According to a report published by the New York Post, an insurance company owned by Warren Buffett’s Berkshire Hathaway (NYSE:BRK.A) agreed to a $3 million settlement with the New York Department of Financial Services.
The report indicates that Applied Underwriters agreed to the settlement based on charges that it had sold “misleading” insurance products related to worker’s compensation to hundreds of small and medium-sized businesses operating within New York.
The regulator pointed out that Berkshire’s subsidiary, and five other related companies, operated outside the department’s oversight and sold a complex insurance product to unsuspecting businesses, which ended up costing way more than expected.
Applied Underwriters, which was acquired by Berkshire in 2016 for approximately $339m, has been previously accused by its clients and multiple regulators of charging firms exorbitantly for worker’s compensation insurance, which is one of the largest business expenses for most companies.
Many former clients have filed civil suits claiming that the insurer structures its products so that business owners have to pay up for their own insurance claims despite having insurance coverage.
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