The California Department of Insurance ("DOI") has issued two orders to show cause against Access Insurance Company.
The first alleged that Access was conducting its business and affairs in a manner that threatened to render it insolvent or in a financially hazardous condition in violation of the California Insurance Code.
The second alleged that Access had failed to pay over $5 million in premium taxes, interest, and penalties.
The first order to show cause alleged that Access was conducting its business in a hazardous manner that resulted in a risk of loss to policyholders, creditors, and the public. The order alleged that the company had failed to properly account for its future obligations. According to the DOI, the company's reserves were $22.5 million deficient and it had failed to pay premium taxes, penalties, and interest in excess of $5 million resulting in a total deficiency of nearly $27.2 million available to pay policyholders on their claims.
The DOI staff alleged that as a result of the deficiency noted above, Access had failed to maintain the capital required by law and California's insurance commissioner was authorized to place Access under regulatory control. As a result, the DOI said, Access might be subject to conservation or liquidation proceedings. Irreparable loss and injury to the property and business of the company might occur unless California's insurance commissioner acted to correct, eliminate, and remedy such conduct and conditions, according to the DOI.
The second order to show cause charged Access with repeatedly failing to pay premium taxes to the State of California, and alleged that the company owed over $5.2 million in delinquent taxes, interest, and penalties. It provided that, pursuant to California Revenue and Taxation Code Section 12802, Access' certificate of authority should be revoked unless the company could establish that the taxes, interest, and penalties currently outstanding and due had been paid. The DOI staff alleged that this outstanding tax liability was in addition to the inadequate reserves identified in the first order to show cause.
"As insurance commissioner, my first priority is protecting consumers," said the California insurance commissioner, Dave Jones. "To do this I must ensure all insurance companies are following the law, acting with financial integrity, and delivering on their promises to consumers."
A public hearing will be held on February 14, 2018 at 10:00 a.m. at the DOI in San Francisco after which the insurance commissioner will determine whether to issue a cease desist order and or revoke Access' certificate of authority to transact insurance.
A separate order to show cause was filed in July 2017 charging Access and some of its affiliates with engaging in improper claims handling and improper rating and underwriting practices in violation of the California Insurance Code and the Fair Claims Settlement regulations. It remains pending.