Oregon Fines AIG On WC Violations

The Oregon Department of Consumer and Business Service on Thursday imposed a $5 million fine on nine insurers in the American International Group for violations of Oregon insurance and workers' compensation laws–some of them dating back to 1985.

According to a DCBS statement, AIG must pay $1 million of the fine within 45 days. DCBS has suspended the remaining $4 million and will withdraw or impose it next year, depending on whether the companies meet certain conditions.

AIG has agreed to the fine and the conditions.

DCBS cited the AIG companies for failing to comply with Oregon laws for processing claims of injured workers and reporting proof of insurance coverage.

For example, the companies have failed to meet state standards in such areas as timely payment of medical benefits to injured workers and accurate reimbursements of costs for related services.

DCBS Director Cory Streisinger said injured workers depend on their insurance carriers to pay claims accurately and on time, and other major carriers succeed in doing so. “AIG hasn't lived up to the standards Oregon injured workers are entitled to expect, and it's our job to hold them accountable,” she said.

DCBS also cited the AIG companies for using insurance policy forms that had not been approved by the state. Advance approval of policy forms by DCBS is required to protect workers and ensure that policies comply with Oregon regulations.

In addition, DCBS found that the AIG companies failed to accurately report workers' comp premiums and claims data, which the department uses to develop the base rates employers pay to cover their workers. Premium information is used to calculate each insurer's assessments to fund parts of the state workers' comp system.

AIG's inaccurate reporting led to an underpayment of required assessments, and in addition to the fines imposed, AIG has paid DCBS approximately $3 million in previously unpaid assessments and interest, according to DCBS.

AIG is the third-largest provider of workers' comp insurance in Oregon. Member companies covered by the Oregon settlement are AIU Insurance Company, American Home Assurance Company, AIG Casualty Company, Commerce and Industry Insurance Company, Granite State Insurance Company, Illinois National Insurance Company, National Union Fire Insurance Company of Pittsburgh PA, New Hampshire Insurance Company, and The Insurance Company of the State of Pennsylvania.