Regulators move to take over an insurer unable to pay its wildfire claims following massive destruction.
A California insurance company bankrupted by the Camp Fire and other wildfires may be taken over by the state. Regulators have made their first moves toward a takeover after wildfires raged through the state, destroying over 13,000 homes.
Merced Property & Casualty Company was unable to keep up with the cost of its policyholder claims.
The California insurance company was pushed into insolvency by the wildfire sparked on November 8, 2018. That same fire ripped through Paradise, nearly entirely destroying it and surrounding towns, said California Insurance Commissioner Dave Jones.
As of the time of the writing of this article, the Department of Insurance did not yet know how many policyholders were covered by the company. It was also not clear how much the claim total for the wildfire would be, said Nancy Kincaid, a spokesperson. However, the California Insurance Guarantee Association will ensure that all legitimate claims are paid.
“Protecting Camp Fire policyholders who have already suffered through so much was my first consideration,” said Jones in a statement.
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The Camp Fire has caused all new business at the California insurance company to stop.
“Due to the massive wildfire in Butte County, we have placed a moratorium on all new business,” said a message at the top of the Merced Property & Casualty Company official website. “Our focus is on assisting those who have suffered loss from the catastrophic event,” it added.
The insurance company’s liquidation proceedings were approved by a judge at the start of the week. According to a CBS report, Kincaid stated that the company had no intention to fight the effort to move forward with liquidation.
The area affected by the Camp Fire had been under evacuation orders for several weeks while the fire was in the area and had not yet been controlled. It is only very recently that law enforcement has permitted California insurance company employees to assess the property damage and losses, added Kincaid. The Camp Fire was the deadliest and most destructive in the history of the state, having killed 88 people and damaged or destroyed over 18,000 structures.