What is Merced Property & Casualty Co.?
Merced Property & Casualty Co. was an insurance company that faced significant financial difficulties following the Camp Fire in Butte County, California, in November 2018. The California Insurance Commissioner filed for its liquidation on November 30, 2018, and a court order was issued on December 3, 2018, appointing the Commissioner as Liquidator. The company had approximately $23 million in assets but expected claims totaling $64 million, leading to its insolvency. By December 31, 2019, the Merced Estate, in collaboration with the California Insurance Guarantee Association (CIGA), had paid around $71.2 million in loss payments and filed a $26.6 million proof of claim in the Pacific Gas & Electric bankruptcy proceeding to recover expenses and unearned premium refunds. Notably, the company's financial impact was significant due to the catastrophic events surrounding the Camp Fire.
Industry
Property Insurance
Exit Announcement Date
The company announced its decision to leave California on November 30, 2018, when the California Insurance Commissioner filed a petition to place Merced Property & Casualty Co. into liquidation. The court subsequently ordered the liquidation on December 3, 2018.
Impact On Customers
The exit of Merced Property & Casualty Co. from the insurance market has significant implications for its customers in California. Following the company's liquidation, all policies were canceled, and customers were left without coverage. The California Department of Insurance took control of the company and its assets, and policyholders were directed to the California Insurance Guarantee Association (CIGA) for claims. CIGA provides limited coverage for claims that were outstanding at the time of the company's liquidation, but this may not cover all losses, especially given the high volume of claims resulting from the Camp Fire. Customers may face challenges in finding new insurance coverage due to the company's exit and the overall market conditions in California.
Exit Reason
Merced Property & Casualty Co. is leaving California primarily due to insolvency, which was significantly impacted by the financial repercussions of the Camp Fire, the deadliest and most destructive wildfire in California's history. A state judge ruled that the company could not meet its financial obligations following the disaster, leading to its liquidation. The economic strain from such catastrophic events, coupled with regulatory challenges in the insurance market, contributed to the company's inability to sustain operations in California.
Replacement Options
Customers affected by the exit of Merced Property & Casualty Co. are advised to seek coverage with other insurance providers immediately. It is recommended to contact local insurance agents or brokers who can assist in finding suitable replacement options. Additionally, the California Department of Insurance may provide resources and guidance for those needing to secure new insurance policies.
