Dover, DE – Delaware Insurance Commissioner Karen Weldin Stewart today announced action taken with respect to workers compensation insurance rates and loss costs effective December 1, 2012.

Commissioner Stewart approved an amended filing submitted by the Delaware Compensation Rating Bureau, Inc. (DCRB) which proposed an overall average increase of 14.6 percent in voluntary market loss costs and 19 percent in residual market rates.

The DCRB made an initial filing in August.  That filing was the subject of an intensive review performed under the direction of the Delaware Department of Insurance.  Two independent actuarial firms were hired to prepare reports in response to the DCRB filing.  A Target Examination of the DCRB’s data collection processes was conducted (which found the DCRB’s processes to be sound).  Public information sessions were held in Wilmington, Dover and Georgetown.  Written public comments were requested and received.  Finally, a public hearing was held, which provided opportunity for Delaware citizens, and representatives of Delaware businesses and local governments, to appear and offer comments.

The residual market rates and voluntary market loss costs that are included in the DCRB’s amended filing were approved after consideration of all available information, including public input.  The rates and loss costs in the amended filing are lower than those in the initial filing, which proposed an average increase of 43.5 percent in the residual market and 38.3 percent in the voluntary market loss costs. They are also significantly lower than the rates and loss costs recommended by the two independent actuarial firms. Commissioner Stewart stated “I recognize that any rate increase in the workers’ compensation system is going to be tough on businesses during this economic climate. The amended rates I approved were the best balance between the several considerations that bear on the workers compensation filing. Using the 2010 policy year, the range of savings between the DCRB original filed amount and the approved amount is estimated to be more than $22 million dollars.

Commissioner Stewart further stated, “I look forward to continuing dialogue and cooperation between the Department of Insurance, the Department of Labor, the Health Care Advisory Panel, the DCRB and other interested parties to better understand the Delaware workers compensation system and to identify potential opportunities to make that system more efficient and effective in serving all of the key constituencies of the Delaware workers compensation system.”

For businesses that are not currently enrolled in the Workplace Safety Program and would like to learn about additional savings in workers’ compensation costs; please contact the Office of Workplace Safety at the Delaware Department of Insurance at 302-674-7378.

Dover – The Delaware Department of Insurance will be conducting public information sessions regarding the rate increase proposed by the Delaware Compensation Rating Bureau (DCRB). The purpose of these sessions is to inform the public on the process as it pertains to the rate filing of the DCRB (Workers’ Compensation). Members of the DCRB and two independent actuaries, contracted by the Delaware Department of Insurance, will be present for comment.

The Public Information Sessions will be held on:

Wednesday, October 24, 2012 -6:00 pm-8:00pm
Carvel State Building
820 North French Street- Mezzanine Level
Wilmington, DE 19801

Tuesday, October 30, 2012 -4:00 pm-6:00pm
Delaware Department of Insurance
841 Silver Lake Blvd.
Dover, DE 19904

Tuesday, October 30, 2012 -7:00 pm-9:00pm
The Cheer Community Center
20520 Sandhill Road
Georgetown, DE 19947

The DCRB filing that requests an increase in workers’ compensation rates was filed with the Department. The Department is charged with reviewing and evaluating the filing in accordance with statutory standards. The Department has retained two independent actuaries and an expert on rating bureau matters to assist with that evaluation. Insurance Commissioner, Karen Weldin Stewart has appointed the Honorable Joshua W. Martin, III as Hearing Officer to conduct a public hearing on the DCRB request, to be held on November 20, 2012, and to prepare a report containing recommended findings of fact and conclusions of law for the Commissioner. Based on the hearing officer’s report and the entire hearing record, the Commissioner then must issue a final order determining whether the requested rates are excessive, inadequate, or unfairly discriminatory.

Commissioner Stewart is statutorily prohibited from commenting on this matter in advance of a public hearing and is steadfast on educating the public on this process. The Commissioner has posted the two independent actuarial reports on the Department website at www.delawareinsurance.gov. Commissioner Stewart agrees with the Markell Administration which stated that “the proposed rate increase deserves critical analysis and substantial public attention”.

Insurance Commissioner Karen Weldin Stewart Applauds Resolution of AIG Workers Compensation Premium Tax Inaccuracies

Dover – Delaware Insurance Commissioner Karen Weldin Stewart announced today that Delaware, as a lead state, will receive one million, eight hundred and twenty thousand and two hundred and ninety-seven dollars ($1,820,297) from AIG and its workers compensation insurance affiliates. The payment is part of an agreement in which AIG will pay a $100 million penalty to insurance regulators in all 50 states and the District of Columbia for alleged premium under-reporting under a settlement announced today by Commissioner Stewart and the regulators of the other seven lead states who led the examination. The company will also pay approximately $46.5 million in additional taxes and assessments. This resolves a multi-state probe that examined whether AIG violated premium reporting rules governing workers compensation insurance.

The multi-state examination was led, along with Delaware, by Florida, Indiana, Massachusetts, Minnesota, New York, Pennsylvania and Rhode Island. All the other states and the District of Columbia are Participating States. The scope of the examination was AIG’s writing and financial reporting of workers compensation insurance. The Examination found noncompliance with financial reporting laws. Most significantly, it found that the Company misreported $2.12 billion of workers compensation premium that was reported instead as general or commercial automobile liability premium.

Under the terms of this settlement, AIG will:

• pay a $100 million fine to be apportioned among all the participating states;
• pay approximately $46.5 million in additional taxes and assessments;
  enter into a compliance plan containing agreed-upon specific steps and standards for evaluating AIG’s ongoing compliance with
• workers compensation insurance rating and reporting requirements;
• submit to periodic internal and state monitoring and a confirmatory examination at the end of 24 months; and
• agree to pay a contingent potential fine of up to $150 million if AIG fails to meet the terms of the compliance plan.

Commissioner Stewart stated, “Accurate company financial data is an essential ingredient of proper insurance regulation. While, in these difficult economic times, the revenue coming to the state as a result of this agreement is important and necessary, what is equally critical is the role that state regulation played in insuring that the public interest is well served.”