California Insurance Commissioner Accuses Berkshire Hathaway Insurer Of Scheme To Circumvent Regulations

The California Insurance Commissioner ruled against California Insurance Company, a Berkshire Hathaway Inc (NYSE: BRK-A) workers’ compensation insurer.

The ‘Scheme’

The commissioner claims that California Insurance Company filed one set of rates and policies with the Department of Insurance but then sold California businesses different policies through another Berkshire Company, with rates and terms different from those first filed.

The second set of rates in each case was never submitted for review as the law requires, and the terms generally shifted the risk of claims back to the businesses themselves, effectively making the businesses self-insured.

The Decision

As a result of the Commissioner’s findings, California Insurance Company is ordered to repay premium amounts paid in excess of the rates under the policies that were filed.

The department will evaluate other policies and rates sold by Berkshire Hathaway companies, possibly leading to further action by the Commissioner up to and including potential penalties.

The department says it found that other state departments of insurance are also seeking to prohibit the sale of similar insurance policies from Berkshire companies.