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Judge puts PEO workers’ comp insurance company into rehabilitation

May 22, 2015

Lumbermen’s Underwriting Alliance, which issued large deductible workers’ compensation plans for professional employer organizations among other insurance lines, was put into rehabilitation by a judge, the Missouri Department of Insurance announced.

The company faced financial difficulty when one of its largest PEO insureds, TS Employment, failed to fully fund collateral obligations and filed Chapter 11 bankruptcy, according to the department. TS Employment served defunct staffing firm Corporate Resource Services.

Rehabilitation is a legal step taken by the court to protect policyholders by preserving the company’s assets, according to the department. John Huff, director of the Missouri Department of Insurance, was named receiver by the court. The move allows him to take over operations of the company. Huff will now attempt to correct existing problems, continue operations of Lumberman’s, maintain policyholder accounting and develop a plan of rehabilitation or petition the court for liquidation, according to the department.

Policies will continue pursuant to their terms and conditions, and policyholders must continue making premium payments to keep insurance coverage intact, according to the department.

“Putting Lumbermen’s into rehabilitation allows us to ensure the company’s assets are handled properly so that claims are paid as fully as possible,” Huff said.

Lumbermen’s, based in Florida, had approximately 3,000 policyholders and 6,080 open workers’ compensation claims with the largest number of claims in California.