INSURER IN RECEIVERSHIP

Oklahoma Insurance Commissioner Carroll Fisher obtained a temporary court order placing Fairway Employment Services into receivership. According to the insurance department Fairway, along with a number of affiliated companies, had been acting as an unlicensed insurance company. In October, Fisher ordered Fairway to stop doing business as an insurer. Since then, Fisher’s agency has learned the company has an estimated $500,000 in outstanding claims with limited resources to pay. In addition, at least one former client sued to have Fairway placed into receivership, creating what Fisher termed a “run on the courthouse” in which several creditors may seek the company’s assets. Fisher said Fairway’s assets should be distributed among all creditors based on statutes governing insurance company insolvencies, which give priority to policyholders with unpaid claims. “The Fairway situation clearly demonstrates why state and federal laws have been established governing the business of insurance,” Fisher said. “Unlicensed insurers have been cropping up across the nation offering cheap insurance. Licensed insurance companies are regulated so that such receiverships are rare, and if they do become insolvent, their overdue claims are paid by each state’s guaranty fund.” Under an order approved by Oklahoma County District Court Judge Carolyn Ricks, a hearing on a permanent receivership was set for Jan. 6. In addition to Fairway Employment Services, the order names Fairway Human Resources Management Inc., Fairway Health Plan, Fairway Claims Administration and Central Management Inc.

Topics Carriers