Arch to repay $5.3m in overcharged premiums
A subsidiary of Bermudian-based Arch Capital will refund $5.3 million in overcharged insurance premiums to hundreds of volunteer firefighter companies in New York state.
Arch Insurance will also a pay a $1 million fine to the state after an investigation by New York's Department of Financial Services of the firm's accident and health policies.
National Union Fire Insurance Company of Pittsburgh, an affiliate of AIG, also agreed to refund nearly $3 million in overcharged premiums to hundreds of fire and ambulance volunteer companies and pay a $1.2 million fine.
The policies covered volunteers who were hurt or disabled while performing firefighting or emergency duties between 2011 and 2017.
Over the seven-year period, Arch issued 3,332 policies to 628 New York volunteer firefighter companies, according to the Consent Order, published by the DFS.
Under state law, the minimum loss ratio for such policies should be 60 per cent. Arch “consistently maintained minimum loss ratios in the high 20 per cent to low 30 per cent range”, the document states. National Union was achieving similar ratios for its policies.
As a result, the volunteer companies were paying “for coverage that did not bear a reasonable relationship to the benefits provided under the policies”, Financial Services superintendent Maria T. Vullo said.
Arch has since updated its blanket accident and health policies for the companies and has received approval from the DFS.
In addition to paying the refunded premiums and fines, both Arch and National Union agreed to report their premium and claims history to the DFS for the next five years.
Greg Hare, a spokesman for Arch, told The Royal Gazette: “Arch Insurance Company has been and remains committed to serving the needs of New York firefighter companies. We are happy to have worked with the New York State Department of Financial Services to resolve this matter.”