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W.R. Berkley Corporation entities and operating unitshave reached a $12 million settlement with the CaliforniaDepartment of Insurance (CDI). 

Admiral InsuranceCompany, Admiral Risk Insurance Services, Inc. n/k/a/ BXMInsurance Services, Inc., and other entities agreed to settleallegations of licensing violations and unlawfully transactingsurplus line insurance in California. 

Consumer protection laws

"Businesses and individual consumers should have confidence thatcompanies selling insurance in California are doing so incompliance with our consumer protection laws," said Dave Jones, thecommissioner of the CDI. "Our enforcement action has resulted inAdmiral and W.R. Berkley Corporation paying a substantial monetarysettlement for their licensing violations and ensures that they arenow complying with all of California's insurance laws andregulations. Failure to continue compliance will result inadditional automatic penalties and sanctions." 

The case came to the CDI as a referral from the Surplus Line Associationof California. The original parties involved AdmiralInsurance Company, an operating unit of W.R. Berkley Corporation;Admiral Risk Insurance Services, Inc.; and three of Admiral Risk'snow-former employees.

Investigation began in 2011

The CDI said that it began its investigation in 2011 and foundthat Admiral Risk and its employees had transacted surplus lineinsurance without holding requisite surplus line broker licensesfrom approximately November 2003 through June 2011. Further,according to the CDI, Admiral Risk had impermissibly acted as amanaging general agent for affiliated company Admiral InsuranceCompany, an insurer not admitted to transact business inCalifornia. 

The CDI said that after it began its investigation, Admiral Riskand its employees obtained the necessary licensing. W.R. BerkleyCorporation later hired outside counsel to conduct an independentreview of its operations, and self-disclosed compliance issues tothe CDI.

'Taken the right steps' 

"As California's largest consumer protection agency, we mustensure that consumer protections laws are followed," addedCommissioner Jones. "The department's duties also include helpingcompanies come into compliance. W.R. Berkley Corporation has takenthe right steps toward remediating its formerpractices." 

The settlement agreement specified thatAdmiral Risk Insurance Services, Inc. n/k/a/ BXM InsuranceServices, Inc., in lieu of license suspension, would pay a monetarysettlement of $1.5 million and also pay a cost recovery fee of$42,500 to reimburse the CDI for expenses incurred. AdmiralInsurance Company would pay the same monetary settlement and costrecovery fees. 

$6 million suspended for self-reporting & remedialaction

W.R. Berkley Corporation also agreed to pay a $9 millionsettlement and $15,000 for cost recovery. In recognitionof the self-reporting and remedial actions already implemented byW.R. Berkley Corporation, the settlement provided that $6 millionof the settlement was suspended.

The $12 million settlement was one of thelargest penalties for licensing violations ever assessed in theCDI's history.

Steven A. Meyerowitz, Esq., is the directorof FC&S Legal, the editor-in-chief of the InsuranceCoverage Law Report, and the founder and president of MeyerowitzCommunications Inc. Email him at [email protected]. 

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