A.M. BestTV: Payouts From State Guaranty Funds Reach $28 Billion

Business Wire

OLDWICK, N.J.--(BUSINESS WIRE)--

This episode of A.M.BestTV explores how headline insolvencies such as Fremont Indemnity Company, Reliance Insurance Company and Lumbermens Mutual Casualty Company are the tip of a 600-deep roster of failed U.S. insurers over the last 40 years, insolvency experts report. An insolvency can trigger payouts to policyholders from U.S. state guaranty funds, though payout caps vary among states. The experts say the guaranty funds have paid out nearly $28 billion over roughly 45 years.

Loretta Wortes, vice president of the Insurance Information Institute said, “The property/casualty industry see the state guaranty funds as reputational insurance because it helps provide a protection for policyholders.” National Conference of Insurance Funds President and CEO Roger Schmelzer added, “These state guaranty funds basically step into the shoes of failed insurance companies with only one objective, which is to pay claims to policyholders whose insurance companies have become insolvent.” Notable is that all state guaranty funds have a top level that varies by state, with exception of the workers’ compensation fund, which does not.

Click here to view this episode. http://www.ambest.com/v.asp?v=guarantyfunds714.

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A.M.BestTV covers exclusive A.M. Best information and reports, targeted topics and key developments in the (re)insurance industry every Monday, Wednesday and Friday. Sign up for alerts of episodes at http://www.ambest.com/multimedia/ambtvsignup.html. View A.M.BestTV episodes at www.ambest.tv.

A.M. Best Company is the world’s oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Copyright © 2014 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.

Contact:
A.M. Best Company
Lee McDonald, 908-439-2200, ext. 5561
Group Vice President, Publication and News Services
lee.mcdonald@ambest.com
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