N.Y. Dept. Moves To Keep Weak Firms Afloat

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By Caroline McDonald

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New York

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A New York Insurance Department official said his agency hasstarted a program to foster rehabilitation, rather thanliquidation, of financially shaky insurers.

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Peter J. Molinaro, senior deputy superintendent for insurance,said the department is aiming to create a more “flexible, adaptive”liquidation program.”

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Mr. Molinaro noted that State Insurance Superintendent GregoryV. Serio “has made statements, in no uncertain terms, that he needsthe bureau to be more flexible, more adaptive, and certainly moregeared to rehabilitation of companies as opposed to juststraight-out liquidation of companies.”

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His comments came last week in New York City at a meeting of theAdvancement of Professional Insurance Women.

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While the department believes, given the state of the insurancemarket, the state of the stock market and the direction of theeconomy, that liquidation service may be necessary, “our first stepis to make every effort at rehabilitation,” Mr. Molinaro said.

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A better rehabilitation program is important because “the wholepoint is to get the company well again–to get it back into themarket, back paying taxes and back employing people,” he said. Hecontrasted this to the idea that when companies “used to go to theLiquidation Bureau, it was a death sentence–the company wasn'tgoing to come out.”

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Mr. Molinaro noted that, in the history of the bureau, only oneinsurer has been restored to solvency.

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“We want to change that,” he advised.

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In an initial move to refashion the liquidation program, thedepartment, on Jan. 15, hired James P. O'Connor as special deputysuperintendent of the Liquidation Bureau. Mr. O'Connor, sinceDecember 1995, served as chief legal officer of the New York StateInsurance Fund.

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New York “wants to be a leader in the country in rehabilitatingcompanies, and that's the mission that Greg Serio and I have givenJim O'Connor,” he said. “He is aggressively taking that up now” by“reviewing every aspect of the bureau's operations,” he said.


Reproduced from National Underwriter Edition, April 28, 2003.Copyright 2003 by The National Underwriter Company in the serialpublication. All rights reserved. Copyright in this article as anindependent work may be held by the author.


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