* New York, N.Y. -- A Petition filed March 4th against New Jersey's Department of Banking and Insurance seeks confirmation from State regulators that the State's existing insurance laws do enable captive insurance formats to continue to function as established, for the benefit of businesses and their employees, notably a program for Workers' Compensation insurance offered by Applied Underwriters, one of the petitioners.
The action holds that regulators have misinterpreted the longstanding, essential role that reinsurance plays in a widely used workers' compensation insuring format and has attempted to restrict the program in direct violation of section 531 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which precludes state insurance regulators from rewriting the terms of an out-of-state reinsurance contract. The Petition requests confirmation that Applied's program is a valid captive reinsurance arrangement under New Jersey law and should be affirmed at a time when the format's desirability among businesses is growing as a preferred risk transfer vehicle among Applied's many New Jersey based clients and their employees. The Petition protects the clients of independent agents who have implemented the Applied programs as a sound, wise choice, an alternative to "off the shelf" policies in which the buyer has little influence on costs and little benefit from favorable outcomes.
Applied's Petition sets forth the generally accepted definitions and standard, permitted uses of reinsurance as employed in its format and underlines the potential damage that the undue tampering or undoing of the enabling regulations would visit upon New Jersey businesses and their employees, according to Shand Stephens, partner, DLA Piper, LLC, attorney for Applied. Mr. Stephens noted that Applied, a national A+ rated Workers' Compensation insurance provider, offers policies to businesses of all sizes that reward business owners by providing participation in the favorable financial and pricing outcomes resulting from their observation of best practices in workplace safety.
According to Mr. Jeffrey Silver, General Counsel for Applied based in its Omaha Operations Center, Applied's basic captive format, which dates back conceptually to the 1950's and is typical of the thousands of captives in operation successfully in every jurisdiction including New Jersey, has received increasingly wide acceptance among business leaders across the...