Oklahoma Seizes Workers’ Compensation Insurer

Copyright 2010 A.M. Best Company, Inc.All Rights Reserved BestWire

March 24, 2010 Wednesday 04:40 PM EST

371 words

Oklahoma Seizes Workers' Compensation Insurer

Sean P Carr

OKLAHOMA CITY

Oklahoma Insurance Commissioner Kim Holland took control of a workers' compensation insurer she cited as both insolvent and involved in potentially deceptive financial transactions.

Oklahoma County District Court Judge Daniel L. Owens granted Holland's application for an order of receivership March 18, giving her department full control of Imperial Casualty and Indemnity Co. The court appointed Mark D. Tharp of Tharp & Associates as assistant receiver of the company.

A hearing on the order to show cause is scheduled for April 9.

According to Holland's legal filing, Imperial entered into a loss portfolio transfer and 100% quota share reinsurance contract that transferred the majority of its business to its parent company, Park Avenue Property and Casualty. However, that LPT was never filed with the insurance department, as required.

Imperial's actuary told the department that if Imperial were required to assume the liabilities under the LPT, its liabilities will exceed its assets. Judge Owens determined Imperial will likely be obligated to pay its liabilities. "Therefore, based on its own actuary's opinion, Imperial is financially impaired and/or insolvent," he wrote.

PAPC, formerly Providence Property & Casualty Insurance Co., entered receivership Nov. 2009, according to BestLink, which provides online access to A.M. Best's Global Insurance & Banking Database. All in-force policies were subsequently cancelled by Dec. 18, 2009, with protection for policyholders provided by the state guaranty associations in the 28 states in which PAPC was licensed to do business.

Imperial touted its ability to focus on a niche business of providing workers' compensation insurance to professional employer organizations. It claimed coverage of more than 5,000 companies and 42,000 workers.

Attempts to reach Tharp and an attorney representing Imperial were not successful.

The top five writers of workers' compensation insurance in Oklahoma in 2008 were: CompSource Oklahoma, with 35.2% market share; American International Group Inc., with 12.7%; Liberty Mutual Insurance Cos., with 10.2%; Hartford Insurance Group, with 4.7%; and Travelers Group, with 4.3%.

(By Sean P. Carr, Washington Correspondent: [email protected])

March 25, 2010