New England Fidelity Receivership Questions and Answers

New England Fidelity Receivership Questions and Answers

Q. What action has the Commissioner of Insurance taken against New England Fidelity? A. Massachusetts Commissioner of Insurance Linda L. Ruthardt, acting through the office of Tom Reilly, Massachusetts Attorney General, sought and received an order from the Massachusetts Supreme Judicial Court for Suffolk County ("the Court") placing New England Fidelity Insurance Company into receivership for purposes of rehabilitation and conservation. Q. Why was New England Fidelity placed into receivership? A. The Company sustained severe operating losses during 2000. It has been the subject of an ongoing financial examination by the Massachusetts Division of Insurance, and an Order of Administrative Supervision. The Commissioner has now concluded that New England Fidelity's financial condition is hazardous to the public and to its policyholders and creditors. Its statutory capital is below the minimum amount established by law. The Commissioner therefore sought and received the Court's permission to take control of the Company's assets and oversee its continued operation. The Company did not object to the Commissioner's appointment. Q. How will this action affect policyholders? A. Starting immediately, New England Fidelity will begin canceling all of its policies of insurance upon 90 days' written notice. Policyholders should contact their agent in order to make arrangements to replace their policies. In the event that a policyholder replaces coverage before the effective date of cancellation (or expiration if earlier), there will be no "short rate" cancellation penalty applied. Q. What will happen to claims? A. For the time being, policyholders should continue to report claims to their agent as before the receivership, and claims will be adjusted by New England Fidelity claims staff. Q. What will happen next? A. The Commissioner will report back to the Court within 30 days with her further recommendations concerning New England Fidelity. Q. What will happen to New England Fidelity's exclusive representative producers? A. It is expected that all of New England Fidelity's exclusive representative producers will be immediately reassigned to other automobile insurers by Commonwealth Automobile Reinsurers. Q. How can I obtain answers to other questions which I might have? A. You may contact the Consumer Help Line at the Massachusetts Division of Insurance by dialing [phone].