Applied Underwriters’ CIC accuses California regulator of stunning overreach

In a recent court statement and tentative decision, the California Department of Insurance (CDI) prevailed in its efforts to prevent the California Insurance Company (CIC) from withdrawing from the California market, much to CIC’s frustration.

Jeffrey Silver, Executive Vice President and General Counsel at CIC, criticised the CDI’s actions as “an egregious and ill-motivated act that has cost taxpayers a small fortune and has adversely affected insurance buyers in the state.”

Silver argues that the CDI’s use of a conservation mechanism, typically reserved for financially distressed companies, was unjustified given CIC’s ‘A’ rating and over $1 billion in capital and surplus.

“The entire matter, both on the regulatory and legal sides, has no precedent procedurally or in case law, making it an exotic miscarriage and implicit approval of what may best be termed an ‘unaccountable entrenched bureaucracy,” Silver adds.

Despite his frustration, Silver pledges to adhere to the court’s decision and ensure that policyholders do not suffer as a result of it.

Steve Menzies, Chairman and Founder of CIC, echoes Silver’s concerns, suggesting that the CDI’s actions will have long-lasting negative effects on the Californian insurance market.

Menzies criticises the CDI for prioritising the “expansion of its power base” over addressing the needs of the market.

Menzies states, “Many can attest to the fact that CDI actions reveal a pattern of insider dealing, indifference to public accountability, and a level of activism against targeted companies that belies the presence of operatives with questionable agendas, willing to use a kind of piracy over private assets heedless of the outcome. And so the carriers’ charge to exit continues. Our experience may be seen as a case in point.”

Menzies also points out the inconsistency in the CDI’s actions, highlighting that they initially approved CIC’s redomestication before reversing their decision, benefiting “no one apart from the operatives’ selected law firms and consultants.”

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