New Applied Underwriters / CIC Employer Claim Deadlines

The San Mateo Superior Court has a February 2nd hearing to approve the Conservator’s proposed rehabilitation plan for Applied Underwriters’ California Insurance Company. If the plan is approved as expected, it will set in motion a 60-day process for employers to file a claim with the Court.

The rehabilitation plan includes three options (see below) for resolving disputes between policyholders and CIC. A policyholder could opt out of a settlement to pursue its own litigation if it so chooses. But the proposal calls for an independent consultant to be appointed to oversee the settlement calculations to determine if the policyholder or CIC is owed any monies.

Revisiting some of these policies may be a good way for brokers to connect or reconnect with former clients, says one Southern California broker.

Attorney Larry Lichtenegger, based in Salinas, who represents many of the policyholders with claims currently pending against CIC, notes that the deal would give policyholders up to 60-days to file a claim. The notice will be issued following approval of the rehabilitation plan by the courts.

“There’s a provision so that employers who were in EquityComp or SolutionOne programs can file a claim even though they have not previously been in litigation with Applied and CIC. So any policyholder can file a claim up to a deadline that is still to be determined,” says Lichtenegger. “There’s a process laid out in the rehabilitation plan, and they probably should contact an attorney to do that for them.”

3 Settlement Options

The claimant will have a choice between three different legal remedies under the proposed rehabilitation plan. Each of the remedies includes cancellation of the money Applied claims it is owed under the EquityComp or SolutionOne reinsurance participation agreement the California Department of Insurance found to be illegal and unenforceable.

Lichtenegger says the proposal includes these alternatives:

(1) to pay the premiums under the existing guaranteed cost policy [issued by CIC] or get a refund if there was an overpayment

(2) to pay a premium under what is determined to be a standard Retrospective Rating Plan based on California’s ‘Cal-Retro Plan’or receive a refund for overpayment

(3) to enforce what Applied proposed under its solicitation document called its ‘Program Summary and Scenarios,’ or receive a refund for overpayment.

Lichtenegger says, “Each remedy is different and, depending on an analysis and therefore the choice of the insured, will give substantially different returns.” Lichtenegger has a mathematical model to calculate the outcomes.

The options are explained in greater detail in the Conservator’s proposed rehabilitation plan, which is available in our Resources section or by clicking here Lichtenegger can be reached at 831-601-2801.

Applied Underwriters was once but is no longer an affiliate of Berkshire Hathaway. Applied’s management bought it. Berkshire Hathaway bears no responsibility for any of the events which have transpired involving Applied Underwriters’ or its subsidiaries including California Insurance Company.