Zurich American Insurance Co. has agreed to refund $4.6 million to policyholders of its New York statutory disability insurance policies because they failed to spend at least 60 percent of its premiums on claims, a violation of state law.
The money is being refunded to approximately 73,000 policyholders through an agreement with the New York State Department of Financial Services. Most of the policyholders are small businesses.
Zurich failed to meet the 60 percent minimum, called a minimum loss ratio (MLR), because it overestimated the amount of money it would spend to pay claims when the policies were priced by the insurer.
The refunds involve policies issued in calendar years 2009, 2010 and 2011. New York state statutory disability benefits insurance provides temporary cash benefits paid to an eligible employee to replace, in part, wages lost when the employee is disabled by an off-the-job illness or injury, and for disabilities arising from pregnancy.
Employers who hire employees in New York state are required to provide statutory disability benefits insurance unless they are exempt under New York state law. The coverage is part of workers”™ compensation insurance.
