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IN RE STAR INSURANCE COMPANY; ACCIDENT FUND INSURANCE COMPANY OF AMERICA; GRIFFIN, SMALLEY & WILKERSON, INC.;
and PATRICK E. WILLIAMS


DOCKET NO. INS-05-201

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CONSENT AGREEMENT
BY STAR
INSURANCE COMPANY

Star Insurance Company, the Maine Superintendent of Insurance, and the Maine Office of the Attorney General hereby enter into this Consent Agreement pursuant to 10 M.R.S.A. § 8003(5)(B) to resolve, without an adjudicatory proceeding, issues arising out of Star’s conduct under the regulatory authority of the Superintendent.

Stipulations

1. The Superintendent is the official charged with administering and enforcing the insurance laws of the State of Maine.

2. Respondent Star Insurance Company (NAIC Code 18023) is a Michigan stock insurance corporation with a principal place of business in Southfield, and has been licensed by the Superintendent to transact multiple lines of insurance, including workers’ compensation insurance, within the State of Maine since November 19, 1998.

3. Patrick E. Williams and Griffin, Smalley & Wilkerson, Inc. (GS&W) were the producer and agency of record for PML Holdings Group, Inc., a Michigan-based employee leasing company whose workers’ compensation coverage was issued by Star Insurance Company and fully reinsured by Accident Fund Insurance Company of America. PML advised Williams that it had entered into a business relationship with World Wide Personnel Services of Maine, Inc. (WWPSME) and United Personnel Services, Inc. (UPSME), two Maine employee leasing companies, and that both WWPSME and UPSME would need workers’ compensation insurance effective June 16, 2003.

4. At that time neither Williams nor GS&W was licensed in Maine. They therefore promptly contacted a contractor that processes license applications, received application materials by fax on June 6, and sent back complete, fully executed applications on June 10 for the contractor to forward to the Maine Bureau of Insurance.

5. The Bureau received the applications on June 20, and issued the license on July 1.

6. Star made no attempt to verify whether Williams or GS&W was licensed in Maine. Had Star been aware that the applications were not executed until June 10, Star would have recognized that it would be unrealistic to expect licensure by June 16 even if the applications had been submitted directly to the Bureau.

7. Nevertheless, Williams, acting on behalf of GS&W, went forward with the sale of the Maine insurance coverage to WWPSME and UPSME with an effective date of June 16. Williams and GS&W represented both Star and Accident Fund in this transaction.

8. By placing business through unlicensed producers, Star violated 24-A M.R.S.A. §§ 1420 M(1) and 1445(1).

9. After the Bureau notified the insurers that the coverage had been sold through unlicensed producers, the Bureau was advised that the commission would be prorated and the producers would be paid only for the portion of the coverage period commencing on July 1, 2003. An insurer’s recapture of commission payments does not remedy the violation because it inappropriately rewards the insurer for using an unlicensed producer. Furthermore, the issue is whether the producer was licensed at the time of the sale, not whether the producer was subsequently licensed during some or all of the term of coverage.

Covenants

Star Insurance Company, the Superintendent, and the Office of the Attorney General agree to the following:

10. This Consent Agreement is entered into in accordance with 10 M.R.S.A. § 8003(5)(B) and is not subject to review or appeal. This Consent Agreement is enforceable by an action in the Superior Court.

11. Star warrants that it has made full and accurate disclosure to the Superintendent of the underlying facts, and agrees that any material inaccuracy would constitute a violation of this Consent Agreement.

12. For the violations described above, Star agrees to the imposition of a civil penalty of $250, pursuant to 24 A M.R.S.A. § 12 A(1), and shall submit a check in that amount, payable to the Treasurer of the State of Maine, at the time of the execution of this Agreement.

13. In consideration of Star’s execution of and compliance with the terms of this Consent Agreement, the Superintendent agrees to forgo pursuing any disciplinary measures or other civil or administrative sanction for the violations of the notice and disclosure requirements described in the Stipulations, other than those agreed to in this Consent Agreement. However, should Star violate this Consent Agreement, the Superintendent reserves the right to pursue any available legal remedy for the violation, including without limitation the suspension or revocation of all licenses issued by the Superintendent.

14. The parties to this Agreement understand that nothing herein shall affect any rights or interests that any person not a party to this Agreement may possess.

15. Star understands and acknowledges that this Agreement will constitute a public record within the meaning of 1 M.R.S.A. § 402, will be available for public inspection and copying as provided for by 1 M.R.S.A. § 408, and will be reported to the National Association of Insurance Commissioners’ “RIRS” database.

16. Star has been advised of its right to consult with counsel, and has consulted with counsel before executing this Agreement.

17. This Consent Agreement may be modified only by a written agreement executed by all of the parties.

FOR STAR INSURANCE COMPANY

Dated:

____________________________
(signature)

____________________________
(printed name and title)

Personally appeared before me this day ____________________________, and signed this Consent Agreement in my presence.

 

____________________________
Notary Public


FOR THE OFFICE OF THE ATTORNEY GENERAL

Dated:

____________________________
Andrew L. Black, AAG


BY THE SUPERINTENDENT OF INSURANCE

Dated:

____________________________
Alessandro A. Iuppa, Superintendent

 


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Last Updated: October 22, 2013