Washington Insurance Commissioner Kreidler fines insurer Starbucks $ 24 million

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The state commissioner ordered the insurer of the coffee chain to payday loans taxes, penalties and interest.

Washington Insurance Commissioner Mike Kreidler ordered a Starbucks-owned insurer to pay nearly $ 24 million in fines. The insurance company is required to pay the full amount in taxes, penalties and interest.

The total amount of the fine is the result of alleged unauthorized insurance sales by the insurer of Starbucks.

If, in the end, Starbucks is required to pay the full amount to Washington’s Insurance Commissioner, that would approach $ 24 million. This is said to be the result of alleged unauthorized sales by an insurance company owned by Starbucks. It includes a fine of $ 1.1 million, as well as a premium tax totaling nearly $ 12.6 million, in addition to $ 2.5 million in tax penalties and nearly $ 7.7 million. dollars of interest.

Kreidler’s office has ordered that the fine be stayed until a hearing scheduled for Jan. 14 has been concluded. This hearing will include a conference in the case against Olympic Casualty Insurance Co, owned by Starbucks. The insurer was also ordered to cease and desist from all sales of insurance products until the end of the hearing.

The Washington Insurance Commissioner’s office has suspended sales and fines until the hearing is concluded.

Olympic Casualty, owned by Starbucks, is an insurer that sells Liability coverage and workers’ compensation for the coffee chain. According to a Starbucks spokesperson quoted in a Review report, this is a disagreement on best insurance practices, not a real tax issue.

The coffee chain and a number of other Crown corporations have used “captive insurer” arrangements for many years. This happens when a parent company forms an insurance company for the purpose of self-insurance.

Last September, an insurer owned by Alaska Air Group was fined $ 2.5 million for selling unauthorized insurance. Last Tuesday, that company and the insurer of Starbucks both received an order from the commissioner’s office to stop insuring their parent companies.

Washington law requires all insurers to pay a 2% tax based on the premiums they write. According to the Washington Insurance Commissioner’s office, neither the OlympicCasualty nor ASA Assurance – the insurer of Alaska Air – were licensed to sell insurance in the state and neither paid premium tax on the coverage they did. were selling there.

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