Penn’s Liquidation Delay Prompts California Action
By Robert Warne - April 28, 2003Sick and tired of waiting on Pennsylvania to throw Legion and Villanova Insurance Companies into liquidation, California Insurance Commissioner John Garamendi, April 25, did what the keystone state has failed to do.
The Pennsylvania Department of Insurance filed a petition to seek an order of liquidation Aug. 29, 2002, but a judge has delayed issuing a liquidation order three times since then.
Garamendi’s action activated the California Insurance Guarantee Association (CIGA), the state entity that will administer all Legion and Villanova claims in the state.
It was reported that more than 11,000 Californian’s with claims will benefit from the liquidation order.
"No consumer should have to wait this long for claims payment," said Garamendi. "The Pennsylvania judge's repeated delays in issuing a liquidation order have caused financial and emotional problems for thousands of California consumers who faithfully paid their premiums expecting in return the insurance protection for which they paid. Our separate order of liquidation was necessary to protect our own consumers."
Legion and Villanova originally got into trouble as a result of their inability to collect on reinsurance recoverables.
To top that off, its parent Bermuda-based Mutual Risk Management is running on ultra low funds and has nothing to give to its subsidiaries.
The Los Angeles County Superior Court’s liquidation order only effects California claims, and has no bearing on claims in the 49 other states Legion and Villanova were licensed to conduct business in.
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