NU Online News Service, July 21, 4:02 p.m. EDT
Policyholders suing American International Group (AIG) over alleged excessive workers' compensation rates can continue to do so, the Supreme Court of South Carolina has ruled.
The U.S. District Court for the District of South Carolina had asked the state Supreme Court to determine if a state rate doctrine prohibited the lawsuit against AIG filed by Temporary Services Inc. and Charleston Steel and Metal Company.
The rate doctrine states that because a state agency has the authority to determine rates, courts cannot judge what a reasonable rate should be in a collateral lawsuit, according to court records.
However, the state Supreme Court ruled the policies at issue in the case were exempt commercial policies--part of the state's assigned risk program--and therefore the doctrine does not apply.
The companies allege AIG fraudulently charged excessive workers' compensation premiums, according to court documents. The insurer underreported premiums to the assigned risk pool, the suit alleges.
AIG could not be reached for comment.
The plaintiffs in the case originally filed their suit in 2008 in federal court and are asking for class-action status for other policyholders.
According to the federal court filing, the plaintiffs alleged that for decades AIG may have filed incorrect financial reports about its workers' compensation business and misclassified the business as general liability or other lines of insurance. AIG allegedly used the reports to justify increasing its lost-cost multipliers and charging more premiums, the suit states.
Want to continue reading?
Become a Free PropertyCasualty360 Digital Reader
Your access to unlimited PropertyCasualty360 content isn’t changing.
Once you are an ALM digital member, you’ll receive:
- Breaking insurance news and analysis, on-site and via our newsletters and custom alerts
- Weekly Insurance Speak podcast featuring exclusive interviews with industry leaders
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical converage of the employee benefits and financial advisory markets on our other ALM sites, BenefitsPRO and ThinkAdvisor
Already have an account? Sign In Now
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
