Bloomberg) -- Applied Underwriters, aworkers’ compensation insurer owned by Warren Buffett’s BerkshireHathaway Inc., agreed to provide additional disclosure to customersabout a product in California after a state review of potentialabuses.

The deal requires Applied Underwriters “to stop thebait-and-switch marketing tactics used to sell a workers’ compensation insurance product, whichled to numerous complaints from employers caught up in the costlyand complicated policies,” the CaliforniaDepartment of Insurance said Thursday in a statement.

Wave of litigation

Applied is facing a wave of litigation over products where thecosts to employers could vary based on their claims. Dozens ofbusinesses allege the insurer peddled plans that regulators hadn’tapproved. They also complain about being surprised by large billsbased on formulas that stacked the deck in Applied’s favor.Regulators in Vermont and Wisconsin have outlawed some of thecompany’s plans.

The insurer has said its coverage saves employers money and thatcustomers were aware of the terms. Companies that are litigatingaccount for only about one in 400 policies sold, Jeffrey Silver,Applied’s lawyer, told Bloomberg News for a story published inNovember. The plans didn’t work out in their favor because they hadclaims that caused costs to go up, he said. They’re now “takingadvantage of a regulatory situation” to avoid paying what they owe,according to the lawyer. About 90% percent of employers renew,Silver said.

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