California Insurance Commissioner John Garamendi announced Wednesday that $386 million has been distributed this year to policyholders and claimants of insolvent (bankrupt) insurers liquidated through the state’s Conservation and Liquidation Office (CLO).
Through the CLO, a service organization responsible for the rehabilitation and/or liquidation of troubled California insurance companies, the Commissioner has distributed in excess of $1 billion since returning to the Insurance Commissioner’s post in 2003.
“The integrity of the insurance system depends upon the fair payment of claims made by policyholders, even if the company that sold the policy has endured financial problems,” said Insurance Commissioner Garamendi. “Our work at the CLO will help protect these affected policyholders and ensure the integrity of the insurance system.”
This year’s pay out activity is a continuation of the Commissioner’s plan over the past two years to get much needed relief to injured policyholders and claimants who have suffered financial losses and hardships due to major insurer insolvencies over the past decade. In 2003 the CLO distributed $587 million; in 2004 it distributed $496 million; and from 2003-2005 the CLO closed 27 liquidated companies and plans to close another five by the end of 2005.
A key beneficiary of these recent distributions is the California Guaranty Association (“CIGA”), an industry-backed association that serves as the ultimate safety net for policyholders who are affected by insurance company failures.
To date in 2005 CIGA has received approximately $185 million from the CLO distributions, and should receive an additional $16 million this year.
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