People who know Don Erway say the former football hero is not the type to stiff car dealers and consumers on their vehicle service contract claims.
Erway was the starting quarterback for the University of Nebraska Cornhuskers in 1954 and 1955 and once regulated insurers while working for the Nebraska Department of Insurance. A community leader in his native Lincoln, Neb., Erway, 68, is known as a family man and a straight shooter.
But nice guy or not, Erway has got himself into a jam. And the founder and CEO of National Warranty Insurance Co., a major insurer of independent service contracts, is getting no sympathy from dealers who sold his company's contracts and consumers who purchased them.
Erway says his company grew too fast and he even blames National Warranty's outdated computer system. But his critics say the problem was more like greed or incompetence.
The collapse of Lincoln-based National Warranty could cost dealerships, consumers and sales agents thousands of dollars in claims and result in more than $100 million in losses for National Warranty, according to court-appointed auditors and legal experts.
The auditors say 900,000 to 1 million service contracts backed by National Warranty are outstanding. The insurer stopped paying claims in June after obtaining a Cayman Islands court order protecting it from creditors. National Warranty is incorporated in the Caymans, where a court declared the company insolvent on Aug. 1.
"It's like losing part of the family," Erway said last week.
National Warranty's troubles have confounded the industry. The company has been around for almost 20 years and until March was rated "excellent" by A.M. Best, a firm that monitors the financial strength of insurers. Since then its ratings have plummeted.