Michigan Bars Insurer, Alleging Surplus Insurance Fraud

Michigan regulators charged an insurer with selling fraudulent certificates of surplus insurance and issued a cease-and-desist order banning it from doing business in the state.

The order affects Novus Centuriae Inc., alleged by regulators to be "a fraudulent insurance company" incorporated in the Caribbean island of Nevis, and its "unauthorized" managing general agency, Core States Management Inc. Novus is not registered to do surplus lines business in Michigan or any other state and has violated the Michigan Insurance Code, according to the complaint from the Office of Financial and Insurance Regulation.

OFIR Commissioner Ken Ross said any consumers or companies that have purchased policies from Novus should obtain proper coverage elsewhere.

Core States declared bankruptcy March 15, according to the complaint. Novus has not accepted any new business since June, said Robert Feala, who identified himself as president of Core States. The complaint identifies him as Novus' president and sole shareholder.

"We've already ceased and desisted," Feala said.

Feala said Novus had, since 2002, been a general liability insurer and paid its claims. He said neither Novus nor Core States committed any wrongdoing.

"Anything that has the word fraudulent in front of it, we deny," Feala said.

Failure to comply with the OFIR order will subject Novus to one or more of the following: a civil penalty of not more than $1,000 for each violation, not to exceed a total of $30,000; a civil penalty of not more than $25,000 for each knowing violation, not to exceed an aggregate civil fine of $250,000; and complete restitution to all persons in the state damaged by the violation.

In April, Ross issued a similar cease-and-desist order to Vanguard Insurance Placement Inc., another Feala-associated company. Feala said he was Vanguard's secretary.