RECIPROCAL OF AMERICA AND
THE RECIPROCAL GROUP
  In Receivership for Liquidation  

 

     

CANCELLATION OF DIRECT INSURANCE POLICIES

Question: Why did the State Corporation Commission of the Commonwealth of Virginia (the "Commission") authorize the Deputy Receiver to cancel ROA's direct insurance policies in its Order of Liquidation with a Finding of Insolvency and Directing the Cancellation of Direct Insurance Policies ("Liquidation Order")?
   
Answer: There are particular periods of time after which the insurance guaranty associations ("GAs") of various states will no longer pay covered claims. (Please refer to the GUARANTY ASSOCIATIONS AND YOUR CLAIM section for further information.) If the policies are not cancelled by the end of those time periods, claims arising after those dates would not be covered by the GAs and might never be paid to the extent provided by the policies under which they arise. Therefore, the Commission directed the Deputy Receiver to set cancellation dates for ROA direct insurance policies that coincided with the dates of GA coverage.
   
Question: When were ROA direct insurance policies cancelled?
   
Answer: ROA's direct insurance policies (including tail coverage policies and extended reporting endorsements) were cancelled in each state as described below, unless an individual policy was cancelled sooner, was replaced by the insured, or expired by its own terms before the applicable cancellation date. Active ROA policies issued in states other than Rhode Island, New Jersey, and Virginia, terminated as of 12:01 a.m., Eastern Time, on July 21, 2003. All active ROA insurance policies issued in Rhode Island terminated as of 12:01 a.m., Eastern Time, on August 20, 2003. All active ROA insurance policies issued in New Jersey terminated as of 12:01 a.m., Eastern Time, on September 19, 2003. All active ROA insurance policies issued in Virginia terminated as of 12:01 a.m., Eastern Time, on September 20, 2003.
   
Question: Will I get my premium back if my policy was cancelled?
   
Answer: In most states, the GAs may pay some portion of a policyholder's "unearned premium" due because of the premature cancellation of covered policies. However, GA coverage for eligible claims of insureds is subject to various limits, caps, deductibles, eligibility requirements, and other conditions. For further information about a particular GAís limitations, please consult the applicable state statute.
   
Question: How will the cancellation of my policy affect reporting claims arising under that policy?
   
Answer: Claims which arose under policies that were cancelled by the Liquidation Order (or which were cancelled by the insured or expired before the Commission-ordered cancellation) must have been reported by the earlier of the following dates:

(1) The Final Bar Date of September 30, 2004, set by the Commissionís Order Setting Final Bar Date and Granting Deputy Receiver Continuing Authority to Liquidate Companies, or,

(2) The reporting deadline provided by the policy terms.

For further information on the Final Bar Date, see the FILING A CLAIM AND THE PROOF OF CLAIM PROCESS section of the Frequently Asked Questions.

   
Question: How will the cancellation of my policy affect reporting claims under tail coverage?
   
Answer: Please be aware that tail coverage policies or extended reporting endorsements are no longer issued by ROA. Tail coverage policies and extended reporting endorsements are considered to be part of the direct policies of insurance of ROA and have been cancelled on the same schedule as other direct policies as detailed above. Claims under any tail coverage which arose before the cancellation of such coverage, must have been reported by the earlier of the following dates:

(1) The Final Bar Date of September 30, 2004, set by the Commissionís Order Setting Final Bar Date and Granting Deputy Receiver Continuing Authority to Liquidate Companies, or,

(2) The reporting deadline provided by the terms of the tail coverage policy or extended reporting endorsement.

For further information on the Final Bar Date, see the FILING A CLAIM AND THE PROOF OF CLAIM PROCESS section of the Frequently Asked Questions.