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CONSUMERS: 1999 PRESS RELEASE

For Release: June 22, 1999
Media Calls Only: 916-492-3566

CALIFORNIA INSURANCE COMMISSIONER CHUCK QUACKENBUSH ANNOUNCES MULTIPLE ACTIONS TO INVESTIGATE INSURANCE COMPANIES IDENTIFIED IN APRIL FOR HOLOCAUST CLAIMS
PAYMENT DENIAL

Records of Four Companies to be Examined and Probed; Administrative Hearing Initiated Against Munich Reinsurance Subsidiaries; Warning of Impending Action Against Companies that Refuse to Pay Claims

SACRAMENTO -- California Insurance Commissioner Chuck Quackenbush today announced that he will probe several companies identified in April that the Department of Insurance suspects of having unpaid Holocaust-era claims. These insurance companies have not yet entered into the settlement process of the International Commission for Holocaust-era Insurance Claims (ICHEIC).

To that end, Commissioner Quackenbush has first of all appointed a Special Deputy Insurance Commissioner and Special Examiner (Commissioner Quackenbush has the authority under the powers delegated to him pursuant to Sections 733 and 734 of the California Insurance Code). The Special Deputy Insurance Commissioner will work with approximately 100 departmental personnel to examine any and all business affairs of the identified companies. The Special Deputy will make recommendations regarding the advisability of further regulatory actions.

Second, Commissioner Quackenbush has initiated an administrative hearing concerning the California licensed subsidiaries of Munich Reinsurance (Munchener Ruckversichergungs-Gesellschaft). Department research indicates that this group of insurance companies has significant exposure and has failed to pay Holocaust victims’ claims. As such, the companies may be guilty of other unfair business practices that are hazardous to its policyholders, creditors, and the public.

"I am committed to deploying a team of 100-150 people, if necessary, to accomplish the important task of probing these companies in a comprehensive and aggressive fashion to identify claims and bring appropriate pressure to get claims paid," said Commissioner Quackenbush. "My position has been clear from the beginning, and I am as resolved as ever in leaving no stone unturned in identifying every unpaid claim possible and ensuring that those claims are paid. To do that, these company examinations and the administrative hearing for Munich Re are vital investigative tools to help us gather accurate information on these companies – companies that should, in all good faith, already be at the negotiating table of the International Commission. We do not allow spectators in this battle for justice."

The companies subject to examination, by Special Deputy Insurance Commissioner and Special Examiner Karl L. Rubinstein of Rubinstein and Perry, A Professional Corporation, are California-licensed subsidiaries of the following four major insurance companies: Gerling Konzern, Basler Lebens-Versichergungs-Gesellschaft, Swiss Reinsurance Company, and Munchener Ruckversichergungs-Gesellschaft. The specific subsidiaries are as follows (listed under the parent companies):

Parent: Gerling Konzern

--Gerling American Insurance Company
--Gerling Global Life Insurance Company
--Gerling Global Life Reinsurance Company
--Gerling Global Reinsurance Corporation of America
--Gerling Global Reinsurance Corporation of US

Parent: Basler Lebens-Versichergungs-Gesellschaft

--Providence Washington Insurance Company
--York Insurance Company

Parent: Swiss Reinsurance Company

--Swiss Reinsurance American Corporation
--North American Specialty Insurance Company

Parent: Munchener Ruckversichergungs-Gesellschaft

--Munich American Reassurance Company
--Munich American Reinsurance Company
--Munich Reinsurance Company US Branch
--American Alternative Insurance Corporation

"Commissioner Quackenbush has authorized me to thoroughly examine these companies to determine whether they are obeying California law regarding payment of Holocaust-related claims, and I will proceed immediately to carry out his instructions," said
Karl Rubinstein.

Commissioner Quackenbush has led the effort on several fronts to ensure that Holocaust-era insurance policies are settled by companies. He held the first Department of Insurance hearing on unpaid Holocaust insurance claims in California in November of 1997. Commissioner Quackenbush was the only Insurance Commissioner in the nation to subpoena insurance company executives to a California hearing in San Francisco. The company executives subpoenaed were from Generali. Pursuant to legislation authored by State Senator Tom Hayden (SB 1530), he has coordinated California’s effort at the ICHEIC to represent the needs of survivors and to support, among other things, the importance of collecting information, outreach, and setting up a registry so that restitution on Holocaust-era claims can be made promptly, accurately and fully.

Commissioner Quackenbush spearheaded, with the New York Superintendent and Washington Commissioner, the establishment of the ICHEIC by bringing the first round of insurance companies to the table to sign a Memorandum of Understanding (MOU) to begin setting in place a process for paying claims.

He co-chaired the Audit Committee of the ICHEIC, which has completed its work to oversee the information provided by ICHEIC-member insurance companies that will lead to discovery of claim information and final settlement.

Next, Commissioner Quackenbush commenced an outreach program to survivors, supported by the 28-member Holocaust Insurance Settlement Alliance, and was joined at a unity event attended by Governor Gray Davis, Attorney General Bill Lockyer, Treasurer Phil Angelides, Senator Tom Hayden, and Assemblyman Wally Knox.

Commissioner Quackenbush has also deployed several teams of private investigators to delve into archives throughout the world to locate lists of survivors, policy information, denial letters from companies to legitimate claimants, company financial records, complicity documents, and other information that will help build a full historical record of the existence and scope of Holocaust claims being denied for more than one-half century.

"Some of the evidence we have found thus far is quite telling, including declination letters stating companies’ refusal to pay claims based on ‘non-Aryan’ status, as well as other questionable reasons for denial, such as nationalization of assets, statute of limitations, and necessity for production of documents – including concentration camp death certificates – before a claim could be paid," said Commissioner Quackenbush.

Commissioner Quackenbush also supported a series of successive litigation victories as an Amicus Curiae with respect to litigation on the Holocaust insurance restitution front, including:

  1. Filed an amicus brief in support of the Stern family – who seek recovery of life insurance benefits that defendant Assicurazioni Generali has refused to a Stern family member who died in the Holocaust. Generali has continually attempted to dismiss the lawsuit or have it transferred from California. Importantly, the California Supreme Court just recently (June 16, 1999) denied two petitions of Generali to dismiss or stay the lawsuit, thereby settling the jurisdiction issue and eliminating the final obstacles to the Stern case commencing on the established trial date of February 9, 2000.
  2. Submitted papers and arguments supporting three other cases, including those of the Friedman, Sladek and Babos families. The Los Angeles Superior Court ruled in favor of these families in early June, denying Generali’s motion to dismiss all three cases. Last week the California Supreme Court denied Generali’s appeals on jurisdiction. Generali has been ordered to answer the complaints, and a February 2000 trial date eight months from now has been set.

Commissioner Quackenbush will continue the fight for restitution for Holocaust victims and heirs during this week’s meetings of the International Commission being held in Jerusalem on June 23-24, 1999.

"I continue to emphasize that I fully expect significant progress at this week’s meetings, especially in what I believe are vital areas related to nationalization, valuation, and outreach. Barring the kind of progress that I and others believe must be achieved in Jerusalem, I stand on the side of survivors and will take appropriate further action against companies that continue the unconscionable policy of refusing to pay claims that they have turned into profit for more than 50 years," said Commissioner Quackenbush.

"It’s my intention to move against an ICHEIC company licensed in this state, provided significant progress is not made in Israel. Our market is strong and vibrant, and we don’t need -- and won’t tolerate -- continued company footdragging, especially from those whose own admissions and records already testify to hundreds of thousands of unpaid claims," said Commissioner Quackenbush.

You can access more information about the Holocaust insurance issue by logging on to the Department of Insurance’s Holocaust Website at www.insurance.ca.gov. Go to the main menu then click on the red button labeled "What’s Hot" and click on "Holocaust Era Insurance Claims." To file a claim for an unpaid Holocaust-era insurance policy, you can contact the Department of Insurance’s dedicated phone line at 1-888-CDI-INFO (234-4636).

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