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Beacon Mutual Insurance Co.

Beacon, RI: (Aug-20-07) A group of Rhode Island companies brought a lawsuit against Beacon Mutual Insurance Co., alleging that the insurer kept policyholders' money by offering discounts to favored policyholders, spending lavishly on golf trips, building up huge surpluses, and enriching their executives. Beacon, the state's dominant workers' compensation insurer, is a nonprofit mutual insurance company that provides coverage to about 15,000 policyholders, or roughly 90% of all employers in Rhode Island. A state market conduct examination of Beacon's business practices released on Aug. 2, 2007 revealed that Beacon, for years, gave discounted rates to favored policyholders, plied insurance agents with unearned commissions, and spent lavishly on fancy golf trips and executive perks.

In a settlement reached, Beacon signed a consent order with state regulators in which it agreed to refund policyholders $7 million. Additionally, it agreed to pay the state a fine of up to $2.5 million, or $1 million if they comply with all the recommendations. In a recent development, the group of Rhode Island companies that purchased workers' compensation insurance from Beacon Mutual Insurance Co. is seeking a court order to stop a state-approved plan to refund policyholders $7 million. Instead, the plaintiffs are demanding that a jury decide the amount of compensation, including monetary damages. [PROVIDENCE JOURNAL: WOKERS COMPENSATION INSURANCE]


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Published on Aug-22-07


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