California regulator takes over small failing insurer after Camp Fire
The enormous number of claims following the Camp Fire have overwhelmed the small insurer to the point of insolvency.
Overwhelmed by the large volume of claims from the Camp Fire, Merced Property & Casualty Company has been taken over by California’s insurance regulator in an effort to protect the company’s policyholders, including those who suffered losses in the Camp Fire.
The company has reached a point of insolvency, and by law, this allows the state’s Department of Insurance to take control of Merced. The department has 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.
Insurance Commissioner Dave Jones advises that while current insurance policies remain in-force for 30 days, customers of 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, Jones explains.
The Camp Fire is now the largest and deadliest wildfire in California state history, burning through 200,000 acres that left 88 dead and nearly 200 still missing. With such an overwhelming volume of claims, Jones has 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.
Related: Historic wildfires in California estimated to cost $15-19B in losses