Declaring that its medical plan faced "extraordinary" losses, one of the nation's top insurance firms, Washington National Insurance Co. of Evanston, Ill., canceled its health plan this week, affecting dozens of small businesses in California and Arizona, it was learned late Friday.
Firms employing up to about 150 people received the cancellation notices Thursday and Friday, according to Encino insurance broker Roxie Rhoden. "It's kind of a shock that an insurance company as large as Washington National would do that," she said. "And it scares the devil out of the companies."
According to state Department of Insurance records, Washington National, operating in California since 1923, ranks among the nation's 50 top insurance carriers with $1.7 billion in assets and $1.5 billion in liabilities. A. M. Best Co., an insurance rating firm, gives Washington National an "A-plus," its highest rating.
"So the employers in this group must be running up tremendous losses," concluded John Faber, the department's chief counsel. "It tells you the claims are horrible in terms of their number and severity."