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| | The Way We Were And Still Are Today. A Retrospective On Workers' Compensation Claims Departments In California: from Fred S. James To Zenith Insurance Company.
By Lonce LaMon - July 20, 2011
In 1980, a small office of a Third-Party-Administrator called Fred S. James was in Orange County handling workers’ compensation claims for self-insureds. Fred S. James was a broker that simply reached out and opened up a business for claims handling.
But, it wasn’t that big. There were just several examiners, a couple of supervisors and a manager. Then, just a few years went by, Ronald Reagan was President of the U.S. and time reached the middle of the 1980s and I noticed that the Fred S. James office for administering claims in Orange County was now called Sedgwick James. Somebody named Sedgwick had come on the scene. Then, time reached the 1990s, and James was no longer around. I noted the James dropped out of the name. It was just Sedgwick, and the name evolved to read Sedgwick Claims Management Services.
What an evolution. Now, Sedgwick Claims Management Services (Sedgwick CMS) has 9,500 employees in 190 claims office locations in the U.S. They just purchased Specialty Risk Services (SRS) from The Hartford a little over six months ago, and just a couple of months ago they purchased the Cambridge Integrated Services Group portion of Xchanging.
So, today Sedgwick CMS has over 20 claims offices in California. They are the largest private company TPA handling workers’ compensation claims in California. And 30 years ago they didn’t even exist.
But, ESIS existed 30 years ago. Indeed. In 1980 they were a TPA owned by INA (Insurance Company of North America) and had an office at 4050 Wilshire Blvd in the Miracle Mile District of Los Angeles. They were right across the street from the famous fine dining restaurant called Perino’s. Today ESIS has an office in Chatsworth, in the Southern California San Fernando Valley. They have over 50 staff members in that Chatsworth claims office.
Republic Indemnity was around in 1980 writing workers’ compensation business and handling their claims. Their office had been on Highland Avenue in Hollywood just prior to 1980 up until it moved to Encino, California where it still is today. Republic today seems pretty much the way it was 30 years ago. They have also had a claims office in San Diego for that many years. In 1980 in Encino, Jerry Bougas was the claims manager and he used to hire a lot of headhunters to staff his claims department. I remember he was keen on hiring people who had been in the military.
Liberty Mutual, Aetna Life & Casualty with Aetna Casualty & Surety, and “little Aetna” which was called Aetna Insurance Company, along with California Casualty were all in Downtown Los Angeles or near Mid-Wilshire. So were Canadian Indemnity and Industrial Indemnity. They all handled Workers’ Compensation claims and especially Industrial Indemnity. Then, Downtown Los Angeles and the Wilshire Corridor went into serious decline, and there was a big trend in the early 1980s for insurance carriers to move into the San Fernando Valley and especially Glendale. Downtown L.A. was overpriced, run down, and suffering from hubris.
Aetna Insurance, aka "little Aetna" is a distinct and separate company from Aetna Life & Casualty (which owned Aetna Casualty & Surety). Both insurance carriers were on Wilshire Boulevard in L.A. back in the 1970s and 80s and the mail from one would always get delivered accidently to the other, driving claims adjusters crazy. It was a paper craze, as there was no such thing as a paperless system in those days. Today Aetna Life & Casualty is owned by The Travelers Insurance Group (since 1996).
Liberty Mutual moved to Glendale and has been there ever since. California Casualty moved to Glendale but today is no longer in business. Industrial Indemnity (I.I.) stayed on Lafayette Park Place in the Mid-Wilshire District and is also no longer in business today. I.I. was purchased by Fremont Indemnity Company in the 1990s and now today Fremont is no longer in business. They went bankrupt in 2002 and were in receivership for some time. Their offices also moved from Downtown L.A. on West Sixth Street in the 1970s and 1980s, to Glendale by the 1990s.
CNA in Brea had RSKCO, a third-party-administrator for workers’ comp claims. CNA sold RSKCO just after the turn of the Millenium so now, today, there’s no more RSKCO. Then there was FIRM SOLUTIONS in Orange, California, during the 1980s and 1990s that handled the County of Los Angeles account. FIRM SOLUTIONS eventually through some osmosis and metamorphosis became part of Tristar Risk Management.
Zenith Insurance Company, headquartered in Woodland Hills, has been a stalwart survivor as a mono-line workers’ compensation insurance carrier for over 30 years. Zenith survived the blood bath in the early first decade of the 21st Century when insurance carriers, such as Fremont Indemnity and Paula Insurance Company, went bankrupt in California while dozens of others fled the state over rampant workers’ compensation losses. Run by the formidable Stanley Zax, who has been a valiant warrior in the fight against workers’ compensation fraud, Zenith has endured and come out alive and well.
Stanley Zax sold The Zenith to Fairfax Holdings last year but remains with the company, to date, as a consultant. He still answers his own phone with a casual “hello” just as if he were answering his home phone. He is modest and self-effacing and admits to none of his accomplishments. He merely expresses that he’s a survivor and requests not to be quoted. When told of the enormous role he has played in the fight against fraud for the benefit of the entire insurance industry, he says nothing. He asks for no credit. Seeks no praise.
Stanley Zax
Then there’s Keenan & Associates in Torrance, California. Keenan has been around more than 30 years just like The Zenith.
Keenan is an expansive organization offering a variety of insurance services extending beyond just claims administration. John Keenan is active today as the Chairman of the Board and is just over 80 years old. He loves to play tennis but says he isn’t very good.
Dale Jones worked for Keenan & Associates over thirty years ago and by the 1980s had started Southern California Risk Management Associates (SCRMA). SCRMA specialized in claims administration for school districts, cities and counties and was sold to York Insurance Services Group about two years ago. Now, York has a prominent presence in California having purchased Bragg & Associates at the same time it purchased SCRMA.
An enormous amount has changed in thirty years but a few players have endured and have not gone away. Like Stanley Zax and Zenith Insurance Company, they have survived and are still here.
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