NWIG
Summary of Events
Since 1984, The National Warranty Insurance Group (NWIG), incorporated in the Cayman Islands and headquartered in Nebraska, has been selling and administering automotive service contracts in the United States. Over 5,000 dealerships and dozens of independant agiencies have sold their policies, as many as 15,000 policies a month. June 2003 , NWIG has filed for "Provisional Liquidation" in the Cayman Islands and for bankruptcy protection in the United States. At this point, NWIG stopped issueing new policies, paying claims, and approving repairs for future claims. On August 1st, 2003 NWIG was placed into full liquidation by the Grand Court of the Caymans.
What is so frustrating is the complexity of the whole mess. Ususally, a portion of the service contract cost was placed into a "reserve account" to pay for future claims. NWIG administered these accounts, meaning it decided who and when to pay. In most cases, they also insured the obligations of the contract would be met. With some of the contracts, NWIG bore sole responsibility for paying claims, and with others the seller of the contract shared in the responsibility. If any money was left in the reserve account after all associated claims were paid, the money would either go to NWIG, the selling company, or a combination of the two.
Because NWIG may be due a portion of many accounts years down the road, most of these accounts have been frozen by courts in the Cayman Islands. For the most part, US courts have supported the decisions of the Caymans. On September 4th, the US court did order that a few of the accounts be released.
For those who currently hold NWIG policies, the future is unclear. Many people didn't find out about the NWIG troubles, until their mechanic refused to release their vehicle until repairs were paid for. Even policies which are administered by NWIG and not insured by them are in limbo, as many reserve accounts are frozen pending court hearings. As of yet, no one really knows for sure what is going to happen to current policy holders. I've heard a lot of speculation, some optemistic, most pessimistic, but no one knows for sure.
I recommend anyone currently holding a NWIG contract, read this Iowa Insurance Division Informational Notice (pdf). It is one of the best sources of information I've found so far, published by the Iowa Insurance Division. The notice mainly deals with policies sold by dealerships under the "Smart Choice" and "Encore" programs, but has information helpful to all NWIG policy holders. In addition, the letter tends to be free of personal opinions and is written in relatively plain English.
Policy holders in Nevada, with unpaid claims, can contact the DMV. You may be protected by some unique state laws.
If anyone else has related information, please email me, and I'll post it on the site (assuming it's from a credible source and verifable). Please DO NOT email me requesting an update on the latest information. I've been recieving 20-30 such requests a day and I do not have time to answer them all. As I get reliable information, I'll do my best to post it.
Please Read:
I've thrown this page up rather hastily, so there may be some errors. Please understand that this is a hobby site of mine, and not a full time job. While I believe all the information here is correct to the best of my knowledge, I make no guarantee as to the accuracy.
Related News Articles
A special thanks goes out to Dick Piersol and the Lincoln Journal Star. Over the past 2 months, he has done more writting and research on NWIG than any other journalist I know of.
Underwriting Losses Earn Warranty Insurer Lowered Rating (March 11, 2003 | Insurance Journal) - Article discussing NWIG's downgrade from "A-" AM BEST rating to "B++" back in March, 2003.
A.M. Best Downgrades Rating of National Warranty (May 23, 2003 | AM Best) - NWIG is downgraded from "B++" to "B".
Service contract insurer in liquidation (June 9th, 2003 | Automotive News)
Service contract insurer gets protection from creditors (June 10th, 2003 | Automotive News )
A.M. Best Downgrades Rating of National Warranty (June 10, 2003 | AM Best) - NWIG is downgraded from "B" to "C-u".
Insurer's future hangs on attempts to revive it (June 22, 2003 | Lincoln Journal Star)
Huge number of warranties may be affected (June 22, 2003 | Lincoln Journal Star) - Article estimating how many outstanding NWIG policies may exist.
Dealers caught in warranty war (June 30, 2003 | Automotive News) - Article focuses on NWIG and how recent events affect automotive dealerships who sold policies under the "Smart Choice" program.
Broke Cayman Insurer (July 25th, 2003 | Cayman Net News) - Article summarizes the NWIG situaltion, and possible affects it might have on the Cayman Islands Monetary Authority (CIMA).
Lincoln insurer must liquidate (August 2nd, 2003 | Lincoln Journal Star) - Another good article by Richard L. Piersol covering the August 1st order of liquidation and it's implications.
Failed Insurer Liquidated (August, 2003 | Cayman Net News) - Article talks about NWIG going into liquidation. In addition, it talks about several other companies which had reserve accounts frozen.
Local dealers caught in NWIG problems (August 10th, 2003 | Lincoln Journal Star)
Editorial: Ensuring an Independent Press (August 11th, 2003 | Cayman Net News) - Apparently upset about the bad press recieved from the NWIG situation, the Cayman Islands Monetary Authority has been defending its actions.
Recovery of NWIG Money Complicated (August 22nd, 2003 | Lincoln Journal Star)
NWIG assets shielded in liquidation process (August 21nd, 2003 | Lincoln Journal Star)
Lawyers appeal NWIG ruling (August 28th, 2003 | Lincoln Journal Star)
Judge unthaws NWIG reserve accounts (September 7th, 2003 | Lincoln Journal Star)
How one local dealer evaded NWIG woes (September 14th, 2003 | Lincoln Journal Star)
When Your Car Warranty Runs Out of Gas (September 23, 2003 | THE WALL STREET JOURNAL)
Google News Search - During the first week of August, many local news sources published stories relating to how the NWIG situation affected local consumers and dealerships. As most of these articles offered little to no new insight to the situation, I'm posting a link to search Google news as opposed to listing each story.
back to topRelated Court Documents
Please keep in mind that I am not a lawyer, and the comments I've attached to each document only represent my opinion.
June 6th, 2003 Provisional Liquidation Order (pdf) - This is the origional order from "The Grand Court of The Cayman Islands", appointing Simon Whicker and Theo Bullmore as "Joint Provisional Liquidators (JPLs)" for NWIG. The court authorized the JPLs to: take control of the NWIG's assets and carry on the business of NWIG in order to deal with the legal isues involving the "Pacific Fiduciawry lnvestment Corporation". The order specifically states that the JPLs can allow NWIG to continue writting policies.
June 13th, 2003 Revision to Provisional Liquidation Order (pdf) - This order, from the same court which made the June 6th ruling, gives the JPLs more power. In addition, it nullifies the section 5 of the origional order (Section 5 allowed NWIG to continue writting new policies).
June 19th, 2003 Petition (pdf) - Nebraska bankruptcy court grants JPLs legal status, similar to that granted them by the foreign court in the Cayman Islands. This allows the JPLs to act on NWIG's behalf in US courts.
June 19th, 2003 Motion for Temporary Restraining Order (pdf) - JPLs submit a request to bankrupcy court in Nebraska for a temporary restraining order, protecting NWIG's assets until a Bankruptcy hearing can be held.
June 20th, 2003 Nebraska Bankruptcy Summons (pdf) - Basically, the JPLs filled for bankrupcy protection.
June 20th, 2003 Temporary Restraining Order (pdf) - Nebraska bankruptcy court issues a temporary restraining order, protecting NWIG until offical bankruptcy hearing can be held June 30th, 2003.
July 1st, 2003 Extension to Temporary Restraining Order (pdf) - Temporary restraining order is extended to July 11th, 2003 as the bankruptcy hearing is rescheduled.
July 10th, 2003 Extension to Temporary Restraining Order (pdf) - Temporary restraining order is extended to August 5th, 2003 as the bankruptcy hearing is rescheduled.
July 16th, 2003 Report of the Joint Provisional Liquidators (pdf) - 20 page report given to court by JPLs. Summarizes dispute with Delta Group, finicial condition of NWIG, and current negotiations with Warranty Gold.
Ausust 1st, 2003 Grand Caymans court ruling placing NWIG in liquidation (pdf) - Basically, the judge accepted the JPLs' recommendations and put NWIG into full liquidation.
Ausust 19th, 2003 Bankruptcy Court Order (pdf)
US Court Releases Some Reserve Accounts (pdf)
back to topOther Links of Interest
Edmunds Warranty Message Board - An online message board where there is much discussion about NWIG and various affiliated companies.
www.nwig.com - NWIG's web site.
Warranty Gold's News Site - Warranty Gold maintains this site to keep their customers informed about the NWIG situation, but it does contain some information useful to all NWIG contract holders.
back to topHope this helps,
David