Thursday, February 28, 2019

Applied Underwriters Up For Sale

Warren Buffett's Berkshire Hathaway has announced it is putting up for sale their Workers Comp specialty insurer, Applied Underwriters. The official story given is that Applied Underwriters competes with other Berkshire Hathaway insurers that sell Workers Compensation insurance.

Hmmm. Yeah. If you say so, Warren. But I have my doubts.

See, Applied Underwriters has sold a ton of policies to small business that could be viewed as less than understandable. Many of the businesses that purchased Applied Underwriters policies have felt that the premium charges sought by Applied were way, way higher than the salesmen had ever indicated they could be.

Our own analysis of some of these complicated policies has found that some of these policies were virtually incomprehensible in terms of explaining how premium charges would ultimately be computed. These policies have generated a number of law suits and some official disapproval from insurance regulators.

So maybe, just maybe, Berkshire Hathaway decided that it would be better if Applied Underwriters became someone else's headache. I could be wrong. But not entirely, I suspect.

Wednesday, January 2, 2019

First "Shock Audit" Call of 2019

Well, that didn't take long. At 8:46 am, Central time, I received our first "Shock Audit" phone call of 2019, from a small roofing company in New Jersey. The owner has been on the receiving end of a Workers Comp Shock Audit because his insurance company has insisted on placing his payroll into the roofing classification even though, for the time period in question, he was desperately fighting cancer, going through chemo, getting a bone marrow transplant, and quite unable to be going up on roofs. The good news is that treatment was successful and he is no longer enduring the terrible trials involved in fighting that devastating disease. But he is still enduring the trial of an insurance company insisting it is owed large amounts of money that no sane person would agree with.

That's why we call them "Shock Audits"--these tend to strike a business with significant additional premium charges that were not, could not have been, anticipated based on the original policy premium or on the basic facts of the situation. Small businesses tend to be particularly vulnerable to these, although they can strike a business of just about any size. We've helped policyholders ranging from small machine shops on up to an NFL team and Fortune 500 type companies, all of which were subject to Shock Audit charges. I am pretty damn sure we can help this gentleman. We will certainly do our utmost.