National Warranty Insurance Co., an insurer of vehicle service contracts in the United States, last week began bankruptcy proceedings in the Cayman Islands, where it is incorporated.
National Warranty, headquartered in Lincoln, Neb., underwrote as many as 35,000 vehicle service contracts per month and its losses could be $100 million or more, competitors say.
The Nebraska Department of Insurance received complaints the company stopped paying claims from two Nebraska consumers, several dealers from different states and four other state insurance regulators, says Bruce Ramge, Nebraska's chief of insurance market regulation.
National Warranty's attorney could not be reached for comment.
The company, also known as NWIC, last week received approval from the Grand Court of the Cayman Islands for provisional liquidation, which is similar to filing for Chapter 11 reorganization under the United States Bankruptcy code, NWIC said in a press release.
The court order protects NWIC against legal action and allows the company to continue in business and pay claims.