California Companies Ordered to Stop Selling Workers’ Comp Policies

California Insurance Commissioner Dave Jones has issued an order requiring a central valley company and its affiliates to stop selling workers’ compensation and liability policies because it is not properly licensed with the California Department of Insurance.

In October 2016, the CDI issued a cease and desist order against the Agricultural Contracting Services Association Inc. and its affiliates, the American Labor Alliance and CompOne USA, and board chair Marcus Asay.

The order alleged they were soliciting, marketing, selling and issuing to employers statewide what the company claims are valid workers’ comp policies when the entities were not properly registered with the regulator and were transacting insurance without proper authority.

The company challenged the CDI’s cease and desist order. Asay in 2016 following the cease and desist order from the CDI told the Insurance Journal the company isn’t required to register with the department because it is selling benefits and not insurance, and that efforts to reach out to the department over nearly the last year to keep them informed of what they are doing have gone nowhere.

Following an evidentiary hearing, Jones ordering that the company must continue to refrain from selling insurance policies in California. As part of his order, Jones made the decision precedential, which allows future cases to rely on the ruling.

“Employers who purchased insurance from American Labor Alliance or CompOne USA are likely at great financial risk,” Jones said in a statement. “Employers must protect themselves, their employees, and their business by checking with the Department of Insurance to verify the company and agent or broker’s license is valid and the policy they purchased is also valid.”

Related:

• California Company Says CDI Wrongly Halting Sales of Workers’ Comp Product

Topics California Workers' Compensation