The insurance unit of Berkshire
Hathaway, the firm run by billionaire Warren Buffet, has been hit by a regulator ruling in the state of California.
The region’s leading insurance regulator has concluded that the firm circumvented state laws which are aimed at protecting small employers from unpredictable workers’ compensation costs.
According to a report by The Wall Street Journal
, a linen rental firm from Sacramento issued a complaint that it faced hundreds of thousands of dollars in costs because of a complex arrangement for workers’ compensation coverage that affected around 60 workers.
The complaint was initially brought against the firm in 2014 with insurance commissioner Dave Jones now ruling that there was an “intent to circumvent government regulators”, commenting that this was “very troubling”.
According to the publication, Shasta Linen Supply Inc. originally obtained a policy from California Insurance Company, part of Berkshire
Hathaway, which stated it had filed policies and rates with the state. However, another Berkshire
unit Applied Underwriters Inc. then sold a subsequent agreement to Shasta replacing the original terms – and these terms and rates were not submitted for review, according to Jones.
However, the decision can still be appealed with a spokesman for Applied Underwriters telling the publication that “the company strongly disagrees with the commissioner’s decision and intends to vigorously pursue all legal avenues”.
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