Regulator takes control of small failing insurer after Camp Fire claims
–California’s insurance regulator took expedited legal action earlier this month to secure the assets of and take control of Merced Property & Casualty Company, in an effort to protect the company’s policyholders, including those who suffered losses in the Camp Fire. The volume of claims associated with the catastrophic Camp Fire-the deadliest and most destructive fire in California history-has overwhelmed the small insurer to the point of insolvency.
“California law gives us the authority to take over insurance companies that face insolvency. Protecting Camp Fire policyholders who have already suffered through so much was my first consideration,” said Insurance Commissioner Dave Jones. “We are moving aggressively to take the necessary legal action to take control of the company and to trigger the state law enabling the California Insurance Guarantee Association to immediately begin the process of evaluating losses and paying claims.”
The department filed with the Merced County Superior Court an expedited request for an order enabling the takeover of the company. The California Insurance Department’s Conservation and Liquidation Office, established by law to handle the liquidation of failing insurance companies, is managing the transfer of the company’s claims handling to CIGA.
While current insurance policies remain in-force for 30 days, anyone insured with Merced Property & Casualty Company should seek coverage with another insurer immediately. Once the court issues the requested order, the Conservation and Liquidation Office will notify policyholders about where and how to file a claim with CIGA for insured losses or the return of any unearned premium on their policy.
Given the unprecedented scale of recent wildfires, Jones directed the department to conduct additional detailed reviews of every property insurer domiciled in California to make sure they are properly managing their exposures. The department has received no reports of other insurers in a similar situation.
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