July 7 - Several car buyers in the Las Vegas valley are facing a real consumer nightmare: the company which sold them an extended warranty has gone out of business, leaving them with no place to turn.
Attorney Bob Gerard, who's representing Smart Choice customers, says the parent company, National Warranty, was never a regulated insurance company: "The primary insurance company, National Warranty, is a ponzi scheme, they kept minimum reserves not sufficient to pay all their claims, and the only way they stayed in business was to get new policies issued, new money paid for the old claims. Well one day there wasn't enough."
I am not advocating a law suit at this time. However, If we don't come out of this whole and they do, then all bets are off. Don't think for a minute Warranty Gold isn't looking beyond this bump in the road. Remember, self-preservation is very strong be it human or corporate.
Thank you "skipper747" regarding your advince in contacting the credit card company. I did just that and they told me that they would credit it themselves and place the charge in "dispute". I would be required to fill out some forms, which is no problem for me.
The Las Vegas story is very sad and disturbing. Companies such as those are getting away with our money. These fraudulent companies are just creating distrust amongst us and are destroying our faith and trust in the "honest" extended warranty companies (if there is such a thing).
Well, Warranty Gold is a little different than the Smart Choice/National Warranty, at least based on the info you have here. The SC/NW is supposedly a ponzi scheme, whereas WG has been a legitimate above-board company, that, while somewhat culpable for their decision to use NWIG, they are basically caught up in something that the cause of was beyond their control. Now where WG's actions become questionable is, if they are in such good financial shape as they claim to be, and if they wanted to maintain an honest business relationship, then they ought to have bailed out their NWIG customers and moved them to the new Administrator. Then later, if the NWIG reserves were freed up, they could recoup all or most of their losses.
Where and when does a re-insurer come in? I thought that the re-insurer came into the picture when there was a problem with the primary insurance company.
WARRANTY GOLD ARE NOTHING BUT LIARS!!!!!!!!!! NEVER DID THEY NOTIFY THERE CUSTOMERS ABOUT THE TROUBLE THEY (AND WE) ARE HAVING . NEVER EVER WILL I GET WARRANT GOLD AGAIN . SPREAD THE WORD. WARRANTY GOLD SUCKS
as for me they got me good i bought it flat out paid in full 1 grand. a hundred bills a mth like 1250 to be exact well. i turn this ford in in oct so far ive had no problem except a throttle probelm i have fixed or still is fixing. well i got a 03 tblazer in i know doggone well to get gm's warranty heck with 3 party clowns. i bet other companies will feel the heat now NO ONE IS GOING TO BUY A 3RD PARTY WARRANTY PERIOD!!! after this. or a sucker will seeing that he is ignorant of whats going on so. as for wg well they paid for alot of claims so im not really pissed on a exploder. but i would not buy another PERIOD!!!!!!!
Does any one know what came out of the suposed Cayman Island hearing? A Warranty Gold rep told me last week that I should go ahead and pay for my needed repairs and that I would be reimbursed when this all settles, because they have a reserve fund......Yeah right!!! Fat chance of getting reimbursed!
National Warranty Insurance Co., a major insurer of independent service contracts, was declared insolvent by a Cayman Islands court Friday.
The Grand Court of the Cayman Islands decided the company could not survive its financial troubles and its assets should be liquidated.
Court-appointed auditors say there are almost 1 million contracts outstanding. The auditors' report indicates losses could be more than $100 million.
National Warranty, which is incorporated in the Cayman Islands and based in Lincoln, Neb., insured vehicle service contracts sold through about 5,000 car dealers nationwide.
Talked to Michelle at WG customer service. Of course, I had to call three times, the first two times I was on hold so long that their phone system dropped my call.
On Friday, 1 August, the Cayman Islands court decided that NWIG is insolvent. We knew that; what we still don't know is whether WG will get some or any of their reserve funds back. On that point, there still is no final answer.
I pressed to get an answer, such as what will they do if they only get 50% back, or how much do they need to get back in order to restore full service to existing contracts. Nada. Nothing. The old Sgt. Schultz "I know nothing" song and dance.
She did admit that if they don't get enough money back, they will probably have to go bankrupt themselves, and our contracts will probably be null and void.
If that does happen, I will gladly retract my previous plea to avoid a class action suit. My only request would be that we do it under any applicable SEC fraud laws, since we were all promised that they reinsure their policy reserves.
Hmmm.....sounds like a hollow promise at this point.
Maybe Warranty Gold should change their name to Warranty Fool's Gold.
Are your vehicle service contracts adequately backed?
Yes. Warranty Gold's claim reserve is reinsured to offer you, the consumer, the ultimate in protection. Our Administrator reinsures our Trust Reserves twice to adequately cover all claims today and tomorrow. The insurer that backs our contracts and the reinsurer are) rated by A.M. Best. Your Warranty Gold service contract is absolutely reliable and secure.
Obviously we know our contract isn't absolutely reliable and secure. But my question is - shouldn't this reinsurance, twice mind you, be paying for our losses? Shouldn't one of these safeguards be bailing us out of this predicament? Who is reinsuring the trust reserves, and can we file a claim against them?
By the way, I'm saving all of this advertisement that WG makes in case I decide to go after them in small claims court here in Texas.
Not sure if this has been posted here before, but I found out that the Texas Department of Licensing and Regulation regulates vehicle service contracts in the state of Texas. You can report violations online at the following URL:
....and the text of the complaint I filed today with the state of Texas. Feel free to use the same information, or write your own complaint against them.
NAME: Walter Kammerman, President COMPANY NAME: Warranty Gold Physical Address: 7501 E Highway 290 Suite #101 Austin, TX 78723 Telephone: (512) 929-3001 EXPLANATION: Describe your complaint in detail.
Warranty Gold has defaulted on all contracts written before June, 2003, due to the bankruptcy filing of their administrator, National Warranty Insurance Company. This failure to pay for claims is a breech of contract, and failure to render services as agreed to in the contracts. They also have claimed that all funds are insured to protect policyholders, while claiming they don't have the funds to pay for claims.
The administrator (NWIC) has claimed the Warranty Gold reserve account as an asset in their bankruptcy filing in the Cayman Islands, where National Warranty is incorporated. Since this has happened, Warranty Gold stopped paying for any claims on defects or repairs on vehicles covered by their contracts. Even after diagnosis by an approved repair facility, Warranty Gold is refusing to pay for repairs, as required by the contracts.
Furthermore, Warranty Gold may be committing fraud and misrepresentation on their Web site, www.warrantygold.com. On their Web site, Warranty Gold states that QUOTE Warranty Gold has put the processes into place to secure the investment that each of our customers make in our products. We have established a "Trust Reserve Account" ("TRA") which is managed by our administrator to pay your claims for the life of your contract. Our administrator is insured to adequately cover all claims today and tomorrow. The insurer and the reinsurer are rated by A.M. Best. Your Warranty Gold service contract is absolutely reliable and secure. ENDQUOTE
In the Frequently Asked Questions section of their Web site, they further state QUOTE What reassurance do I have that your company will be here in years to come to honor claims?
Warranty Gold submits actuarily required funds to a third-party administrator, which sets up "trust reserves". These reserves are used to pay for claims.
Are your vehicle service contracts adequately backed?
Yes. Warranty Gold's claim reserve is reinsured to offer you, the consumer, the ultimate in protection. Our Administrator reinsures our Trust Reserves twice to adequately cover all claims today and tomorrow. The insurer that backs our contracts and the reinsurer are) rated by A.M. Best. Your Warranty Gold service contract is absolutely reliable and secure. ENDQUOTE
This situation has left literally thousands of policyholders across the country waiting to see if their contracts are valid. ANY assistance you can offer to either get a complete refund, a significant partial refund, or get Warranty Gold to honor the provisions of existing contracts would be appreciated. If not, I request you immediately pursue any civil or criminal actions available to you under Texas law against Warranty Gold.
Hello, I also had a warranty through warranty gold. I sold my vehicle and cancelled the policy . I was exspecting a refund of a little over 800 dollars. I was also sent the letter that informed me the refund would be delayed but sounded as if i would still recieve it. I have my doubts! I contacted warranty gold after the aug 1 court date and they did not know anything to tell me about the subject. I have called my local news channel and they are researching as to air this or not?? Others need to know that just because a company advertises that they are safe and the customers money is safe doesn't mean it is!!! I do have to give warranty gold credit for paying claims on my vehicle. I had bad luck out of my vehicle ,it ended up in the shop and they spent quite a bit of money on it. But i continues to have problems with said vehicle and traded it off thus incurring the refund from the warranty company. I can honestly say that I hope warranty gold can recover and remain in business. Business is business and I do expect my refund.
FINALLY!! some news i can use on the whole NWIC extended warranty debacle. i actually found out the hard way. i bought my warranty online from warrantygold last august for $1200.00. when i brought my car in last sunday to pep boys (the "check engine" light came on) and they told me the list of things that needed to be repaired, i figured: no problem, i have a warranty. it WAS a problem, however, when i received word from pep boys that warranty gold was not going pay for any repairs. they folks at warrantygold said that $$ for repairs is in "limbo."
i called warrantygold customer service in a panic, and i was informed that my contract is basically worthless. i called them back a minute later, but instead of pressing the "3" button for customer service, i pressed the "1" for sales. the salesman on the phone was more than eager to sell me an extended warranty. horrified, i asked him how they could sell NEW warranties when they were unable to make good on the ones they had already written. he informed me that warrantygold had a NEW company that paid claims, but that the $$ i had paid last year went to NWIC, so there wasn't anything to pay my claim.
i have never felt so let down before. they SHOULD take some of the $$ they have and make good on the claims that have come in. THEY should take the brunt of this hit. they mislead you on their website AND in the booklet they send you by making you think that NWIC is regulated in the US (they list a NEBRASKA address).
I AM SO MMMMMMMMMMMMMMMMMMMAAAAAAAAAAAAAAAAAAAAADDDDDDDDDDDDD!!!!
Griping on here may relieve a little bit of stress, but we are not going to become a significant thorn in their side unless we file complaints with the agencies that have the lawyers and resources to make THEIR lives miserable.
FILE, FILE, FILE!!!
File with anyone and everyone you can. File with the Texas office because WG is licensed and headquartered here. File in your home state because they conducted business operations there when they sold you a contract. File with the Feds because they crossed state lines in order to conduct business.
If a few hundred of us, or a couple of thousand of us file, we may get the attention of some serious media players, such as 48 Hours, 60 Minutes, 20/20 or others.
There is a lady on here that uses edmunds for research on various car issues. She writes for the WSJ. I think her handle is pjreporter or something similar. Maybe we can convince her to do a story about this warranty scandal. I am sure that would get some attention.
Does anyone know of other forums where WG is being discussed? More and more people should be made aware of what is going on. As they say in medicine... prevention is better than cure.
I called the customer service department about a minute ago and was told by the automatic answering service that all agents are busy with customers and that the wait time would be 47 minutes. Yup, 47 minutes. Guess what's going to happen next. I am putting down the phone.
For those out here in the discussion community, I have complained to BBB and my credit card company and will be filing a complaint to the Texas Licensing authority.
I hope prospective customers do NOT do business with this "honorable" company. Nobody in their sane mind should enter into a vehicle service contracts with WG, unless they enjoy getting ripped off.
I spoke to WG today and they directed me to their customer relations department. I asked the sales guy whether they are still selling new contracts and he said yes. I asked him how could WG sell new contracts and he said that if WG did not sell new contracts, then we would never get our money back. I told him not to bluff as we most likely will never see our money again. This forum does not permit me in mentioning the person I spoke to. Incidently, the guy said that he also had a WG contract and gave me the number. As if I am going to believe him.
I asked him about the re-insurer and he said that WG is also asking the same question, "Why does the re-insurer not pay?". Go figure ...
I filed a report with the state of Texas! Hope it helps us. I also talked to my attorney, she stated that in time if warranty gold does not resolve our problem that it would become a class suit. Although nwig filed the chapter 11 warranty gold is still liable for their advertisements in their sale of contracts. I am waiting to hear back from the news reporter. I am not to sure about appearing on tv, I figured I would let them in on what was going on and they would take it from there. They had not heard anything about this until I told them. Think how many people have these warranties and have no idea about what going on until their car ends up in the shop!
I too filed a complaint today with state of Texas! I own two Warranty Gold contracts. I want all of my my money back not a portion! I paid good money for these worthless agreements. Talk about false advertisement! I hope they get whats coming to them! BASTARDS!!
"Who really owns your warranty? Who really has your money?
You need to know about the "transfer of risk" associated with warranties. A transfer of risk is when the dealer pays money to an administrator that sets up "reserves." These reserves are used to pay for repairs. Why is this important?
Some dealers DO NOT pay into the reserve, they do not "transfer the risk". They are gambling with your money. Your warranty is then only as good as the financial status of the dealership. If they hit hard times, your warranty is in jeopardy.
If the dealer hasn't "transferred risk" to an administrator that maintains an excellent claims paying ability and the dealership is sold OR GOES OUT OF BUSINESS, you're out of a warranty, and you're out of the money you paid for that warranty.
Warranty Gold won't play games with your money."
THAT IS EXACTLY WHAT THEY HAVE DONE. what a crock.
There is also a new player in the game: SC & E Administrative Services, Inc. of Irving, Texas.
By the way, I've sent a detailed message to the consumer reporter at the San Antonio NBC affiliate, which just happens to be owned by the largest station group in the country, Clear Channel Communications. If they take the ball and run with it, this story could be pipelined to other Clear Channel stations around the country.
I have just filed a complaint with the Attorney General of Texas. I urge you all to do the same. You need not be a resident of Texas to file. Warranty Gold, in my opinion, is now committing fraud by continuing to sell policies, all the while having thousands of worthless ones being ignored. We might not get any money but perhaps we can drive them out of business.
Has anyone "recently" purchased a contract after June 1st and if so...is WG also willing to refund your money "now" since your with the new re-insurer?
Hey PAman, I'm a big fan of The Schnitt Show, which is out of Florida, but plays on the Clear Channel affiliate in SA. It'd be nice if they bring up the WG practices there. My view is, OK, WG probably wasn't really scamming people all along. But now that they have so many customers 'stuck' with worthless policies, if they're forced by lawsuits and what-not to stand by those contracts, then even the new ones they're selling now, with a different Administrator, will be in jeopardy.
I went to that Texas web site but did not see where to file a claim there. Is it something you can do online or do you have to snail mail in your complaint?
The Web site lets you choose what service you are complaining about, and guides you through the process.
As for the Schnitt show, I listen to him when I can, but my AM reception in my office building is pretty bad. He, like many others, can be a little to infatuated with himself, but I guess that goes with the business he is in. I think I remember listening to him on WFLA out of Tampa when I was stationed at Macdill AFB during Operation Desert Shield and Storm.
Now if you REALLY want to talk about a radio guy I enjoy listening to, you can't beat Sean Hannity. That guy is so logical, many political liberals don't even try to argue against him. But, political talk radio is a different forum altogether, so I will try to stay on subject in here.
"Service Contract Providers" is what you want to file a complaint for on the Texas Department of Licensing and Regulation complaint page that PAman listed.
WG markets and sells these contracts, so maybe there is something this department can do for us in regards to WG. Going after NWIC at this point seems like a lost cause, but who knows how the assets will be distributed during the liquidation.
Considering how upset some people may be, please keep in mind that your posts are still subject to the Edmunds.com Member Agreement in terms of content and language.
I bought a warranty from Warranty Gold not NWIG! I just don't understand why I can't get paid for a repair they authorized before the June filing date anyway.
My contract was for $1251.00, I paid to date 951.00. I am going to contact my credit card company and tell them to refuse any more charges and will try to dispute the rest. If anything I will at least recover $300.00. If this company sent out a letter stating that they were having problems and was trying to resolve them I would stay with them. Just one more unhappy camper.
On August 4th I took my car in and was advised it needed $978 in transmission repair. A cost that should have been covered with my Warranty Gold Contract. When the service center called the toll free number to authorize service they received the recording stating that NWIG was in liquidation - no further information. I called Warranty Gold and after 40 minutes reached the customer service representative. He stated that new policies being sold are covered by a new underwriter, but my policy was not eligible for repair payment at this time. When asked why the consumers with these plans were not being notified that their policies were not any good at this time he said,"It was because their phone lines would be clogged", and they could not serve any of their customers. Think about this, Warranty Gold is still billing and receiving payment for thousands of policies that are not presently any good. I asked if they expected me to send another $275 this month to a company that is not supplying me any services. They stated that my policy could not be cancelled by me, but they would cancel it if I didn't make payment. How convenient. That would get them off the hook. I asked the representative if he were me would he continue to make payments, he said, "no". I am very saddened that a company can demand payment for services unavailable and cancel you if you do not send further payments. Don't buy Warranty Gold, now or in the future. I have 3 policies in effect with Warranty Gold amounting to almost $4000. I am sure I can kiss that money, plus the $978 due for this repair, good-bye.
The BBB in Austin, Texas has continued to give Warranty Gold a satisfactory performance rating, EVEN THOUGH WARRANTY GOLD HAS NOT PAID A CLAIM FOR TWO MONTHS!!! Go figure! I called them today, and they said, "yeah, duhhh....., maybe we should change that..." I might reference the BBB again in my lifetime...NOT!
I did hear back from the Texas agency that regulates warranties. They have requested I send them my contract which I will do tomorrow. I told them about what WG is doing; selling new warranties while still collecting on old ones it cannot and will not honor.
Has anyone who paid with a credit card tried to dispute the charge. I am going to take that route I have 3 more payments left and hope to collect what i have paid in so far.
I received the following response from Warranty Gold yesterday when inquiring about my current contract which I purchased a couple of years ago:
August 8, 2003
Dear Customer:
This correspondence is designed to relate the facts and circumstances pertaining to National Warranty Insurance Risk Retention Group (National Warranty), Warranty Gold's administrator and insurer, and the impact of those circumstances upon the holders of extended service contracts issued by Warranty Gold..
Prior to June 9, 2003, when Warranty Gold contracted with a new administrator and insurer, the administration of Warranty Gold contracts and the payment of claims, if any, were the responsibility of National Warranty, a certified risk retention group authorized to do business in all fifty states. When each contract was sold, Warranty Gold was obligated to deposit with National Warranty the amount of money which National Warranty and, according to National Warranty, its certified actuaries, had calculated would be necessary to pay claims under that contract. In addition, Warranty Gold deposited with National Warranty a fee assessed for administration services and an additional premium for insurance (National Warranty possessed an A- insurance rating, which is excellent) which guaranteed the payment of all covered claims, should the calculated cash deposits prove insufficient to do so. Thus, the contract holder was protected from the risk that National Warranty and its actuaries had not accurately predicted the claims or losses to be incurred over the life of the respective contracts. In addition, National Warranty had a reinsurance contract with an A-rated carrier which was to further insure that National Warranty's obligations would be met.
National Warranty provided the services described here to other extended service contract providers. One such provider was in a dispute with National Warranty and on June 6, 2003, National Warranty sought and received a "provisional liquidation" order which had the effect of preventing any lawsuits or other attempts to attack National Warranty. The accounting firm, KPMG, was assigned to review National Warranty's finances and make recommendations to the court, which is in the Cayman Islands, where National Warranty was originally chartered. Cayman charters were specifically permitted under the Federal Risk Retention Act, and National Warranty was, until March, 2003, rated by A. M. Best as "A-". Additionally, National Warranty was audited each year by Deloitte & Touche, a national accounting firm.
Although Warranty Gold deposited all monies and insurance premiums required to protect holders of Warranty Gold contracts, the KPMG representatives with current authority over National Warranty's operations, determined that all claims would be delayed until KPMG was able to determine whether or not National Warranty was solvent. Consequently, Warranty Gold and other companies which have fully performed all requirements and made all necessary deposits have been unable to access monies or remit claims payments pending the conclusion of the KPMG investigation.
On August 1, the Grand Court of the Cayman Islands entered an order finding that National Warranty is insolvent and converted the Provisional Liquidation into a Liquidation. KPMG was ordered to gather the assets of National Warranty and distribute the assets equitably to Warranty Gold and the other creditors of National Warranty. The total amount of the assets and the method and timing of distribution is not known by anyone at this time. We are in constant contact with the Liquidators and have retained lawyers in the Cayman Islands and the United States to protect the interests of our contract holders, in whose behalf the monies were deposited and insurance purchased. We will be unable to access funds or inform you of the amount of those funds until the Liquidators present a proposal. We will continue to aggressively pursue assets and anyone responsible for the National Warranty insolvency.
On June 9, 2003, the very day Warranty Gold was informed of the provisional liquidation, it contracted with a new administrator and all service contracts sold subsequent to that date are not involved in the National Warranty proceeding and any claims under such new contracts are paid without problems, as was the case prior to the liquidation proceeding. No contracts will ever again be sold subject to any National Warranty involvement.
Warranty Gold is, in the courts and elsewhere, pursuing every avenue to permit the payment of claims which were, and are, the responsibility of National Warranty which received all of the monies related to the contracts and issued insurance policies guaranteeing payment. However, Warranty Gold is obligated to obey the orders of the court. Warranty Gold is painfully aware of the inconvenience and hardship occasioned by these events over which Warranty Gold has no control; as stated above, it has retained attorneys in the Cayman Islands, New York and Texas to aggressively insure that its recovery is maximized. Unfortunately, no one can say with certainty how or when this situation will be resolved.
We greatly appreciate your patience and apologize for the inconvenience you have experienced. We will notify you as soon as additional information is available.
Yesterday I talked to a customer service rep, exchanged e-mail with the person who sold me a contract, and exchanged e-mail with another customer service rep (he sent me the same message shown in the previous post). In summary they all told me that when NWIG's assets are released they will pay claims and issue refunds on cancellations to the best of their ability based on the funds obtained. Well folks, NWIG is insolvent, so the funds obtained will obviously be insufficient. I predict WG will be out of business in short order. I sent my cancellation today (obtained a form from them by e-mail) and stopped payment on my remaining 4 installments. Worse case I saved $360 minus the $28 stop payment fee. Best case I get a few hundred dollars back. I'm counting on the worse case. We are in a very bad position. The money involved is too small to justify legal action other than small claims court; and if you don't live in Texas that's not realistic either. Even if you obtained a judgment, they probably wouldn't or couldn't pay it. This is only the second extended warranty I have ever bought - it will be the last.
"In addition, National Warranty had a reinsurance contract with an A-rated carrier which was to further insure that National Warranty's obligations would be met."
Comments
Actually, I contracted with Interstate National Dealer Services, Inc. when I bought my contract.
I tend to agree with PAman about class action suits, the lawyers seem to end up with most of the money while the victims get pennies on the dollar.
Isn't there a hearing today in the Cayman Islands? I hope WG has some lawyers down there to fight to get our money back.
July 7 - Several car buyers in the Las Vegas valley are facing a real consumer nightmare: the company which sold them an extended warranty has gone out of business, leaving them with no place to turn.
Attorney Bob Gerard, who's representing Smart Choice customers, says the parent company, National Warranty, was never a regulated insurance company: "The primary insurance company, National Warranty, is a ponzi scheme, they kept minimum reserves not sufficient to pay all their claims, and the only way they stayed in business was to get new policies issued, new money paid for the old claims. Well one day there wasn't enough."
The Las Vegas story is very sad and disturbing. Companies such as those are getting away with our money. These fraudulent companies are just creating distrust amongst us and are destroying our faith and trust in the "honest" extended warranty companies (if there is such a thing).
WG has been having a re-insurer all the time.
Can someone please enlighten me?
Service contract insurer insolvent
By Donna Harris
Automotive News / August 01, 2003
National Warranty Insurance Co., a major insurer of independent service contracts, was declared insolvent by a Cayman Islands court Friday.
The Grand Court of the Cayman Islands decided the company could not survive its financial troubles and its assets should be liquidated.
Court-appointed auditors say there are almost 1 million contracts outstanding. The auditors' report indicates losses could be more than $100 million.
National Warranty, which is incorporated in the Cayman Islands and based in Lincoln, Neb., insured vehicle service contracts sold through about 5,000 car dealers nationwide.
On Friday, 1 August, the Cayman Islands court decided that NWIG is insolvent. We knew that; what we still don't know is whether WG will get some or any of their reserve funds back. On that point, there still is no final answer.
I pressed to get an answer, such as what will they do if they only get 50% back, or how much do they need to get back in order to restore full service to existing contracts. Nada. Nothing. The old Sgt. Schultz "I know nothing" song and dance.
She did admit that if they don't get enough money back, they will probably have to go bankrupt themselves, and our contracts will probably be null and void.
If that does happen, I will gladly retract my previous plea to avoid a class action suit. My only request would be that we do it under any applicable SEC fraud laws, since we were all promised that they reinsure their policy reserves.
Hmmm.....sounds like a hollow promise at this point.
Maybe Warranty Gold should change their name to Warranty Fool's Gold.
Joe
Yes. Warranty Gold's claim reserve is reinsured to offer you, the consumer, the ultimate in protection. Our Administrator reinsures our Trust Reserves twice to adequately cover all claims today and tomorrow. The insurer that backs our contracts and the reinsurer are) rated by A.M. Best. Your Warranty Gold service contract is absolutely reliable and secure.
Obviously we know our contract isn't absolutely reliable and secure. But my question is - shouldn't this reinsurance, twice mind you, be paying for our losses? Shouldn't one of these safeguards be bailing us out of this predicament? Who is reinsuring the trust reserves, and can we file a claim against them?
By the way, I'm saving all of this advertisement that WG makes in case I decide to go after them in small claims court here in Texas.
http://www.license.state.tx.us/scp/scp.htm
I don't believe you have to be a Texas resident to do this. It's worth a shot!
Joe
NAME: Walter Kammerman, President
COMPANY NAME: Warranty Gold
Physical Address: 7501 E Highway 290 Suite #101
Austin, TX 78723
Telephone: (512) 929-3001
EXPLANATION: Describe your complaint in detail.
Warranty Gold has defaulted on all contracts written before June, 2003, due to the bankruptcy filing of their administrator, National Warranty Insurance Company. This failure to pay for claims is a breech of contract, and failure to render services as agreed to in the contracts. They also have claimed that all funds are insured to protect policyholders, while claiming they don't have the funds to pay for claims.
The administrator (NWIC) has claimed the Warranty Gold reserve account as an asset in their bankruptcy filing in the Cayman Islands, where National Warranty is incorporated. Since this has happened, Warranty Gold stopped paying for any claims on defects or repairs on vehicles covered by their contracts. Even after diagnosis by an approved repair facility, Warranty Gold is refusing to pay for repairs, as required by the contracts.
Furthermore, Warranty Gold may be committing fraud and misrepresentation on their Web site, www.warrantygold.com. On their Web site, Warranty Gold states that
QUOTE Warranty Gold has put the processes into place to secure the investment that each of our customers make in our products. We have established a "Trust Reserve Account" ("TRA") which is managed by our administrator to pay your claims for the life of your contract. Our administrator is insured to adequately cover all claims today and tomorrow. The insurer and the reinsurer are rated by A.M. Best. Your Warranty Gold service contract is absolutely reliable and secure. ENDQUOTE
In the Frequently Asked Questions section of their Web site, they further state QUOTE
What reassurance do I have that your company will be here in years to come to honor claims?
Warranty Gold submits actuarily required funds to a third-party administrator, which sets up "trust reserves". These reserves are used to pay for claims.
Are your vehicle service contracts adequately backed?
Yes. Warranty Gold's claim reserve is reinsured to offer you, the consumer, the ultimate in protection. Our Administrator reinsures our Trust Reserves twice to adequately cover all claims today and tomorrow. The insurer that backs our contracts and the reinsurer are) rated by A.M. Best. Your Warranty Gold service contract is absolutely reliable and secure. ENDQUOTE
This situation has left literally thousands of policyholders across the country waiting to see if their contracts are valid. ANY assistance you can offer to either get a complete refund, a significant partial refund, or get Warranty Gold to honor the provisions of existing contracts would be appreciated. If not, I request you immediately pursue any civil or criminal actions available to you under Texas law against Warranty Gold.
redline - good questions.
I was unfortunately right that after "August 1" we would no nothing more. Nothing happens.
This is disgusting. I can't believe it's not getting more news. A LOT of people buy these things.
This "reinsurance" thing really makes me mad. Who is that? Where are they? Or was this just some mumbo jumbo?
President
Michael Kammerman
New Address
9111-b Research Blvd
Austin TX 78758
i called warrantygold customer service in a panic, and i was informed that my contract is basically worthless. i called them back a minute later, but instead of pressing the "3" button for customer service, i pressed the "1" for sales. the salesman on the phone was more than eager to sell me an extended warranty. horrified, i asked him how they could sell NEW warranties when they were unable to make good on the ones they had already written. he informed me that warrantygold had a NEW company that paid claims, but that the $$ i had paid last year went to NWIC, so there wasn't anything to pay my claim.
i have never felt so let down before. they SHOULD take some of the $$ they have and make good on the claims that have come in. THEY should take the brunt of this hit. they mislead you on their website AND in the booklet they send you by making you think that NWIC is regulated in the US (they list a NEBRASKA address).
I AM SO MMMMMMMMMMMMMMMMMMMAAAAAAAAAAAAAAAAAAAAADDDDDDDDDDDDD!!!!
HULK SMASHHHH!!!!!!!!!!
Griping on here may relieve a little bit of stress, but we are not going to become a significant thorn in their side unless we file complaints with the agencies that have the lawyers and resources to make THEIR lives miserable.
FILE, FILE, FILE!!!
File with anyone and everyone you can. File with the Texas office because WG is licensed and headquartered here. File in your home state because they conducted business operations there when they sold you a contract. File with the Feds because they crossed state lines in order to conduct business.
If a few hundred of us, or a couple of thousand of us file, we may get the attention of some serious media players, such as 48 Hours, 60 Minutes, 20/20 or others.
For those out here in the discussion community, I have complained to BBB and my credit card company and will be filing a complaint to the Texas Licensing authority.
I spoke to WG today and they directed me to their customer relations department. I asked the sales guy whether they are still selling new contracts and he said yes. I asked him how could WG sell new contracts and he said that if WG did not sell new contracts, then we would never get our money back. I told him not to bluff as we most likely will never see our money again. This forum does not permit me in mentioning the person I spoke to. Incidently, the guy said that he also had a WG contract and gave me the number. As if I am going to believe him.
I asked him about the re-insurer and he said that WG is also asking the same question, "Why does the re-insurer not pay?". Go figure ...
You need to know about the "transfer of risk" associated with warranties. A transfer of risk is when the dealer pays money to an administrator that sets up "reserves." These reserves are used to pay for repairs. Why is this important?
Some dealers DO NOT pay into the reserve, they do not "transfer the risk". They are gambling with your money. Your warranty is then only as good as the financial status of the dealership. If they hit hard times, your warranty is in jeopardy.
If the dealer hasn't "transferred risk" to an administrator that maintains an excellent claims paying ability and the dealership is sold OR GOES OUT OF BUSINESS, you're out of a warranty, and you're out of the money you paid for that warranty.
Warranty Gold won't play games with your money."
THAT IS EXACTLY WHAT THEY HAVE DONE. what a crock.
Here's a new one:
http://www.iid.state.ia.us/division/orders/sce_info.pdf
There is also a new player in the game: SC & E Administrative Services, Inc. of Irving, Texas.
By the way, I've sent a detailed message to the consumer reporter at the San Antonio NBC affiliate, which just happens to be owned by the largest station group in the country, Clear Channel Communications. If they take the ball and run with it, this story could be pipelined to other Clear Channel stations around the country.
KEEP TURNING UP THE HEAT!!!
Joe
http://www.license.state.tx.us/scp/scp.htm
http://www.bbbonline.org/consumer/complaint.asp
http://www.oag.state.tx.us/consumer/complain.shtml
I went to that Texas web site but did not see where to file a claim there. Is it something you can do online or do you have to snail mail in your complaint?
The Web site lets you choose what service you are complaining about, and guides you through the process.
As for the Schnitt show, I listen to him when I can, but my AM reception in my office building is pretty bad. He, like many others, can be a little to infatuated with himself, but I guess that goes with the business he is in. I think I remember listening to him on WFLA out of Tampa when I was stationed at Macdill AFB during Operation Desert Shield and Storm.
Now if you REALLY want to talk about a radio guy I enjoy listening to, you can't beat Sean Hannity. That guy is so logical, many political liberals don't even try to argue against him. But, political talk radio is a different forum altogether, so I will try to stay on subject in here.
Joe
WG markets and sells these contracts, so maybe there is something this department can do for us in regards to WG. Going after NWIC at this point seems like a lost cause, but who knows how the assets will be distributed during the liquidation.
kcram
Host
Smart Shopper and FWI Message Boards
Joe
I received the following response from Warranty Gold yesterday when inquiring about my current contract which I purchased a couple of years ago:
August 8, 2003
Dear Customer:
This correspondence is designed to relate the facts and circumstances
pertaining to National Warranty Insurance Risk Retention Group (National
Warranty), Warranty Gold's administrator and insurer, and the impact of
those circumstances upon the holders of extended service contracts issued by
Warranty Gold..
Prior to June 9, 2003, when Warranty Gold contracted with a new
administrator and insurer, the administration of Warranty Gold contracts and
the payment of claims, if any, were the responsibility of National Warranty,
a certified risk retention group authorized to do business in all fifty
states. When each contract was sold, Warranty Gold was obligated to deposit
with National Warranty the amount of money which National Warranty and,
according to National Warranty, its certified actuaries, had calculated
would be necessary to pay claims under that contract. In addition, Warranty
Gold deposited with National Warranty a fee assessed for administration
services and an additional premium for insurance (National Warranty
possessed an A- insurance rating, which is excellent) which guaranteed the
payment of all covered claims, should the calculated cash deposits prove
insufficient to do so. Thus, the contract holder was protected from the
risk that National Warranty and its actuaries had not accurately predicted
the claims or losses to be incurred over the life of the respective
contracts. In addition, National Warranty had a reinsurance contract with
an A-rated carrier which was to further insure that National Warranty's
obligations would be met.
National Warranty provided the services described here to other extended
service contract providers. One such provider was in a dispute with
National Warranty and on June 6, 2003, National Warranty sought and received
a "provisional liquidation" order which had the effect of preventing any
lawsuits or other attempts to attack National Warranty. The accounting
firm, KPMG, was assigned to review National Warranty's finances and make
recommendations to the court, which is in the Cayman Islands, where National
Warranty was originally chartered. Cayman charters were specifically
permitted under the Federal Risk Retention Act, and National Warranty was,
until March, 2003, rated by A. M. Best as "A-". Additionally, National
Warranty was audited each year by Deloitte & Touche, a national accounting
firm.
Although Warranty Gold deposited all monies and insurance premiums required
to protect holders of Warranty Gold contracts, the KPMG representatives with
current authority over National Warranty's operations, determined that all
claims would be delayed until KPMG was able to determine whether or not
National Warranty was solvent. Consequently, Warranty Gold and other
companies which have fully performed all requirements and made all necessary
deposits have been unable to access monies or remit claims payments pending
the conclusion of the KPMG investigation.
On August 1, the Grand Court of the Cayman Islands entered an order finding
that National Warranty is insolvent and converted the Provisional
Liquidation into a Liquidation. KPMG was ordered to gather the assets of
National Warranty and distribute the assets equitably to Warranty Gold and
the other creditors of National Warranty. The total amount of the assets
and the method and timing of distribution is not known by anyone at this
time. We are in constant contact with the Liquidators and have retained
lawyers in the Cayman Islands and the United States to protect the interests
of our contract holders, in whose behalf the monies were deposited and
insurance purchased. We will be unable to access funds or inform you of the
amount of those funds until the Liquidators present a proposal. We will
continue to aggressively pursue assets and anyone responsible for the
National Warranty insolvency.
On June 9, 2003, the very day Warranty Gold was informed of the provisional
liquidation, it contracted with a new administrator and all service
contracts sold subsequent to that date are not involved in the National
Warranty proceeding and any claims under such new contracts are paid without
problems, as was the case prior to the liquidation proceeding. No contracts
will ever again be sold subject to any National Warranty involvement.
Warranty Gold is, in the courts and elsewhere, pursuing every avenue to
permit the payment of claims which were, and are, the responsibility of
National Warranty which received all of the monies related to the contracts
and issued insurance policies guaranteeing payment. However, Warranty Gold
is obligated to obey the orders of the court. Warranty Gold is painfully
aware of the inconvenience and hardship occasioned by these events over
which Warranty Gold has no control; as stated above, it has retained
attorneys in the Cayman Islands, New York and Texas to aggressively insure
that its recovery is maximized. Unfortunately, no one can say with
certainty how or when this situation will be resolved.
We greatly appreciate your patience and apologize for the inconvenience you
have experienced. We will notify you as soon as additional information is
available.
Respectfully,
Rudy Cantu
Customer Service Representative
Warranty Gold, Ltd.
9111-B Research Blvd
Austin, Texas 78758
1-800-580-9889, ext. 4754
512-382-4770 fax
rcantu@warrantygold.com
http://www.warrantygold.com
obligations would be met."
Yeah - WHO IS THAT?? WHERE ARE THEY???!!!
Unbelievable bunch of crap.