Company Town : Workers’ Comp Insurer Accused of ‘Predatory Pricing’ : Coverage: CalComp denies that it has any policy to require its brokers to give rebates.

The California Department of Insurance on Thursday accused a Northern California insurance company of violating a state law requiring minimum rates for workers’ compensation coverage.

Insurance Commissioner John Garamendi said Novato-based California Compensation Insurance Co. appeared to be offering rates below the minimums set by the state by requiring independent brokers to rebate to customers part of their commissions--up to 55% for certain CalComp incentive programs.

The practice constitutes unfair competition designed to win customers with low rates ahead of the repeal of the minimum rate law, Garamendi said. Effective Jan. 1, workers’ compensation carriers will be free to compete on rates without restrictions.

“The tactics used by CalComp are, pure and simple, predatory pricing,” Garamendi said in a statement. “By offering big discounts, the company blatantly tried to take business away from other carriers which, because of the minimum rate law, could not legally offer lower rates.”

Officials at CalComp, which is the first insurance company cited by the Insurance Department in connection with the minimum rate law, denied that they ever instructed their brokers to use their commissions to lure customers with promises of lower rates.

“It has never been CalComp’s practice or policy to require brokers to give rebates,” CalComp spokesman Kurt Davis said. “The brokers can take the (commission money given to them by CalComp) and go to Acapulco if they want. If they want to distribute the money to their clients, they can do so.”

CalComp, a subsidiary of Rancho Cordova-based Foundation Health Corp., could lose its license to sell workers’ compensation insurance in California if the state can prove its charges.

“When there is up to 55% going to brokers as commission, there is an implied requirement on the part of the insurer for the broker to give that money back to the policyholder,” Insurance Department counsel Bruce Patton said.