FREQUENTLY ASKED QUESTIONS

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1 IMPORTANT NOTICE: The following Frequently Asked Questions and answers are intended to provide consumers and their counsel an overview regarding the liquidation of San Antonio Indemnity Company. Milford Consulting, LLC, as Special Deputy Receiver of San Antonio Indemnity Company reserves the right to provide updated and new information that may affect the interests of San Antonio Indemnity Company. Nothing herein constitutes a binding legal statement by the Commissioner of Insurance of the State of Texas, the Special Deputy Receiver, or their representatives. Nor are the statements contained herein intended as legal advice or complete legal descriptions of the events or matters to which they relate. The material provided herein is offered only for the purpose of general information. For full legal information, interested parties should review the source documents and applicable legal authorities. Consult with your agent or attorney for more information as to your specific rights. FREQUENTLY ASKED QUESTIONS GENERAL QUESTIONS What is a receivership? A receivership is a court proceeding. The Texas Insurance Code authorizes the Commissioner of Insurance (Commissioner) to initiate a receivership to rehabilitate or liquidate an insurance company. In a receivership, the Commissioner is the Receiver of the insurance company, and the Receiver can appoint a Special Deputy Receiver (SDR). Is San Antonio Indemnity Company (SAIC) still operating its insurance business? No, on October 31, 2013, San Antonio Indemnity Company was placed into liquidation. The Travis County District Court (Court) entered an order finding SAIC was insolvent, placed it in liquidation, and appointed the Commissioner as Receiver (Liquidation Order). Milford Consulting, LLC has been appointed as the SDR. Liquidation is similar to bankruptcy, but insurance is a state-regulated industry. An insurance company is placed in liquidation when the Texas Department of Insurance determines that the company may not be able to pay its policyholders, claimants, and creditors with the assets it owns. In a liquidation, an SDR is appointed by the Receiver to protect the interests of the policyholders and others and to distribute the insurance company s remaining assets as directed by the Court. The SDR is responsible for the day-to-day administration of SAIC. The Receiver and SDR s actions are dictated by the Court and certain laws and regulations of the state. Why is San Antonio Indemnity Company (SAIC) in liquidation? The Travis County District Court (Court) entered an order of liquidation for SAIC on October 31, This action was initiated in order to protect policyholders, claimants, creditors, and the public from further harm which might be caused by SAIC s continued operation due to its inability to pay all policy level claims in whole. What is a liquidation order? The Liquidation Order is a final order of the Court that gives the Commissioner, as Receiver, among other powers and duties, the authority to take control over SAIC, marshal its assets, and liquidate them. The Receiver collects the assets belonging to SAIC as the company that is in receivership (also referred to as the receivership estate). Assets are then used to reduce estate debts and pay claims as outlined in Texas Insurance Code Chapter 443.

2 How can I contact the SDR? The SDR s contact information is as follows: Kathy Milford Milford Consulting, LLC P.O. Box 279 Dripping Springs, Texas Phone: Fax: saicinquiry@gmail.com How can I obtain information about the receivership? Information will be made available on the SDR s website. Updates will be posted on this website as additional information is available. The website address is Pleadings and orders will be posted on this website after they are filed with the Court. TERMINATION OF POLICIES I received a notice of termination. When is my policy cancelled? Under Texas law, all SAIC policies are terminated on the earlier of: the policy expiration date; the date of new homeowners insurance coverage; or November 30, If you have not obtained a new policy, you should do so immediately! Your SAIC policy cannot be renewed. If you have a question about your policy, please contact the SDR. How should I obtain replacement new homeowners insurance? To avoid a gap in your homeowners insurance coverage, the new policy effective date should be before November 30, If you have an agent, you should contact the agent as soon as possible. If you are in Texas, you can obtain information comparing insurance companies rates at I have obtained new homeowners insurance. How do I cancel my SAIC policy? Your agent should notify the SDR of your new homeowners insurance as soon as possible. Policy cancellation requests are processed as they are received. A delay in cancelling coverage could reduce any claim you may have for a refund of unearned premium. POLICY CLAIMS Now that SAIC is in liquidation, who will handle my claim? When the Liquidation Order was entered on October 31, 2013, SAIC stopped paying claims. Claims are now payable as follows: The Texas Property and Casualty Insurance Guaranty Association (TPCIGA) will pay "Covered Claims" under SAIC s policies. Covered Claims are subject to payment limits and other conditions or exclusions. Texas law will determine whether a claim qualifies as a Covered Claim.

3 Claims that are not payable in whole or in part by TPCIGA can be presented to the receivership by filing a POC. (Note: Filing a POC refers to your POC being postmarked or received otherwise by the SDR prior to the expiration of the claims filing deadline.) See the POC section of these FAQs for more information about filing a POC. Claims that are approved in the receivership are payable from SAIC s funds. The timing and percentage of any distribution of funds cannot be estimated. How do I contact TPCIGA? Information regarding TPCIGA is available at Their phone numbers are or How do I make a claim that has not yet been reported to SAIC? All new claims should be reported to the SDR. The SDR will forward the claim to TPCIGA. Is there a deadline for filing a claim with TPCIGA? In Texas, there is an 18 month deadline beginning October 31, 2013, for claims on policies issued by SAIC. If you filed a claim with SAIC, you do not need to file another claim with TPCIGA. I have a lawsuit against SAIC. What do I do? The Liquidation Order includes notice of the automatic stay and permanent injunction enjoining suits against SAIC. All claims against SAIC not covered by TPCIGA, previously presented by a lawsuit, will need to be presented as a claim against the SAIC receivership estate by filing a POC. See the POC section for more details. I was insured by SAIC and have a lawsuit pending against me. What do I do? TPCIGA will defend the insured party if SAIC was obligated to provide a defense and the lawsuit is for a Covered Claim. If you are served with a lawsuit, contact TPCIGA and provide them with a copy of the lawsuit papers. What if all or part of my claim is not payable by TPCIGA? While many policy claims will be covered by TPCIGA, some claims may not be covered. A claim that is not covered by TPCIGA can be made in the receivership by filing a Proof of Claim (POC) by April 30, 2015, the claims filing deadline, which has been approved by the Court. The POC form and instructions are posted on the SDR s website ( under the Notices and Forms tabs. You should provide any change of address to the SDR, so you receive the notice of the claims filing deadline. Please see the POC section of these FAQs for additional information about filing POCs. When will claims filed in the receivership be paid? Claims that are filed in the receivership can be paid only after the claim is approved by the Court and a distribution from SAIC s funds is ordered by the Court. It is difficult to estimate the amount of funds available to pay claims against the receivership estate.

4 UNEARNED PREMIUMS What is unearned premium? Unearned premium is the amount of premium paid for your policy for which you did not receive insurance coverage because of the cancellation of your policy. Are there any requirements for the payment of unearned premiums? Unearned premium claims are covered by TPCIGA, subject to limits and other exclusions. If any part of an unearned premium claim is not a Covered Claim, it can be filed in the receivership. If you believe that you have a claim for unearned or overpaid premium and you have not received a refund, you should contact the SDR s office and inquire. AGENTS How is a claim for unpaid commissions handled? If an agent is due unpaid commission, the agent may file a POC in the receivership. TPCIGA does not cover an agent s claim for unpaid commissions. If SAIC was my only appointment, will my license be suspended? If SAIC was your only active appointment, your license will not expire unless you fail to renew it by the expiration date. What do I do with funds owed to SAIC? If you have funds that are owed to SAIC, you are obligated to remit and provide an accounting for those funds as required under your contract and the Texas Insurance Code. Send payments to the SDR and provide any necessary documentation. POC SECTION What is the POC Process? The POC process is the procedure to follow for submitting to the SDR all claims against SAIC that are not covered in whole or in part by TPCIGA. This process includes claims that are related to insurance policies but denied coverage by TPCIGA and claims for goods or services provided to SAIC under contract. On August 14, 2014, the receivership court issued its order approving the SDR s POC form and instructions. The same order established April 30, 2015, as the POC filing deadline (claims filing deadline). The SDR expects to provide notice of the claims filing deadline to known creditors and publish notice in December, The POC form and instructions are posted on the SDR's website under the Notices and Forms tabs.

5 PLEASE BE SURE YOU FILE YOUR POC BY APRIL 30, FILING YOUR POC MEANS YOUR POC SHOULD BE POSTMARKED OR OTHERWISE RECEIVED BY THE SDR BY THE APRIL 30, 2015 FILING DEADLINE. If you choose a method other than postmark, it is your responsibility to obtain proof that the SDR received your POC by the claim filing deadline to validate that you timely filed your POC. Unexcused late POCs submitted after the filing deadline may not be eligible to share in the assets of the SAIC receivership estate unless or until all timely presented claims have been paid in full. FILING POCs TPCIGA has paid most of my claim. Can I file a POC for those amounts not paid by TPCIGA? Yes, you may file a POC for any portion of your claim that TPCIGA has stated is not a covered claim. When filing a claim for amounts not paid by TPCIGA, please be sure to submit a copy of any correspondence you may have received from TPCIGA regarding your claim. This will assist the SDR staff in reviewing your claim. I had a homeowner s policy with SAIC. How can I be protected for claims that are reported after the claims filing deadline? The liability portion of a homeowner s insurance policy is an occurrence policy. Insureds with an occurrence policy may file a proof of claim for any claims that the insured believes may be made against their policy in the future, even if the claims are not known before the claims filing deadline. When you complete the POC form, check Other Claim and in the section labeled Describe the nature of your claim, write policyholder protection claim under an occurrence policy. Even if you currently do not know of any claims that may be filed against you, you should file a POC by April 30, 2015, for future protection. If a claim is reported after the claims filing deadline, and you did not timely file a POC for future protection, your claim may only be allowed as a late claim under the provisions of the Texas Insurance Code. I have a claim against SAIC and its agents for how my claim was handled. What should I do? If your claim was not handled properly, you should file a POC. Improper handling of claims may include delay, denial, or discounting of a claim without a reasonable basis for such action. When you complete the POC form, check Other Claim and in the section labeled Describe the nature of your claim, write improper claims handling. Your POC will be reviewed by the SDR s claim staff, and you will be notified regarding the classification of your claim. I am a general creditor. When will my POC be processed? If you have unpaid bills for providing services, unpaid commissions, unpaid claims, or unpaid reinsurance billings, you should file a POC. This may include invoices for services related to an SAIC claim or policy even if you were initially hired by one of SAIC s managing general agents. Your POC will be reviewed by the SDR s claim staff, and you will be notified regarding the classification of your claim. It is difficult to estimate the amount of assets available for payment of any POCs filed against the receivership estate. I am not a policyholder claimant. Why is it important for me to file a POC? The SDR is working to collect all potential assets of the receivership estate. At this time, it is difficult to predict the amount of receivership assets for the payment of POCs filed with the SDR.

6 In order to protect your future legal rights, it is important to file a POC by April 30, In the event that sufficient assets are collected to pay POCs at this level, timely filing a POC allows you the opportunity to receive a potential payment of an allowed claim. What kind of documentation should I include with my claim? Include copies of anything you think will assist the SDR with evaluating your claim. An example might be any of the following: correspondence you may have received from SAIC, a claims adjuster, an attorney, or your agent; any bills that relate to your claim; and a claim number or policy number. My spouse and I are both claimants and have a pending claim. Does each of us have to file a separate POC form? Yes, a separate POC form is needed for each claimant involved in a pending claim. I don t feel comfortable putting my Social Security number on the POC form. Why do you need the Social Security number? Your privacy will be protected to the extent allowed by law. We will not release the information to any person or entity. We need this information for identification purposes and for any required Internal Revenue Service and Medicare reporting. I have a claim pending against an insured of SAIC. The POC form states that if I file the POC, I will waive my rights to pursue the insured s personal assets. What does this mean? The Texas Insurance Code requires an election of remedies by third parties who wish to pursue a claim against an insured. By filing a POC, the claimant agrees, to the extent of coverage provided under the policy, to waive any right to pursue the assets of the insured, up to the policy limits of coverage. This means that if you choose to make a claim under the insured s policy, you cannot pursue an action against the insured s personal assets for any amount that is within the insured s policy limits. This waiver does not affect any coverage that you may be provided by TPCIGA. A third-party claim is treated at the same level as a policyholder claim. After I file a POC, will I receive an acknowledgement that my POC was received? Due to the cost involved, we cannot verify receipt of your POC form. If you would like verification that we received your POC form, we suggest that you send your completed POC by certified mail or another manner that will provide you with proof that the SDR received your POC. I filed a POC, but my contact information has changed. What do I need to do? It is important for the SDR to have correct contact information in your file. You will receive any notice regarding the status or classification of your claim at the address you provided on your POC form or at your mailing address if you did not provide an address. If any of your contact information has changed, send a written notice to the SDR at P.O. Box 279, Dripping Springs, Texas 78620, with your full name, old contact information, and new contact information.

7 FILING A POC FOR FEES CHARGED TO POLICYHOLDERS Were fees other than premiums charged to policyholders? Initial investigation by the SDR indicates that some policyholders may have been charged fees unauthorized by the Texas Insurance Code. How do I know if any unauthorized fees may have been charged to me? The records and books of the receivership estate should show if any of these unauthorized fees are owed to a policyholder. The SDR will review the records to determine policyholders to whom reimbursement may be owed because of unauthorized fees charged. What should I do if any of these unauthorized fees may have been charged to me? You should file a POC to protect your future legal rights. Since you may not know if any unauthorized fees may have been charged to you, it is important to file a POC by April 30, 2015, for your future protection. The POC form includes a statement above the signature line to address making a claim for fees. Do I need to file an additional POC to make a claim for unauthorized fees that may have been charged if I am filing a POC for another type of claim? No, the POC form includes a statement above the signature line to address making a claim for fees as well. By filing a POC, you acknowledge that you are also making a claim for any fees which are determined to be owing to you, as shown in the books and records of the receivership estate. When will I be reimbursed for any unauthorized fees that may have been charged to me? At this time, it is difficult to estimate the amount of receivership assets available for the payment of any POCs filed with the SDR. The SDR is working to collect all potential assets of the receivership estate. Please see the Review of POCs section below for further information regarding how the SDR will review claims. REVIEW OF POCs In what order will claims be paid? The Texas Insurance Code provides a classification system, which details different levels of classification for POCs based on the type of claim being presented. The priority of payment of claims is determined by how POCs are classified. POCs classified at a higher level must be paid before POCs classified at a lower level can be paid. The SDR is not required to pay claims for any classification level until it appears reasonably likely that assets will be available for a distribution to that level. I filed a POC. What happens next, and when will my POC be paid? In a receivership, it is difficult to estimate the amount of receivership assets available for the payment of any POCs filed with the SDR. The SDR is working to collect all potential assets of the receivership estate. The receivership assets currently available indicate sufficient assets to pay a partial distribution to claims at the policyholder level. POCs at the policyholder level will be classified and allowed, disallowed, or compromised with an amount. POCs below the policyholder

8 level will only be classified, except to the extent necessary to recover assets for the receivership estate as determined by the SDR. 1) How the SDR will review your claim: Based on the documentation received, the SDR will classify your claim according to the order of priority set out in the Texas Insurance Code. Please note the following: -If you have an existing or a new claim under a policy of insurance which may be covered by TPCIGA, but has not been referred to TPCIGA, the SDR will forward your claim to TPCIGA for review and determination. -If your claim was paid in whole by TPCIGA, your POC against the receivership estate will not be processed in any way. 2) A notice of the classification (or allowance, disallowance or compromised amount, if at policyholder level) of your claim to your address, if you provided one on the POC form, or to your mailing address if you did not provide an address. This classification or determination regarding your claim will be based on information submitted with the POC. The handling of your POC may be delayed in the event that there is not enough information submitted with your POC to evaluate your claim. 3) In the event you are not satisfied with the classification or determination of your claim, it is necessary to object in writing to the decision of the SDR. 4) Payment of policyholder level claims: After all claims allowed at the policyholder level are determined with an amount, and approved by the receivership court, the SDR will file an application with the receivership court requesting approval to pay these claims on a prorata basis. Pro-rata means that the available money will be passed out proportionally to all allowed POCs, on an equal ratio to each POC s percentage of all POC claims. At that time, your POC would receive a pro-rata distribution, if approved for payment. 5) Payment of claims below policyholder level: The SDR is not required to pay claims for any class until it appears reasonably likely that assets will be available for a distribution to that class. In the event that sufficient assets are collected in order to pay claims below the policyholder level, the SDR will evaluate these claims, based on their merits, in the order of priority, determined by their classification. After claims within a certain class below the policyholder level are determined with an amount, the SDR will file an application with the receivership court requesting approval to pay these claims on a pro-rata basis. At that time, your POC might receive a pro-rata distribution if all claims in your classification are approved for payment. What is the process for disputed POCs? No lawsuits against SAIC are allowed under the automatic stay as noticed in the Liquidation Order. In order to dispute or appeal the classification or determination of your claim, you may submit a written objection to the SDR no later than the 45th day after the mailing of the notice of classification or determination. The objection must: Be in writing; Set out the facts and the legal basis for the objection; and State the reasons why the claim should be classified or determined differently.

9 If the SDR does not change its classification or determination of your claim after considering your objection, the SDR will set a hearing on its decision and your objection before the receivership court in the Travis County District Court. FOR ATTORNEYS REPRESENTING CLAIMANTS AND CREDITORS OF SAIC How was SAIC determined to be insolvent? The Court determined that SAIC was insolvent as defined in Texas Insurance Code Section (a)(13) and that grounds existed to place SAIC into liquidation under Texas Insurance Code Section Thus, the Court entered the Liquidation Order. What does the SDR do for SAIC in liquidation? The SDR administers the day-to-day affairs of SAIC. The SDR s responsibilities include: obtaining control of SAIC s operations; identifying and securing company property and records; marshaling and evaluating the assets of the company; handling litigation filed by and against SAIC; operating the company s information systems and extracting data; investigating liability of parties responsible for the company s financial problems and identifying preferential transfers; providing notice of the liquidation to claimants and interested parties; distributing assets to creditors with approved claims; and filing pleadings, financial statements, and reports with the Receiver and the Court. The SDR will also coordinate with TPCIGA to ensure an orderly processing and handling of claims. What is the automatic stay and why was it created? As part of the court proceedings placing SAIC into liquidation, the Permanent Injunction was issued to stop SAIC from conducting any business as an insurance company that could harm policyholders, claimants, and other creditors. In addition, an automatic stay of all litigation is in effect, so the SDR can review records, determine priorities, and transfer covered claims to TPCIGA. Please refer to Section 5 of the Liquidation Order as to the extent of the stay as provided by Tex. Ins. Code Section (c) and (f). All persons are permanently stayed from pursuing a claim against the SAIC receivership estate except through a POC form and the claims process set out in the Texas Insurance Code and the orders entered by the Court. How do I find out more information about TPCIGA s handling of Covered Claims? Effective October 31, 2013, the Commissioner issued an Order of Impairment which triggered TPCIGA s handling of Covered Claims. Covered claims are defined in the TPCIGA statute, referred to as the Texas Property and Casualty Insurance Guaranty Act, which is located at Chapter 462 of the Texas Insurance Code. For more information on TPCIGA and how to contact it, please visit Will my client receive notice of the POC filing deadline? Notice of the POC process will be provided to known creditors and published in at least one newspaper. The POC form and instructions are posted on the SDR's website under the Notices and Forms tabs.

10 In what order will claims be paid? Tex. Ins. Code Section provides the priority of distribution for claims. POCs classified at a higher class must be paid before POCs classified at a lower class can be paid. The SDR is not required to pay claims for any class until it appears reasonably likely that assets will be available for a distribution to that class. My client provided goods/services to SAIC but has not been paid. What is the procedure for a claim against SAIC that is unrelated to an insurance policy? All claims against SAIC or one of its managing general agents that are not related to insurance policies should be submitted to the SDR in the POC process. If your client has unpaid bills for services provided to SAIC (a creditor), it will need to file a POC. The POCs will be reviewed by the SDR claims staff. After all required documentation is received and the POC has been reviewed by the SDR claims staff, your client will be notified regarding the classification of the claim. In order to protect the future legal rights of your client, it is important your client file a POC by April 30, 2015, the claims filing deadline. In the event that sufficient assets are collected to pay POCs below the Class 2 level, timely filing a POC allows your client the opportunity to receive a potential payment of an allowed claim. Since it is difficult to estimate the amount of receivership assets available in the future for the payment of POCs, timely filing a POC allows protection of future legal rights regarding any possible payments. A copy of the application and the Court s approval of the claim filing process is posted on the SDR's website under the Legal Docs tab. How do I receive notice of the actions taken by the SDR and the orders of the Court? All pleadings will be posted on the SDR's website, and you can keep up with them as you would like. If you have an address that allows you to receive s with very large attachments, you may request to be added to the service list for the pleadings filed by the SDR. See the Notice to Claimants and Parties of Interest under the Notices tab for instructions regarding how to be added to the service list. Further, the SDR will be providing status reports to the Court regarding the status of the SAIC receivership estate on a quarterly basis. The receivership master assigned to the SAIC receivership estate holds quarterly status conferences, which are normally scheduled for January, April, July, and October, and are held in Austin, Texas. The report provided to the Court for each status conference will be posted on the SDR's website. The next status conference will be January 26, 2015, at 10:00 a.m. and quarterly thereafter.