In a dramatic financial unraveling, Northeast Insurance Co., a captive insurer for several major New York hospitals and a prominent Jewish nonprofit, has filed for Chapter 15 bankruptcy protection in New York, seeking U.S. recognition of its Bermuda liquidation. The insurer says a flood of claims under the state’s Child Victims Act (CVA) pushed it into insolvency.
Filed Wednesday, the company’s plea outlines how 55 claims tied to decades-old child sexual abuse allegations left its balance sheet deeply underwater. The CVA — enacted in 2019 to extend the statute of limitations for childhood abuse survivors — opened the legal floodgates, exposing the insurer to massive unforeseen liabilities.
Hospitals and Nonprofits Caught in the Fallout
Northeast Insurance was originally formed to serve as a risk-sharing shield for its member institutions, including Mount Sinai Medical Center, Maimonides Medical Center, Montefiore Medical Center, Beth Israel Medical Center, CenterLight Health System Inc., and the UJA/Federation of Jewish Philanthropies of New York, among others.
According to Mark Allitt, the court-appointed joint provisional liquidator and foreign representative, Northeast stopped writing new insurance policies at the end of 2017. At that time, it believed its reserves were more than sufficient to meet all obligations.
But the passage of the Child Victims Act two years later changed everything.
“The [Child Victims Act] claims were unforeseeable at the time of cessation of writing new policies and, therefore, no corresponding reserves were funded at that time,” Allitt explained in his declaration.
