Deadly California wildfire bankrupts insurance company

Deadly California wildfire bankrupts insurance company

MERCED, CA (KFNS/CNN) - One of the victims of the deadliest fire in California history is a company that’s supposed to protect homeowners.

Known as one of the deadliest fires in California history, the Camp Fire left thousands of people without homes.

State regulators are taking over Merced Property and Casualty Company because the company can’t pay out all the expected claims from the massive fire.

“It completely overwhelmed this company, looking at the number of claims that they would have, and it left them insolvent,” said Nancy Kincaide of the Department of Insurance.

A judge approved the liquidation proceeding on Monday at the Merced County Superior Courthouse.

Documents stated the company faces about $64 million in outstanding liabilities located in Paradise, CA, but their assets are listed at about $23 million.

A spokesperson for the Department of Insurance said the company had 200 policies in Butte County, but doesn’t know how many people impacted by the fire held insurance with the company.

“No one can remember a time when a property management company could become insolvent, and we haven’t seen a company in a similar financial situation, so I think people can rest assured things are fine,” Kincaide said.

However, no one at the site would comment on the insolvency or how many employees work at the business.

The California Insurance Guarantee Association, which “protects resident claimants in the event of an insurance company insolvency,” will take over the claims and work with policy holders.

However, the state agency has a limit on the maximum amount it can pay claimants, the insurance company said in its FAQs. If a customer’s claims exceed the limit, “the excess will be a claim against the assets of Merced.”

Wayne Wilson, executive director of the California Insurance Guarantee Association, said he believes a big reason for the insurance company’s closure comes down to location.

“It was heavily concentrated in the Sacramento, Central Valley, and didn’t write in other places, so it didn’t have a lot of spread of risk,” he said.

Wilson said he hopes they’ll have information on the claims by next Monday and will start working to assess the damage in areas impacted by the devastating fire.

Copyright 2018 KFNS via CNN. All rights reserved. Raycom News Network contributed to this report.