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Settlements to Result in Substantial Payments to Policyholders

 

Tennessee Department of Commerce and InsuranceAction Ends 8 Years of Insurance Litigation

Nashville, TN – The Tennessee Department of Commerce and Insurance’s (TDCI) Commissioner, acting as statutory receiver, has secured several multi-million-dollar settlements for policyholders in relation to receiverships the Department initiated for the public’s financial safety in 2003.

While the dollar amounts of the settlements are confidential, the receiver plans to file a proposal with the court to make an interim distribution to policyholders equal to 40 percent of approved claims in the near future. The interim distribution will be followed by an additional and substantial final distribution as claims become final.

The settlements – now approved by the court – fully and finally resolve lawsuits the Department filed against numerous individuals and companies, including Crews & Hancock; General Reinsurance Corp.; Milliman, Inc.; PricewaterhouseCoopers LLP; Wachovia; and the directors and officers of the companies in receivership. Defendants denied liability in the lawsuits, most of which have been dismissed.

“We are pleased to announce these settlements,” says TDCI Commissioner Leslie A. Newman. “They are the culmination of an eight-year process and several lawsuits. This begins the phase of returning money to policyholder claimants.”

TDCI placed three affiliate insurers – The Reciprocal Alliance, Doctors Insurance Reciprocal, and American National Lawyers Insurance Reciprocal – under receivership on January 31st, 2003, after finding the companies were in financial conditions that posed a financial hazard to the public and were unable to cover existing claims.

The three affiliate insurers primarily provided professional liability insurance to healthcare professionals, institutions and attorneys across the country. They had been engaged in a risk-sharing, reinsurance arrangement with Virginia-based Reciprocal of America, which TDCI’s Virginia regulatory counterpart placed under receivership, as well.

The Department of Commerce and Insurance works to protect consumers while ensuring fair competition for industries and professionals who do business in Tennessee. www.tn.gov/commerce/


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