Sen. Maralyn Chase wants Washington to protect the ownership equities of the present consumer-owners of Mutual of Enumclaw if that insurance company restructures itself into an Oregon stock insurer under a mutual holding company.
“This action could hurt consumers in a number of ways,” said Chase, who has sent a letter to State Insurance Commissioner Mike Kreidler, asking him to help safeguard the best interest of the consumers who own Mutual of Enumclaw. “The conversion results are predictable. The holding company managers could remove valuable property, sell or gift stock to themselves or the public, move corporate offices, relocate employees, raise premiums to satisfy investors, or even charge unaccountable management fees. All of this would be contrary to the mutual concept designed 262 years ago by Benjamin Franklin.”
With so many potential ways that holding company managers could divert money that now belongs to consumer-owners, Chase wants the insurance commissioner to scrutinize the proposed conversion process, ensuring that consumers are protected and that they have access to accurate information.
“I’m very concerned that a longtime mutual insurer is trying to privatize without informing its 166,000 consumers of the potential risks to their ownership equity rights, which could be considerable,” Chase said recently. “When Premera tried the same thing some years back, the commissioner’s independent experts raised serious concerns that the Premera managers were motivated by potential financial gain in their conversion decision and could raise premiums to satisfy investors; the commissioner made it discontinue its efforts to convert.”
Mutual of Enumclaw’s surplus (ownership equities) of $297 million make it a tempting target and the related potential loss to consumer-owners considerable, Chase warned. With hundreds of millions of dollars at stake, manager-insiders could distribute millions to enrich themselves.
Chase represents the 32nd Legislative District, including Lynnwood, Woodway and nearby unincorporated areas of southwest Snohomish County, parts of Edmonds and Mountlake Terrace, the City of Shoreline and part of northwest Seattle.
Evan Smith can be reached at schsmith@frontier.com.
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