Lansing -- The Insurance Bureau has issued a cease and desist order against Northern Indemnity Company, a West Indian insurer. Insurance Commissioner D. Joseph Olson signed the order August 13, which requires the offshore company to immediately stop any insurance transactions in Michigan.

According to the order, Northern Indemnity is alleged to have sold a performance bond through agent Christopher Campo to Mago Construction, a Michigan business. The bond was to guarantee performance of a water main replacement project for the city of Westland. Northern Indemnity is not licensed to solicit, issue or deliver insurance contracts in this state, nor may it collect any premium payments for insurance coverage. Although licensed at the time of the transaction with Mago, Campo is also no longer licensed.

The company subsequently failed to pay a claim against the bond. The order states that Northern Indemnity "failed to act upon or acknowledge communication" about the claim and that it "failed to implement reasonable claim handling procedures." Mago defaulted on the job and has not paid its subcontractors for work performed on the project. Dean Sigler, an attorney for Northern Indemnity, has refused service of certified mail from subcontractors containing claim information and demanding payment of $34,655 owed for subcontracted work.

Northern Indemnity has 10 days to acknowledge and comply with the order or face fines of up to $1,000 for each violation to date, and up to $25,000 each for any further violations. It also faces possible restitution to any persons harmed by the violations or by the company's failure to comply with the order. The company can contest the order by requesting a hearing with the Insurance Commissioner within 30 days to respond to the allegations.

Anyone who has transacted business with Northern Indemnity or who has been solicited for business by the company or Mr. Campo is encouraged to contact the Michigan Insurance Bureau immediately at (517) 373-0961.