April 01, 2010
Missouri insurance regulators put St. Louis-based National States Insurance Co. into rehabilitation
Jefferson City, Mo. - A judge has placed a St. Louis-based insurance company into rehabilitation and turned it over to regulators at the Missouri Department of Insurance. Department Director John M. Huff has been named receiver of National States Insurance Co., which allows the department to take over operations of the company. Huff says National States is in hazardous financial condition, and the action is necessary to protect Missouri consumers who have long-term care, life and Medicare Supplement insurance policies with the company. The company's board of directors has consented to the rehabilitation order.
Rehabilitation is a legal step taken by the Court to protect policyholders by preserving the company's assets. The Department as the Rehabilitator assumes management of the company, attempts to correct existing problems, continues operations, maintains policyholder accounting and develops a plan of rehabilitation or petitions the Court for liquidation. The department is currently overseeing thirteen insurance companies in rehabilitation or receivership status.
National States is licensed to do business in 37 states, including Florida, where it has run into financial problems with its long-term care policies. Huff says the company underpriced its products, and as a result may be unable to pay future long-term care insurance claims filed by policyholders.
With a rehabilitation, the department's priority will be to process existing claims and find another insurance company willing to buy and assume the policies of National States.
As with all licensed insurers in Missouri, National States' policies are backed by the Missouri Insurance Guaranty Association. Much as the FDIC insures bank deposits in the event of a bank failure, the Guaranty Association backs the policies of insurance companies so that policyholders are protected after a failure.
"Putting National States into rehabilitation will allow our department to make sure the company's assets are handled properly, so that claims are paid as fully as possible," said Huff. "The department and the Guaranty Associations in the states in which the company conducts business will work together on behalf of consumers, who have faithfully paid their premiums to this company for years."
National States had $6.4 million in premium sales in Missouri in 2009. Policyholders with questions can call the Missouri Department of Insurance Consumer Hotline at 800-726-7390 or contact the department online at insurance.mo.gov. A list of Frequently Asked Questions pertaining to this rehabilitation may also be found on the department's Web site.
About the Missouri Department of Insurance, Financial Institutions & Professional Registration
The Missouri Department of Insurance, Financial Institutions and Professional Registration (DIFP) is responsible for consumer protection through the regulation of financial industries and professionals.The department's seven divisions work to maintain consumer confidence by examining and monitoring industries and professions and by establishing coherent and evolving policies.DIFP works to enforce state regulations both efficiently and effectively while encouraging a competitive environment for industries and professions to ensure consumers have access to quality products.