Oklahoma Insurance Commissioner Kim Holland announced the largest fine of an insurance company in state history – $400,000 – against eleven AIG insurance companies doing business in the state.
The companies were hit with the fine because of inaccurate reporting of workers’ compensation information, the announcement said.
“It is imperative that insurance companies report information as accurately as possible in order to promulgate credible worker’s compensation loss costs,” said Holland. “Accurate information is essential to both correctly price and to properly protect the consumer.”
The companies reportedly failed to transmit information required by statute and requested by the workers’ compensation rating organization, the National Council on Compensation Insurance Inc. (NCCI). NCCI is licensed by the Oklahoma Insurance Department to collect financial data from insurance companies to provide accurate statistical information to determine loss costs and rates for workers’ compensation insurance policies.
“It is possible these reporting discrepancies resulted in Oklahoma consumers paying too much for worker’s compensation insurance. It is also possible that this resulted in consumers paying artificially lower rates that did not provide an accurate picture of a company’s financial solvency,” added Holland.
Financial data calls to AIG from 1998 through 2003 for Oklahoma showed numerous discrepancies including a more than $13 million difference in premiums reported. Additionally, NCCI was unable to use the companies’ financial data in promulgating 2005 loss costs because of late filing and data quality issues, Holland said.
“These reporting irregularities not only impact the rates of AIG companies, but those of every insurance company writing workers’ compensation products in the state,” said Holland. “Rates are actuarially computed based on aggregated data collected from all insurance companies doing business in Oklahoma.”
According to the Associated Press, Holland said the fine, which was paid by AIG, would go to the department’s revolving fund for general operations.
AIG spokesman Joe Norton told the AP the company continues to “work with NCCI and the Oklahoma (Insurance) Department to fully comply with current and future data calls.”
AIG has completed the first phase of a data remediation plan for states using NCCI data, the company said.
Sources: Oklahoma Insurance Department, Associated Press
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