Rhode Island officials have completed their audit of Beacon Mutual Insurance Co. and turned over the results to the workers’ compensation insurer.
However it will be at least 30 days before the public learns what is in the report.
Department of Business Regulation Director A. Michael Marques said he transmitted the market conduct report in draft form on Feb. 19 to Beacon’s CEO, James V. Rosati. Beacon is being given an opportunity to review the report for any factual errors.
DBR has been reviewing Beacon’s practices and procedures since September, 2005. It intensified the exam by retaining forensic auditors, Deloitte Financial Advisory Services in February, 2006, following receipt of an internal report that raised questions about the management at that time. The company has since replaced its chief executive officer with Rosati and Gov. Donald Carcieri has named several new members to the board of directors.
If any errors exist, Beacon has an opportunity to present them to DBR no later than March 1, 2007. DBR says it will then provide Beacon with a final version of the report, after which the insurer’s board of directors will have 30 days to respond to DBR’s findings. DBR will then review Beacon’s response, and Marques will formally accept or reject the report.
During this process, state law requires that the report remain private and confidential, according to DBR.
“This process will minimize disruption for both parties and will ensure the fair conclusion to what has admittedly been a costly and time-consuming process,” Marques said.
Beacon Mutual acknowledged receipt of the report.
“We have assembled a team of board members and senior mangers to respond to the report in an open and substantive manner. I am committed to responding to DBR’s findings in a cooperative manner on behalf of Beacon’s 14,000 policyholders. Unfortunately, a spirit of cooperation did not always exist during this process. One of my primary goals as Beacon’s new CEO is to continue the process of restoring relations between Beacon and the Department of Business Regulation,” said Rosati in a written statement.
Rosati said the report would be released to the public after the review process. “Once DBR deems the process complete, it is our intention to release the entire report and Beacon’s response to our policyholders and the public,” said Rosati. “It is our intention to waive our rights to a 30 day holding period and release the report as quickly as possible when the regulatory process is complete. It is critical that our policyholders understand Beacon is changing the way it does business.”
In October of 2006, Beacon Mutual retained the services of The Ward Group, a consulting firm specializing in the insurance industry benchmarking and best practices services. Rosati said The Ward Group would assist Beacon in its response to the DBR report.
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