EMPLOYERS DIRECT TO STOP WRITING BUSINESS IN CALIFORNIA

Employers Direct Insurance has announced that it will stop issuing new and renewal workers’ compensation policies in its home state of California with effect from August 1. Employers Direct, which entered the California market in 2003, blamed the move on the strain of escalating medical costs, increasingly intense price competition and uncertainty about the sustainability of the state’s 2003-2004 market reforms. The company, a unit of New York-based Alleghany Corp, will continue to write business in Arizona, Nevada and other markets. Employers Direct president Jim Little told local newsletter Workers’ Comp Executive that the company will return to the California market when “market conditions return to normalcy”. With the departure, the company said that it would reduce its workforce by 18%. The announcement also prompted rating firm AM Best to downgrade Employers Direct’s financial strength rating to single B double plus from single A minus.