Maine Court Rules Insurers Outside W.C. Residual Market Not Subject To Deficit Charge.


DES PLAINES, Ill. -- The Maine Insurance Department cannot charge the state's workers' compensation residual market deficit to insurers who have not been serving the residual market, according to a ruling by a Justice in the Superior Court of Maine.

The December 11 decision by Justice Donald G. Alexander followed a suit filed by the National Association of Independent Insurers and others charging that the state insurance department action violated the constitution's due process provisions.

"This decision is a major victory for insurers," said Patrick J. McNally, NAII senior vice president and general counsel. "It reaffirms that there must be some relation between a state's rationale for imposing assessments to recover deficits incurred within a residual market. It signifies that the courts will not allow states to impose burdens on companies who did not have a hand in causing the problem."

Prior to 1987, the state of Maine allocated the deficit in the workers" compensation residual market on a 50/50 basis between the employers' community and the insurance industry. The industry's share of the deficit was then allocated among those insurers servicing the residual market and all others licensed to write workers' compensation insurance in Maine on a 90/10...

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