Litigation

State Guaranty Funds

By John Darer

State insurance departments regulate insurers domicied and licensed in their states. In the event of an impairment that is sufficient for insurance regulators to take over, the shortfalls are funded through assessments on the solvent insurers in the state, in general proportionate to business written in the state. In spite of what may be conveyed through erroneous information state guaranty funds are not insurance companies and have no gigantic pool of cash ready and waiting.

In the event of a particularly large impairment could the assessment be so large that it might bring a solvent insurer(or insurers) to "the brink", or closer to it?

There is good reason that many state insurance laws prohibit insurance agents from advertising the existence of a state's guaranty fund as part of the sales pitch.

Full post as published by Structured Settlements 4Real on September 17, 2008 (boomark / email).