Judge puts Benicorp Insurance into receivership

A Marion County judge has appointed the Indiana Department of Insurance as receiver of Benicorp Insurance Co. to protect the ailing company’s 52,000 policyholders, the department announced today.

Marion Circuit Judge Theodore Sosin appointed Insurance Commissioner Jim Atterholt to oversee the transfer of Benicorp customers to Minnesota-based UnitedHealthcare and, potentially, to liquidate Benicorp’s assets.

Indianapolis-based Benicorp has policyholders in Indiana and 27 others states. In July, Benicorp told its customers it had halted new sales of its group life and health policies while it worked to fix problems with its computer systems.

Benicorp, which was founded in Indianapolis in 1987, was bought by Chicago-area investors in early 2005 for $32 million. At that time, it had 115 employees. In 2006, Benicorp pulled in $95 million in premiums but also sustained a $9 million loss.

“Throughout the last five months, I have worked diligently with Benicorp, attempting to bring its business into compliance with industry standards,” said Atterholt. “Despite all our efforts, including five orders directing Benicorp to correct its business practices and successfully requiring its parent company to infuse nearly $14 million into the company, it became clear the company could not be saved.”

Atterholt said he expects to file a petition of liquidation with Sosin next week. If that petition were approved, any unpaid claims at the time of liquidation would be paid by the Indiana Life and Health Insurance Guaranty Association and the National Organization of Life and Health Insurance Guaranty Associations.

The statutory cap on payments by the Indiana Life and Health Insurance Guaranty Association is $300,000 per individual. The caps for the other states vary from $100,000 to $500,000.

Atterholt tapped Randy Lamberjack, president of Noble Consulting Services Inc., to oversee the Benicorp rehabilitation process and the expected liquidation proceedings. Lamberjack previously served as chief examiner for the insurance department under former Gov. Evan Bayh.

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