James Odato: If state is to blame, we'll pay price
James M. Odato
Tower Group International, a giant New York insurance company, has lost hundreds of millions of dollars in the past two years, sending its net worth to negative $11 million. In a recently filed lawsuit, the founder of a small insurance company blames the state for the collapse of the once-mighty firm.
If Tower's losses worsen, everyone in New York with an insurance policy could be hurt: The firm's huge book of property and casualty insurance policyholders are guaranteed for up to $1 million per claim by the state if the company goes bust or is liquidated.
Although it moved to Bermuda a few years ago, Tower is regulated by the state Department of Financial Services. Officials at DFS say the state's guarantee fund, which pays the claims of insolvent insurers, holds $246.6 million, but won't say what its estimated exposure to Tower's problems are because the company is publicly traded.
The guarantee funds could be refueled through assessments on insurers, which typically pass on their costs to customers.
http://www.timesunion.com/local/article/James-Odato-If-state-is-to-blame-we-ll-pay-price-5709744.php