A. The Commissioner filed a petition with the Supreme Judicial Court for Suffolk County ("the Court") seeking an order of receivership with the objective of rehabilitation for the Lumber Mutual Companies, comprised of Lumber Mutual Insurance, its subsidiaries, SEACO Insurance Company and North American Lumber Insurance Company ("Lumber"). Lumber assented to the petition. The Commissioner was appointed Receiver by the Court on November 1st.
Q. What is the goal of this receivership?
A. The goal of the Receiver is to protect the interests of policyholders and other creditors through managing the expenses of Lumber as the business is run off in a consistent and orderly manner. Business and staffing plans are currently being developed to achieve this goal. The Receiver will continue to seek potential acquirers who may have an interest in Lumber's charter and licenses, its book of business, its infrastructure, or some combination thereof.
Q. Why did the Commissioner take this step?
A. After consultation with Lumber's management, the Commissioner has concluded that Lumber is in a financial condition requiring a receivership proceeding in order to protect the interests of policyholders and other creditors.
Q. What will this mean for existing policyholders?
A. In light of Lumber's financial condition, the Receiver has obtained the Court's authority to cancel all policies in force on January 1, 2001.
Q. Will Lumber be renewing policies with expiration dates between now and 1/1/01?
A. If sufficient time remains to issue a legal notice of non-renewal, the policy will not be renewed. If not, it will be renewed, but the renewal policy will be cancelled effective 12:01 am on January 1, 2001.
Q. How will refunds of unearned premium be handled?
A. Unearned premium refunds will continue to be processed in the normal course during the rehabilitation.
Q. Will short rate cancellation penalties apply if a Lumber policy is cancelled by the policyholder prior to January 1, 2001?
Q. How will claims be handled?
A. All claims will continue to be paid in the normal manner. Policyholders should continue to deal with Lumber/SEACO staff.
Q. Is the company going to close?
A. It's anticipated that the company will continue operations for a substantial period of time. Claims processing, receivables collection, audits, statistical reporting, customer support, reinsurance processing, files management and support from Systems, Finance and Human Resources will be required at varying levels for varying duration. This will be addressed in developing business and staffing plans.
Q. How will policyholders, agents and other vendors be notified of the receivership?
A. The Receiver has a statutory obligation to notify all policyholders of her appointment within 20 days of the entry of the receivership order in a form approved by the Court. Policyholders will receive a letter from the Receiver advising of her appointment. This letter will include the phone number for the Division of Insurance Consumer Help Line, (617) 521-7777. Lumber/SEACO policyholders and agents may obtain basic information from a recorded message or from Division of Insurance Consumer Service staff.