Sacramento, CA – Insurance Commissioner Dave Jones recently announced that CastlePoint National Insurance Company (CastlePoint), the California insurance company affiliate of the defunct Tower Group, has been ordered into formal liquidation, paving the way for protection of CastlePoint’s policyholders through the national system of insurance guaranty associations. The filing on March 30, 2017, of an Order of Liquidation by the San Francisco Superior Court was the final judicial stage of a meticulously planned and complex process of winding up a group of financially impaired insurers that wrote insurance across the country.
The Commissioner started the process in January 2016 when he took the lead in convincing insurance commissioners in six other states to redomicile all of the insurers within the Tower Insurance Group to California so that the companies could be consolidated into CastlePoint National to achieve an orderly conservation and liquidation of the companies. In July the commissioner implemented the second phase of the plan, by asking the Court to order CastlePoint into conservation and appoint him as Conservator of the company. As Conservator, the Commissioner developed and implemented a multi-stage Conservation & Liquidation Plan that infused $200 million in liquid assets into CastlePoint and locked in the resources required to ensure the uninterrupted administration and payment of CastlePoint’s policyholder claims during the conservation phase. The final phase of the plan is the entry of a liquidation order.
“The liquidation order for CastlePoint was an essential step in our efforts to protect CastlePoint’s policyholders across the country,” said Commissioner Jones. “The order triggers the legal obligation of the national network of insurance guaranty associations to step up to pay CastlePoint’s insurance claims in a timely and fair manner. It’s never good when an insurance company fails, but through careful planning and execution we have provided CastlePoint’s policyholders with the maximum protection available under the law.”
All CastlePoint claims continued to be adjusted and paid throughout the eight-month conservation phase of this process. During the final stage of conservation, the Commissioner prepared for a seamless transition into liquidation by arranging for pre-funding of all workers’ compensation indemnity (or wage replacement) benefits for the next 60 to 90 days. This pre-funding process ensures that there will be no interruption or avoidable delay in payments to the many injured workers who are relying on CastlePoint for the financial means to survive while they recover from workplace injuries.
“The protection of injured workers was one of my primary objectives in this conservation,” added Commissioner Jones. “Workers who get injured on the job should be confident that they will be covered by their employer’s workers’ compensation insurance, even if the insurer fails.”