Providence Washington Car Insurance Company

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  • Update:Providence Washington liquidated in June 2004


Update:Providence Washington liquidated in June 2004.

A review of Providence Washington Car Insurance Company leads to a company that is no longer in business.

Providence Washington was a strong company and a leader in the insurance industry for many years.

However, after some financial struggles, it closed its doors for good in June of 2004 because it was no longer financially viable.

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Insurance companies come and go quite frequently. It is not a rare thing for an insurance company to close; however, it is rare for an insurance company that has been in business for more than 200 years to close.

There were several factors that led up to the closing of Providence Washington Insurance Company.

Providence Washington Financial Problems

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Ultimately, Providence Washington closed its doors because it had lost money due to policies that were not renewed and investments that went south.

When this started to happen, executives at Providence Washington tried to raise more capital to get the company back on its feet but were unsuccessful in doing so.

Once the executives and board members of Providence Washington realized that they were not going to be able to raise the capital needed, they tried to find a buyer for the company.

At this point, the company was no longer appealing to a buyer because it was in such financial turmoil. These series of events left the company with no choice but to close its doors after 205 years in the insurance business.

The problems began in 2002 when several claims were filed simultaneously, having to do with asbestos found in several buildings. Although the claims were paid, it was a long process.

The company lost $7 million and angry customers who had to wait months for their claim money soiled the reputation of the company.

In 2003, the company continued to struggle. It tried to repair its reputation with print and television ads, but it saw a drastic drop in both renewed policies and new policies.

The company suffered a $35 million loss for the year. By the first quarter of 2004, it was down another $7 million and it became clear that the company could not be saved and needed to close.

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Providence Washington Policy Buyouts

Though Providence Washington tried to find a buyer for the company as a whole, it could not.

Selling the company as a whole would have allowed shareholders to receive some money and would have allowed policyholders to continue with consistent coverage, but this did not happen.

Instead, Providence Washington was able to find companies to buy parts of the company.

OneBeacon Insurance Group purchased all of the small business policies that were held with Providence Washington at the time. This gave it the right to hold the policies and to renew them as needed.

Policyholders were not even aware of the problems at Providence Washington.

They simply received a letter stating that their policy had been sold to OneBeacon and they had the option to keep it with them or find another company.

Providence Washington Insurance Lessons

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There is a lot that policyholders can learn from what happened at Providence Washington.

Potential clients don’t always think about checking the financial viability of the insurance company before purchasing a policy, but it is easy to do.

Checking on a company can be done is a couple of ways.

First of all, anyone can go to the website of the insurance department of their state to check if an insurance company is licensed.

Having a license from the state means that the state has assessed the financial standing of the company and found it to be secure.

It also means that if there is a problem with the company, the state will step in and help the clients.

Secondly, anyone can go to the website of independent rating companies such as A.M. Best to check the financial stability rating of the company.

If customers had done this with Providence Washington, they would have noticed that the company had been downgraded to a B-, which is a rating of financial instability.

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