Markham General placed under liquidation order

Troubled insurer Markham General has been ordered to wind up its business and is having its assets seized by the Financial Services Commission of Ontario (FSCO). Earlier this year the insurer cancelled all policies and ceased writing new business.

At the time, Markham General statements indicated the company would be paying all outstanding claims, but FSCO now says the company’s assets are insufficient. “The superintendent [of FSCO] took this action to protect policyholders because Markham General Insurance Co. could no longer meet its obligations.”

Deloitte and Touche has been appointed provisional liquidator and outstanding claims will be submitted to the Property and Casualty Insurance Compensation Corporation (PACICC). “PACICC will consider claims arising from events that occurred on or before the date of the cancellation of all the policies – June 15, 2002,” says PACICC president and CEO Alex Kennedy. He notes that Markham General conducted business in Ontario, British Columbia and Alberta, but that the bulk of its business was in the Ontario auto market.

The liquidator should soon appoint an adjusting firm to run-off claims, Kennedy said in an interview. “It shouldn’t take any time to handle the physical damage claims. But there are a bundle of accident benefit claims and they obviously take a bit longer.” This is because Ontario’s legislation has not yet been updated to handle auto accident benefit claims fairly in wind-up situations. Currently there is a random assignation of claims that could see one insurer facing several high-dollar payouts. “That is going to be a problem again [because] the Ontario government has not enacted legislation we want on the books.” Twice legislation has been introduced, but not yet passed, to have these claims paid by the Motor Vehicle Accident Fund (MVAF) and charged to the Facility Association (FA) to be spread among all insurance companies. This is despite general agreement that the current legislation needs to be changed.

During the Maplex wind-up, Kennedy notes that special arrangements were made to use the FA as a means to spread the claims losses. This same scenario could potentially take place in the Markham General situation, he adds.