California Dept of Insurance statement on Berkshire Subsidiary

[gfp]

http://www.insurance.ca.gov/0400-news/0100-press-releases/2016/release066-16.cfm

[Grenville]

Thank you for posting!

 

I'm curious to hear Berkshire's response. Seems odd not filing the policy with the state commissioner...

 

Found this article in the WSJ today:

"Regulator Faults Berkshire Hathaway Insurance Unit"

http://www.wsj.com/articles/regulator-faults-berkshire-hathaway-insurance-unit-1466444329

 

“The company strongly disagrees with the commissioner’s decision and intends to vigorously pursue all legal avenues,” said a person authorized to speak on behalf of Applied Underwriters.

[LC]

I'm all for uncovering the shadier side of Berkshire, but can anyone explain the following to me:

 

The insurance company later had one of its affiliates—another Berkshire Hathaway entity—sell Shasta Linen a second insurance policy called EquityComp, which is not a traditional guaranteed cost workers' compensation insurance policy. This second insurance policy was a retroactive non-linear insurance policy, which adjusted the rates paid based on current loses and provided no experience modification of rates based on the employers' claims experience.

 

Did they have a gun to this business's head? Why just, you know, not buy the shitty policy?