News: 2019 Press Release
For Release: October 21, 2019
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Department of Insurance denies application for approval of sale of California Insurance Company
SACRAMENTO, Calif. — On Friday, October 18, the California Department of Insurance denied an application for approval of the sale of California Insurance Company, citing, among other reasons, the applicants’ abrupt and unilateral decision to merge the company with a New Mexico-based entity without seeking or obtaining California’s prior approval.
The California Department of Insurance had been in the process for several months of extensively reviewing the application for sale of the company when applicants abruptly changed plans and failed to seek the required prior approval of the California Department of Insurance and failed to submit the information and documentation required to determine whether the sale is fair and reasonable to its California policyholders.
In addition, the department said the competence, experience, and integrity of the persons who would control California Insurance Company after the change of control is not in the best interest of its policyholders or the public.
As a result, the California Department of Insurance denied the application and is exploring additional enforcement remedies to the fullest extent of the law in order to protect policyholders.
California law is unequivocal in giving the Department of Insurance the duty and power to review transactions of California-based insurers in order to protect policyholders. No company can evade this authority if it wants to sell insurance in this state.
If the reported merger of California Insurance Company is completed without the California Department of Insurance’s approval, its existing California certificate of authority will terminate by operation of law and the surviving entity will not be qualified to transact insurance in California.
If this occurs, no existing policyholder of California Insurance Company will lose coverage as a result of this action. The California Department of Insurance will take all necessary steps to protect coverage for existing employer policyholders and injured workers including pursuing additional enforcement remedies to the fullest extent of the law.
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Led by Insurance Commissioner Ricardo Lara, the California Department of Insurance is the consumer protection agency for the nation's largest insurance marketplace and safeguards all of the state’s consumers by fairly regulating the insurance industry. Under the Commissioner’s direction, the Department uses its authority to protect Californians from insurance rates that are excessive, inadequate, or unfairly discriminatory, oversee insurer solvency to pay claims, set standards for agents and broker licensing, perform market conduct reviews of insurance companies, resolve consumer complaints, and investigate and prosecute insurance fraud. Consumers are urged to call 1-800-927-4357 with any questions or contact us at www.insurance.ca.gov via webform or online chat. Non-media inquiries should be directed to the Consumer Hotline at 800-927-4357. Teletypewriter (TTY), please dial 800-482-4833.