A Florida staffing firm is taking Chubb and its affiliates to federal court, alleging the insurer imposed unlawful collateral demands and mishandled claims after a decade-long relationship soured.
Full Steam Staffing, LLC, a Florida limited liability company with substantial operations in California, filed a complaint on Oct. 14 in the United States District Court for the Central District of California against Chubb Limited, ACE American Insurance Company, Indemnity Insurance Company of North America, and ESIS, Inc. The lawsuit centers on a workers’ compensation insurance program that, according to Full Steam, became the source of escalating financial demands and administrative disputes after the company decided to switch insurance carriers.
The complaint states that Full Steam’s insurance relationship began in 2015 with ACE Limited, which later became part of Chubb Limited following a $28.3 billion acquisition of The Chubb Corporation in January 2016. Over the next decade, Full Steam maintained continuous workers’ compensation coverage with Chubb and its subsidiaries, providing staffing and payroll services primarily to the light industrial and factory sectors, with California representing its largest exposure state.
According to the filing, issues arose as Full Steam prepared to end its relationship with Chubb after 10 years. The company alleges that Chubb responded by demanding additional collateral – initially seeking $12,529,453 to renew the policy for an 11th year. This sum included about $1.7 million for an annual “true-up” and about $10.8 million to secure anticipated exposure for the 2025-2026 policy year. When Full Steam indicated it might change carriers, Chubb revised the collateral demand to $11,494,172.
After Full Steam decided to leave, the complaint alleges Chubb escalated its demands. Chubb was already holding $29,403,287 in cash from Full Steam to cover future claim payments. The insurer then allegedly required that this cash be converted into a letter of credit, which would remain idle, and insisted Full Steam continue to fund all future claim payments on a monthly basis. The complaint specifies that claim payments made in July and August 2025 were $984,191 and $976,307, respectively. Chubb also demanded an additional $22,029,727 in “collateral security,” bringing the total demand to $51,433,014, while Full Steam would still need to cover monthly claim invoices of around $900,000 to $1 million.
Full Steam contends that these demands were not based on actuarial necessity but were instead intended to penalize the company for leaving and to tie up its capital. According to the complaint, Chubb justified these demands using “Program Agreements” or “side agreements” that Full Steam claims were never filed with or approved by the California Workers’ Compensation Insurance Rating Bureau or the California Insurance Commissioner, as required by law. The agreements, Full Steam alleges, authorized the collateral demands and included arbitration and venue clauses that the company says are void and unenforceable for California exposure.
The complaint also targets ESIS, Inc., Chubb’s claims administrator, alleging mishandling of workers’ compensation claims. Full Steam accuses ESIS of failing to properly investigate claims, setting excessive reserves, making improper payments, and lacking adequate claims management. The company claims these actions increased its insurance costs, including the funding and collateral demanded by Chubb.
Full Steam is seeking a judicial declaration that the program agreements and arbitration clauses are void as they pertain to California exposure. The company also seeks restitution of all amounts paid under the agreements, damages for breach of the implied covenant of good faith and fair dealing, and damages for professional negligence in claims handling.
The complaint states that Full Steam has fully performed its obligations under the insurance policies and agreements, including timely payment of all premiums and provision of required collateral. The company’s California payroll grew from approximately $60 million in 2015 to about $143 million in 2024, reflecting substantial business growth during the period of coverage.
At this stage, all allegations remain unproven, and the case awaits further proceedings in federal court.
