricing move comes after last month’s withdrawal by the insurer of a separate filing for a 27 percent loss cost cut and ends at least temporarily a stalemate between the company and state regulators.
The Department of Business Regulation, which must approve any filing, has been battling with Beacon Mutual over rate filings. DBR officials want Beacon Mutual to file along with the National Council on Compensation Insurers, which represents all other insurers in the state in rate proceedings.
But Beacon Mutual has balked at using NCCI advisory filings, arguing that it should be able to utilize its own loss costs.
Now the insurer, which has come under increasing scrutiny for its governance following public attacks by the Governor and the release of an outside audit that revealed questionable business practices, has decided to go along with the DBR. It has filed a loss cost multiplier and agreed to adopt the most recent NCCI approved advisory loss costs.
DBR officials have approved NCCI loss cost reductions of 4.2 percent and 20.2 percent within the past year. Beacon Mutual had declined to be a party in those NCCI rate proceedings but has now adopted them.
After adjusting these most recent NCCI filings for its own business and classifications, the result for Beacon is the16 percent reduction from current loss costs. If approved, the change would be the first for Beacon Mutual since March 1999.
“It was important to get a rate filing adopted this year,” said Bill Fischer, spokesman for the company which has been operating under mostly new senior management since the April audit report was released.
Fischer maintained that the company management is “moving forward” in the wake of the controversies. He said the insurer now has “good relations” with DBR and is cooperating with a DBR audit of the firm.
In April, an audit released by a committee headed by former Governor Lincoln Almond said the company had given improper price breaks to favored policyholders at the expense of other customers.
Shortly after the audit became public, the board fired its CEO, Joseph Solomon, and its vice president for underwriting.
Gov. Don Carcieri has been waging a campaign in the press and courts to remove board members. Several have heeded the Governor’s call to resign but two are fighting to retain their positions.
A statewide grand jury has subpoenaed company records and the DBR and state attorney general are reviewing the company’s rate-setting practices, including whether certain brokers and clients received favorable treatement.
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