WARWICK – The Beacon Mutual Insurance Co. has distributed $5.6 million to about 9,400 policyholders, completing the payout required by its settlement last year with the R.I. Department of Business Regulation.

“For the past several months, we have worked diligently with the [DBR] to ensure payments have been calculated properly,” James V. Rosati, president and CEO of the workers’ compensation insurer, said in a statement.

To allow better accuracy, the DBR had granted Beacon’s request for a one-month extension of the original March 31 deadline to allow the company to include first-quarter data from the validation of shared earnings plans. (READ MORE) All payments were issued before the revised April 30 deadline, Beacon noted.

“The issuance of these payments closes a chapter on Beacon’s past,” Rosati said yesterday. “I want our policyholders to know that we have reformed our underwriting procedures to ensure that premiums are calculated in a transparent and equitable manner.”

The distribution compensated certain Beacon customers the DBR considered to have been overcharged. It was required by a consent order the company entered into with the DBR on July 27, after the agency released the results of its Market Conduct Exam. Eligible were certain policyholders whose policies commenced between Oct. 1, 2005, and Sept. 30, 2006.

Payments were allocated to eligible policyholders from a pool determined by the DBR, based on the premiums each paid during the period in question. The calculated reimbursement was then reduced by any distributions received (such as dividends, credits and shared earnings) or fees overdue.

The actual amount repaid to customers was 20 percent below the anticipated total of approximately $7 million that was mentioned in the original consent order. “This approximation was based upon information available at the time the consent order was issued, and estimated future outcomes,” the insurer said today. “The amount of the final distribution was less because the actual amounts previously paid by Beacon, as of March 31, 2008, varied from estimates” at the time the order was issued.

Beacon has distributed letters explaining the process to all policyholders, eligible or not, the company said.

“There will not be a rate increase related to the payment process,” Rosati emphasized in his statement, adding: “The Beacon remains a financially strong and stable company.”

The Beacon Mutual Insurance Co. – established by legislation enacted in 1990, by the R.I. General Assembly, as the State Compensation Insurance Fund – is the largest writer of workers’ compensation insurance and commercial property casualty insurance in Rhode Island. Additional information is available at www.beaconmutual.com.