CALIFORNIA INSURANCE GUARANTEE ASSOCIATION 2005 HISTORY l

CALIFORNIA INSURANCE GUARANTEE ASSOCIATION 2005

HISTORY l ESTABLISHED IN 1969 l CALIFORNA INSURANCE CODE, – – ARTICLES 14. 2 AND 14. 25 § 1063

CIGA Structure l BOARD OF GOVERNORS – APPOINTED BY THE INSURANCE COMMISSIONER – 9 MEMBER COMPANIES 4 MEMBERS FROM PUBLIC SECTOR –

CIGA ORGANIZATION l Board of Governors – Executive Director l l l Finance Department Human Resources Operations Audit Claims - Liability Department - Workers’ Compensation Department

FUNDING l Assessments l Distributions form Estates l Investment income l Borrowed funds

CIGA FUNDS l WORKERS’ COMPENSATION l PERSONAL LINES l OTHER

NOT COVERED l l l Life, Annuity and Disability Title Fidelity and Surety Credit Mortgage & financial Ocean marine

IMPORTANT CIGA IS NOT AN INSURANCE COMPANY

l ISSUES NO POLICIES l COLLECTS NO PREMIUM l NO PROFITS l ASSUMES NO CONTRACTUAL OBLIGATIONS TO THE INSUREDS

HOW IS CIGA TRIGGERED? l SUPERIOR COURT LIQUIDATION ORDER l AND A FINDING OF INSOLVENCY OF THE INSURER

Pre-2000 l 4, 100 Claims WC claims – – l 5 WC claims staff 1 TPA 2, 360 Liability claims – – 6 liability claims staff 1 TPA

Post 2000 l LMI Insurance Co. – l Superior National Ins. Companies – l 31, 140 wc claims Credit General Ins. – Ohio – – l 727 liability claims 2, 800 wc claims 942 liability claims HIH & Great States Ins. – 7, 492 wc claims

2001 l Amwest Surety Ins. Co – l Sable Ins. Co – – l 174 Auto & Liability claims 578 wc claims 279 liability claims Frontier Pacific Ins. – 2, 824 auto & liability

2001 l Far West Insurance – 284 auto & liability claims l Reliance Insurance Companies – 7, 984 wc claims – 7, 900 auto & liability claims l PHICO – 506 wc claims – 77 liability claims

2002 l National Auto & Casualty – – l Western Specialty. – l 75 wc claims 1, 610 auto & homeowners 655 auto & liability claims Paula Insurance Co – 3, 593 wc claims

2002 l American Horizon – l 159 auto & liability Alistar Insurance – – 380 wc claims 1, 039 auto & liability claims

2003 l Western Growers – l Millers Insurance Co. – l 600 wc claim 138 auto & liability Legion & Villanova Insurance Companies – – 15, 000 wc claims 12, 100 auto & liability claims

2003 l Home Insurance Co. – – l Fremont Indemnity – – l 1, 000 wc claims 3, 500 liability claims 15, 000 wc claims 500 liability claims Pacific National Insurance Co. – – 1, 750 wc claims 365 liability claims

2003 l Wasatch Crest – 138 liability claims

2004 l Commercial Casualty Ins. of NC – l Protective National Ins. Co. – l 10 liability claims Casualty Reciprocal Exchange – – l 1, 168 liability claims 500 wc claims 2 liability claims American Bonding. – 12 liability claims

Growth by Year l Year 2000 Takeover 33, 466 l 2001 28, 771 l 2002 8, 127 l 2003 50, 091 l 2004 1, 692 l 2005 ? ? ? . . l

Staffing Today l In house claims staffing: – – l 50 WC 24 Auto & Liability TPA’s – – 12 with 23 locations Approximately 560 claims staff adjusters, supervisors & managers

CURRENT OBLIGATIONS l 5, 445 Liability Claims – l 3, 969 handled in-house 54, 000 Workers’ Compensation Claims – – 4, 600 handled in-house 49, 400 handled by Third Party Claims Administrators (TPA)

TPA OVERSIGHT l CIGA PHILOSOPHY 7 COMPLIANCE REPRESENTATIVES • • • IRVINE CALABASAS RANCHO CORDOVA SAN DIEGO PASADENA

COVERED CLAIMS – DUTIES l 1063. 2(a) l 1063. 2(b)

SPECIFIC NON-COVERED CLAIMS l 1063. 1(c) – – CT claims with other insurance Contribution DWD MEDI-CAL/Medicare

SPECIFIC NON-COVERED CLAIMS l CT – CLAIMS Insurance Code § 1063. 1(c)(9)(i) -- other coverage available to employee

SPECIFIC NON-COVERED CLAIMS l CONTRIBUTION – Insurance Code § 1063. 1(c)(5)

SPECIFIC NON-COVERED CLAIMS l General Special Employment

SPECIFIC NON-COVERED CLAIMS l GOVERNMENT – – – § 1063. 1(c)(4) EDD LC § 4706. 5 (DWD) CLAIMS