SPIRIT COMMERCIAL AUTO RISK RETENTION GROUP, INC., IN RECEIVERSHIP

Below are frequently asked questions and answers (“FAQs”) for the receivership of Spirit Commercial Auto Risk Retention Group, Inc. (hereinafter, “Spirit” or the “Company”). These FAQs are meant as a general guide, and you should feel free to contact Spirit receivership staff, at the address or telephone mentioned in question and answer thirteen below, if you have further questions.

Question 1: WHAT IS THE STATUS OF THE COMPANY?

Answer: On January 18, 2019, in a case styled State of Nevada ex rel. Commissioner of Insurance, in her Official Capacity as Statutory Receiver for Delinquent Domestic Insurer vs. Spirit Commercial Auto Risk Retention Group, Inc., a Nevada Domiciled Association Captive Insurance Company, Case No. A-19-787325-C, Dept. No. XVI, the Eighth Judicial District Court of Nevada (“Court”) issued its Order Appointing Insurance Commissioner, Barbara D. Richardson (the “Commissioner”), as Temporary Receiver Pending Further Orders of the Court and Granting Temporary Injunctive Relief Pursuant to NRS 696B.270, which appointed the Commissioner as Temporary Receiver for Spirit.

Further, on February 27, 2019, Department XXVII of the Eighth Judicial District Court of Nevada entered its Permanent Injunction and Order Appointing Commissioner as Permanent Receiver of Spirit Commercial Auto Risk Retention Group, Inc. (the “Permanent Order”). Pursuant to the terms of the Permanent Order, the Commissioner was appointed Permanent Receiver (“Receiver”), and the firm of Cantilo & Bennett, L.L.P. was that same day appointed by the Receiver as Special Deputy Receiver of Spirit. As provided by the Permanent Order, the Receiver and Special Deputy Receiver are authorized to conduct the business of the Company and to administer its affairs for the protection of all secured creditors, insureds, policyholders, and general creditors.

Question 2: WHY WAS IT NECESSARY TO PLACE SPIRIT IN RECEIVERSHIP?

Answer: The Court found Spirit to be in an insolvent and hazardous financial condition that required the appointment of a Receiver and Special Deputy Receiver to administer the affairs of the Company for the protection of its insureds, policyholders, creditors, and the general public.

Question 3: WHAT DOES RECEIVERSHIP MEAN?

Answer: Receivership is a protective measure established under Nevada insurance law whereby regulatory officials seize control of an insurance company that is in an insolvent and hazardous financial condition. Receivership action is taken (as is the case for Spirit) for the protection of its policyholders, creditors, and the general public. The Receiver and Special Deputy Receiver, through the Permanent Order, have been given the authority to run the affairs of Spirit in compliance with applicable Court orders and the laws of the state of Nevada.

Question 4: IS SPIRIT ISSUING NEW INSURANCE POLICIES?

Answer: No. The Court’s Permanent Order placing Spirit into receivership permanently enjoins the Company from writing any new business. Further, the authority to issue new business was already surrendered voluntarily by Spirit in connection with prior regulatory actions which took place in 2018, and Spirit stopped writing new and renewal insurance business on June 30, 2018.

Question 5: WHAT IS THE STATUS OF MY PENDING CLAIM FILED WITH SPIRIT?

Answer: The Receiver has elected, as permitted by paragraph 17 of the Permanent Order, to impose a full suspension and moratorium on disbursements owed by Spirit, to include the payment of insurance claims, insurance defense costs, mediation costs, and other such costs related to the defense or adjudication of insurance policy claims. This moratorium is effective as of the date of entry of the Permanent Order, February 27, 2019.

The Receiver encourages you to contact current defense counsel (i.e., for any insured claims where you are now being defended by the Company through outside litigation counsel) and to make arrangements as best you can for the continued defense of claims brought against you as an insured of Spirit—if the claimant is not willing to stay litigation against you. For insureds that agree to pay their own defense costs for claims covered by the Company and/or pay money to settle claims covered by Spirit’s insurance, they are entitled to submit claims for those paid defense costs or claim settlements (i.e., as covered by Spirit’s insurance policy) to the Receiver.

The Receiver provides no guaranty of reimbursement of defense costs and claim payments made directly by insureds, or the timing of any reimbursement payment that may be approved, as this will depend on the extent of any future distributions made by the Receiver, including a review and approval that paid costs and claims are covered by Spirit’s insurance policy. Insured payments for defense costs and/or claim settlements should be submitted to Criterion Claim Solutions, Inc. (“Criterion”), at the address below. Please also contact Criterion if you are unsure about the name of current defense counsel handling any litigation brought against you and covered by Spirit.

Question 6: DOES ANY PROVISION CONTAINED IN THE COURT’S PERMANENT ORDER TRIGGER THE APPLICABILITY OF THE NEVADA INSURANCE GUARANTY ASSOCIATION OR ANY OTHER STATE INSURANCE GUARANTY ASSOCIATION?

Answer: No. Pursuant to NRS 695E.200(5), risk retention groups shall not “[j]oin or contribute financially to the Nevada Insurance Guaranty Association, or to any similar organization or fund in this state[.]” Further, NRS 695E.200(5) provides that “the provisions of chapter 687A of NRS [the Insurance Guaranty Association animating statutes] do not apply to a risk retention group. A risk retention group and its insureds shall not accept any benefit from such an organization or fund for claims arising out of the operation of the risk retention group.” As such, Insurance Guaranty Association coverage is not applicable in this case.

Risk retention groups, such as Spirit, are also not covered by the state insurance guaranty associations of other state jurisdictions.

Question 7: HOW DO I PRESENT CLAIMS THAT I HAVE UNDER A SPIRIT POLICY?

Answer: Claims for coverage may be submitted to Spirit by e-mail, facsimile, or postal mail using the following contact information:

Criterion Claim Solutions of Omaha, Inc.
P.O. Box 787
Omaha, Nebraska 68101

Telephone: (888) 816-2227
Facsimile: (800) 754-8440
E-mail: ccs@criterionclaim.com

Question 8: WILL THE PERMANENT ORDER OF RECEIVERSHIP CANCEL SPIRIT’S INSURANCE POLICIES?

Answer: Yes. Paragraph 18 of the Permanent Order mandates that “all evidences of coverage, insurance policies and contracts of insurance of SCARRG[Spirit] are hereby terminated effective on April 15, 2019, unless the Receiver determines that any such contracts should be cancelled as of an earlier date.” The Receiver has decided, upon review of all the applicable facts and circumstances, that Spirit’s in-force insurance policies are to be canceled effective on the earlier of April 15, 2019, or the date when the insured ceased making premium payments to Spirit (and insurance coverage on active policies is provided through April 15, 2019, provided that premiums are paid by insureds to the Company through such date).

Question 9: SHOULD I CONTINUE TO PAY MY PREMIUMS?

Answer: Yes. Insurance premiums must be paid to assure that your insurance policy remains in force through April 15, 2019, which is the insurance policy cancellation date ordered by the Court. Non-payment of premium may cause your policy to be canceled at an earlier date than this. You will also still be responsible for any additional premiums owed to Spirit for prior insurance coverage, whether that is determined through premium audits or otherwise.

Question 10: IF AN INSURED TOOK OVER THE DEFENSE OF A CLAIM COVERED BY HIS OR HER INSURANCE POLICY AFTER SPIRIT WAS PLACED IN RECEIVERSHIP AND HAS PAID, OR IS PAYING, HIS OR HER OWN LEGAL COSTS, WILL THE INSURED BE REIMBURSED FOR THOSE COSTS FROM THE RECEIVERSHIP ESTATE?

Answer: Generally, when legal costs are incurred in defending a claim that is covered by a Spirit insurance policy, the cost will be considered an insurance policy benefit claim, provided that the insurance policy provides coverage for insurance defense costs. You should submit a claim for the defense cost to the Receiver via the contact information as outlined above in response to question seven. All such defense cost claims are subject to the moratorium on claim payments imposed by the Receiver for the protection of all of Spirit’s insureds, creditors, and the public.

The Receiver provides no guaranty of reimbursement of defense costs and claim payments made directly by insureds, or the timing of any reimbursement payment that may be approved, as this will depend on the extent of any future distributions made by the Receiver, including a review and approval that paid costs and claims are covered by Spirit’s insurance policy.

Question 11: IS THERE AN INJUNCTION FROM COMMENCING, BRINGING, MAINTAINING, OR FURTHER PROSECUTING ANY ACTION AT LAW, SUIT IN EQUITY, ARBITRATION, OR SPECIAL OR OTHER PROCEEDING AGAINST THE COMPANIES, RECEIVER, OR SPECIAL DEPUTY RECEIVER?

Answer: Yes, the Permanent Order of receivership provides that all persons are enjoined from commencing, bringing, maintaining, or further prosecuting any action at law, suit in equity, arbitration, or special or other proceeding against Spirit, the Receiver, or the Special Deputy Receiver, unless brought in the receivership court.

Question 11: IS THERE AN INJUNCTION FROM COMMENCING, BRINGING, MAINTAINING, OR FURTHER PROSECUTING ANY ACTION AT LAW, SUIT IN EQUITY, ARBITRATION, OR SPECIAL OR OTHER PROCEEDING AGAINST THE COMPANIES, RECEIVER, OR SPECIAL DEPUTY RECEIVER?

Answer: Yes, the Permanent Order of receivership provides that all persons are enjoined from commencing, bringing, maintaining, or further prosecuting any action at law, suit in equity, arbitration, or special or other proceeding against Spirit, the Receiver, or the Special Deputy Receiver, unless brought in the receivership court.

Question 12: WHEN WILL CLAIMS BE PAID?

Answer: Currently, the Receiver does not have an estimated timeframe as to when claim or insurance defense disbursements will resume, as it will depend on many factors that are not yet known to the Receiver. We apologize for the hardship caused by the receivership and are working to achieve the best outcome for Spirit’s claimants.

Question 13: HOW CAN I CONTACT RECEIVERSHIP STAFF DIRECTLY? IS THERE A RECEIVERSHIP WEB SITE?

Answer: For copies of documents, additional information, and to address receivership questions, contact the Special Deputy Receiver as follows:

Cantilo & Bennett, L.L.P.
Special Deputy Receiver
Spirit Commercial Auto Risk Retention Group, Inc.
11401 Century Oaks Terrace, Suite 300
Austin, Texas 78758
mail@cb-firm.com

Or Receivership Documents page on the website.