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Zurich Insurance "extortion"


Grumbler in Training
From: Larry Pearl <larry@newburyportframers.com>
Date: April 14, 2010 9:14:04 PM EDT
To: Randall.Clouser@zurichna.com, Ed.Lopes@zurichna.com
Cc: letter@globe.com, Martin.Senn@zurich.com, Mike.Foley@zurich.com, Mike.Kerner@zurich.com, Steve.Randall@zurich.com, Tim.Carter@zurich.com
Subject: Zurich Insurance bait-and-switch tactics?


BEWARE Zurich Insurance Company bait-and-switch!

Zurich Insurance bait-and-switch is putting us out of business.

Last February received Workman's Comp policy....$770 for the year which we have budgeted and have paid every month. At the end of the year dutifully provided them with audit info and was notified in month 11 that our policy is not $770 but $1,200!

Futile calls to the agent and audit department go unanswered.
Finally get someone in customer service who informs me that they are just following Massachusetts laws.

I refuse to pay, however, they are CANCELING my policy! We are a small business and I am required to have worker's comp insurance so I am forced to close my doors and LAY OFF MY STAFF.

I'm at a loss to know what to do and will be filing a complaint.

Larry Pearl
owner - Newburyport Framers




cc: Governor Deval Patrick
Joseph G. Murphy - Commisioner Dept of Insurance
Boston Globe
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David N Waldmann

SGF, Supreme Grumble Framer

First, welcome to the Grumble.

Regarding your grumble, I don't know all the details, but here's something to consider. Worker's Compensation Insurance (WC), at least in Vermont, is charged as a percentage of actual paid wages, not a fixed price like Liability or Property usually is. When you were quoted the price it should have been based on the wages you gave them. If actual wages are higher you have to pay to make up the difference (and yes, if your wages are less, you get your money back - we got back almost $8,000 this year).

One other possible factor is that you were misclassified. Different positions are charged different rates based on the likeliness of damages paid. To be honest, $770 or $1200 sounds awful cheap for (apparently at least) two people in a frame shop. We pay 9.4% for our workers, so you can see even $1200 wouldn't cover one at minimum wage...

Again, I don't know your situation, but I would think that if you are keeping your employees busy you would be far better off paying the $430 and keeping them. If they are busy they should be able to earn their keep pretty quickly.

All that said, I can understand your frustration. It sounds like your agent did not do a very good job explaining how WC works.

Good luck in working it out.

Rob Markoff

PFG, Picture Framing God

I could not have explained it better myself. I just had my audit yesterday and for the first time in years, will also get a return of premium. (Note, NOT a "refund" - I can either get $$ back, or roll it into this year's deposit premium).

I used Zurich as my insurer for several years. It certainly doesn't sound like bait and switch to me.

What the OP paid was called a "deposit premium" and is exactly as you described, based on payroll $$ and class codes.

The $770 total premium made me smile - I sure pay a LOT more than that each MONTH :).


SGF, Supreme Grumble Framer
One of the biggest reasons for classification changes is where a person does 2 functions (rating wise). EX: front showroom sales and back room assembly (manufacturing). In this example the "worst case" classification will be calculated in the audit.

P.S. did you receive a hard copy of the audit report? If not, you are entitled to a copy.


SGF, Supreme Grumble Framer
To add to what others have said, and I agree with what they have said, if an increase of $430 a year is forcing you to close your doors, then you really should have been closed beforehand.

I am not trying to be mean but $430 is not that much money over a years time and if that is enough to put you out of business then you really need to reevaluate what you are doing.


SGF, Supreme Grumble Framer
I have had people quote me for Worker's Comp at rediculously low prices around $900. You only get rates like that if you are "retail", which is how many will classify you to get your business. But as soon as they figure out that you are actually constructing frames in your business, cutting glass and so forth, you'll be moved to the "manufacturer" classification and your rates will jump up... and you have to pay the difference for the original mis-classification. In my case, the rates I'm quoted are $3400-$4500 generally.

But as someone else mentioned, it depends on your estimated wages to be paid (your original quote) and your actual wages paid (your revision).

Are you actually constructing frames in your business? Do you cut or assemble them? Do you cut glass? If so... Just guessing, but it wouldn't surprise me to find that they have classified you as retail, and will triple or quadruple your rates if they find out otherwise... which they will the first time you have a claim. It is also possible that they will deny your claim and instead claim that you defrauded them, leaving you liable to pay for the worker's comp claim yourself, and you will not get back the money that you paid to them for the insurance.

I'd do some checking.


CGF, Certified Grumble Framer
Another thing to remember - the rates for both WC and Unemp are going to go up due to the States running out of funds!! Great news HUH!!

Also - good in the increase - likely means that your payroll was higher than anticipated and that should have meant that sales were up!


SGF, Supreme Grumble Framer
:fire:Futile calls to the agent and audit department go unanswered.

I had them when I was 1st in biz---quick/convenient(then they moved to another city[phone calls arent as satisifying as facetoface]/changed rates etc etc --dropped them/got local/better rates)

take ALL your written documentation(contracts/correspondence--pray you still have it!) and go see the local arm of the fraud squad at the copshop......this is outright bait/switsh/fraud!!!!!!!:fire::fire::fire:

if you live close to your capital, take copies to your state insurance commisioner....they MUST deal with these bozos!!!!!!!

get a lawyer---and tell these idiots to stick it!!! and they'll only get that $$$ when they win the judgment against you in claims court(by the by, they CAN get the judgement--that does NOT mean they WILL get the $$$!!!)

Grey Owl

SGF, Supreme Grumble Framer
Another item that will influence your rate is your mod factor. If you have had quite a few claims, your mod factor will go up. So, if you have a mod factor of 1.5, you pay 50% more (eg 1.5 times), the basic rate for the classification.

Generally, in most states, you will have a mod factor of 1.0 for at least the first year.

I have heard of some companies [not in framing], that formed new companies for specific kinds of their workers [eg all drivers] so they had a lower mod factor for a year or two, while they worked on eliminating worker injuries. Their first company then "contracted" with the new company for the labor. It was cheaper than the high mod factors.


Grumbler in Training
who's fault?

Stupid me for trusting others to take care of things I know (or care to know) little about....

But fault squarely lies with the agent who never mentioned, or supplied the necessary exemption forms/documentation. Isn't that why we have an agent?

We are going to try for an audit adjustment and I'll know better for next year.

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