Key Insurance Co. has been ordered into receivership and is halting the issuance of new policies, according to a recent court order. The Kansas Insurance Commissioner, Vicki Schmidt, has filed a petition seeking the company’s liquidation.
Financial Troubles Lead to Action
The Shawnee County District Court issued an order prohibiting the automobile insurer from issuing or renewing any policies. Policyholders are instructed to secure alternative coverage immediately, as stated on the company’s website. Additionally, Key announced that premium refunds will be issued for policies with effective dates on or after March 4. Existing policies will remain in effect until their terms expire.
According to the Nevada Department of Insurance, over 22,000 policyholders in Nevada will be affected and must quickly find replacement coverage.
In a March 18 petition for liquidation, the Kansas Insurance Department reported that a review of Key’s financial records – conducted with the help of external consultants – indicated the company would run out of cash by the end of March. Key reported liabilities of $65.3 million and admitted assets of $57.9 million in its year-end financial filings. An actuarial review of Key’s claim exposure as of December 31, 2024, estimated net reserve liabilities in a range of $58.6 million to $71.6 million. Based on these figures, the company’s projected year-end surplus was estimated to fall between negative $7.4 million and negative $20.4 million.
Key Insurance Co. has been operating at a loss for the past four years, including a $16.3 million loss in 2024. During the same timeframe, the company’s policyholder surplus dropped from $13.7 million to a negative $7.4 million.
Industry Trends
The U.S. insurance industry has seen several companies enter receivership or liquidation between 2023 and 2024 due to financial and operational challenges. In 2023, 13 property and casualty (P&C) insurers became impaired, with 12 undergoing insolvent liquidations and one entering rehabilitation. This brought the total number of impaired P&C insurers from 2000 to 2023 to 432, including 364 insolvent liquidations and 66 rehabilitations. In 2024, regulatory interventions decreased, with four insurers placed into rehabilitation and one into liquidation. Of these, three were life and health companies, and two were P&C insurers.
