Montana’s insurance commissioner has placed Great Falls-based Westland Farm Mutual Insurance Co. under her office’s supervision, citing the company’s diminishing cash reserves.
Commissioner of Securities and Insurance Monica Lindeen says Westland will cancel all of its homeowner’s insurance policies by June 30. Its crop-hail insurance policies will remain in effect.
Lindeen’s office recommends current holders of farm and homeowner’s policies move them to another company before the end of the month so they don’t risk a lapse of coverage that could violate the terms of their mortgage or result in higher premiums on future policies.
Lindeen’s order bars Westland from taking on any more liabilities or selling any new non-crop-hail insurance policies. Westland agreed to the terms of the May 25 order and notified its customers and agents last week.
Montana farm mutual insurers have been providing limited insurance policies to farms, ranches and rural homeowners in Montana for more than 100 years. To protect their customers, farm mutual insurers sell policies that are backed, or reinsured, by other national and international insurance companies.
While Westland’s crop insurance policies are fully reinsured, its farm and homeowner policies were only partially reinsured, meaning Westland had to pay a portion of every claim out of its own reserves. In January, the reinsurance company revised its contract, increasing Westland’s risk on some policies as much as 28 times higher than the previous year, Lindeen’s office said.
With Westland’s increased exposure and dwindling reserves, Lindeen’s office estimated the company would run out of money to pay claims on its farm and homeowner’s insurance policies by August.
A woman who answered the phone at Westland’s office Wednesday afternoon said the company had no comment.