What if my insurance carrier goes bankrupt?

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PostPosted: Sat Dec 10, 2011 2:11 am   Post subject:   

Every state guaranty association is different. When I say, "unfunded", I'm not saying that they have $0. I am saying that they don't have to have the money to pay claims. They assess as needed. Any money that they have is usually because they assessed insurers and didn't need all of the money. In general, they become funded as needed. Many states have gone years without assessing any insurers.


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PostPosted: Sat Dec 10, 2011 2:18 am   Post subject:   

Quote:
I know you have trouble sometimes believing what I write. These are not my words, but the words of the CLHIGA as noted -- you can read it for yourself.



If it were true that claims have been paid 100% without fail, why is it that some policyholders and claimants of the failed Executive Life Insurance Company -- those who opted out of the class action settlement -- continue to receive scraps of money, as recently as just a few months ago, as a result of their prior losses?




I have never said that all claims have been paid 100% without fail. I have said that all DEATH CLAIMS have been paid 100% without fail.



I have been saying this same thing for many years. If I'm wrong, I want to know it. Nobody has ever pointed me to an example of me being wrong about this.



For instance, with the life insurance policies of Executive Life, they were transferred to Aurora Life. The Gurantee Associations don't pay the claims of transferred policies.



If I'm wrong, let me know. I can't find any literature of any sort claiming that there has been a death claim that hasn't been paid 100%.



I can't prove that I'm correct. However, it should be easy to show that I'm wrong. If I'm wrong, I need to know.

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PostPosted: Sat Dec 10, 2011 2:21 am   Post subject:   

Quote:
For instance, with the life insurance policies of Executive Life, they were transferred to Aurora Life. The Gurantee Associations don't pay the claims of transferred policies


This is correct. But they don't transfer policies of dead people either, and those are the folks who lost money.



Quote:
If I'm wrong, let me know. I can't find any literature of any sort claiming that there has been a death claim that hasn't been paid 100%.


Call the CLHIGA at the phone number posted above, and ask them directly. Always better to get it straight from the horse's mouth. It will take you about 5 minutes of your time. When they pay a death claim, it's limited by state law. That's a fact. And that fact operates in all states.


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PostPosted: Sat Dec 10, 2011 2:32 am   Post subject:   

Quote:
Any money that they have is usually because they assessed insurers and didn't need all of the money. In general, they become funded as needed


If you read the financial report from the CDI, you will see that in addition to the $50million of actual cash, there was more than $70million in assessments paid or issued but not called as part of their total $130million+ in assets. I didn't want to bring that up because it's confusing.



The Guarantee Associations admittedly do not stock enough money to pay all claims at once. They don't even know how much claims will be before an insurer becomes insolvent.



But this, in reality, is not any different than any other commercial insurer. No insurance company is fully funded for 100% of its liabilities. If all those claims came in today, the company would be bankrupt were it not for reinsurance. That's what keeps the world of insurance spinning smoothly on its axis.



You should translate this chatter about the Guarantee Associations into a similar thread about Life Insurance Companies themselves and their record of paying claims. There are plenty of insurance companies that have collected life insurance premiums and when the time comes to pay up, they send a claims denial letter.



Don't people lose money when that happens? The Guarantee Associations don't pay those claims either. People have probably lost far more money dealing with solvent insurance companies over the centuries than they ever will with the Guarantee Associations.



That's a fact no one should dispute.


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PostPosted: Sat Dec 10, 2011 2:38 am   Post subject:   

Now don't get all bent out of shape about this next statement -- it's meant to be taken as a joke, not a punch in the mouth.



Quote:
When I say, "unfunded", I'm not saying that they have $0


That's about the same as Bill Clinton wagging his finger at the camera and saying, "I did not have sex with that woman!"



As he sort of kind of explained it later, "I didn't mean that kind of sex, I meant that kind of sex."


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PostPosted: Sat Dec 10, 2011 3:37 am   Post subject:   

Quote:
But this, in reality, is not any different than any other commercial insurer.




It is very different. A commercial insurer must have the money to pay its claims. There are laws on the books concerning their reserves. If they don't have enough money they can't assess anybody to pay these claims. With the State Guaranty Associations, some may have lots of money on hand, and some may not have much on hand. There is no requirement that they have money on hand. There is the assumption that the power to assess will be sufficient. My point is that the power to assess doesn't do much good if there is an industry wide problem.



PLEASE PLEASE PLEASE, if you have any information about insured's not collecting 100% of a death claim due to insolvency, please share it.

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PostPosted: Sat Dec 10, 2011 4:56 am   Post subject:   

How does this . . .

Quote:
A commercial insurer must have the money to pay its claims.


coincide with this . . .

Quote:
the power to assess doesn't do much good if there is an industry wide problem.




As for this . . .

Quote:
PLEASE PLEASE PLEASE, if you have any information about insured's not collecting 100% of a death claim due to insolvency, please share it.


You've been given what you need to contact at least one Guarantee Association for the answer that you may share with the rest of us. Why must I be asked to do your homework for you?



I've already talked to the CLHIGA about this, was given an answer that I accept, and it's what allows me to post what I have said. You and others don't seem to like it, so CHECK IT OUT FOR YOURSELF and then post the information you obtain.



Honestly, this is a modern day example of Shakespeare's "Much Ado About Nothing". The fact is that the overwhelming, vast, majority of insurance companies will probably never have an issue with paying their claims or come anywhere close to insolvency. Not unless everyone dies on the same day.



On that day, it won't matter if there are Guarantee Associations or not, with or without any money behind them.


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PostPosted: Sat Dec 10, 2011 7:13 am   Post subject:   

CLHIGA told you how the Guarantee Associations work. The question is whether there has ever been a DEATH CLAIM not paid due to an insurance company's insolvency. I keep sayng that the answer to this question is "no". I'm looking for someone to show me that I'm wrong because I can't find any information to the contrary.


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PostPosted: Sat Dec 10, 2011 7:50 pm   Post subject:   

Quote:
The question is whether there has ever been a DEATH CLAIM not paid due to an insurance company's insolvency.


Now you've changed the question!!



Until now, you have relentlessly stuck with

Quote:
2) All death claims in the U.S. have been paid 100%.


And the answer to that question is NO.



But the answer to your newly changed question is also YES (which means there were claims not paid or not paid 100%).



The Guarantee Associations have existed for less than 40 years. California's was only created in 1991, just in time for the failure of Executive Life to occur (and that one is still not yet settled due to all the covert French shenanigans). What do you think could have possibly happened in the previous 130 or so years in the history of US life, health, and P&C insurers that even gave rise to the concept of insurance Guarantee Associations in the first place? A claim or two not paid due to an insurer's insolvency?



The insurance industry is dynamic -- constantly evolving to meet needs best protected with insurance; but it's also reactive -- creating products only after a need has been identified. Insurance companies are not like other consumer-oriented businesses (like smart phone manufacturers and dish detergent) that invent products which mysteriously create the need their products are ready to "solve".



Quote:
CLHIGA told you how the Guarantee Associations work


No, they did not. I already knew that. They confirmed the answer to your question (as originally stated) that I've been standing by all this time. I could call them again and get the answer to your newly manufactured question, but I won't.



You want confirmation of either question? Then drop a dime and CALL ANY GUARANTEE ASSOCIATION AND ASK. The amount of time you've repeatedly spent writing all this blather about everyone in America getting death claims paid 100% when insurance companies are insolvent would have been better spent making a single phone call to a source that will set you straight.



If you don't want to call the CLHIGA, you can write or call or fax the National Organization of Life and Health Insurance Guaranty Associations. They've only existed since 1983.



NOLHGA

13873 Park Center Road, Suite 329

Herndon, VA 2017

Phone: 703.481.5206

Fax: 703.481.5209

E-mail: info@nolhga.com



Or, if that's too much work, you can read their consumer brochure at

http://www.nolhga.com/resource/file/2009GABrochureFINAL.pdf



In that brochure, you will see, on Page 2, this information:



How much protection do I have?
Like the FDIC, state guaranty associations have maximum benefit limits. These limits are established by state law and can vary from state to state, but most states provide at least:

• $300,000 in life insurance death benefits

• $100,000 in cash surrender or withdrawal values for life insurance

• $100,000 in withdrawal and cash values for annuities

• $100,000 in health insurance policy benefits

The overall benefit “cap” in most states for an individual life is $300,000, although some states have higher caps. Guaranty association coverage does not extend to any non-guaranteed policy or annuity, or portion thereof, or any portion of a policy in which investment risk is borne by the individual, such as the non-guaranteed, variable component of a variable annuity.
http://www.nolhga.com/resource/file/2009GABrochureFINAL.pdf



Now, here I am doing your homework, for you, again. You can visit the NOLHGA website and snoop around a bit and locate a 2009 memo related to Executive Life's collapse in 1991. If you know anything about the regulation of insurance in NY, you would know that with only a handful of exceptions, only domestic insurance companies are permitted to transact life insurance in that state. So there was an entirely "separate" entity called Executive Life Insurance Company of New York (ELNY) that went into "rehabilitation" in 1991 when the parent company was "conserved" here in CA that year.



ELNY is still in "rehabilitation" after 20 years. A 2009 memo about that situation, in the second paragraph, states:



ELNY remains in rehabilitation and an order of liquidation with a finding of insolvency has not yet been sought or granted. The NYLB is attempting to develop a plan that would result in additional funding being raised to help

secure the benefits of ELNY’s policyholders.
(emphasis added) http://www.nolhga.com/resource/file/costs/ELNYAssessment2010.pdf



If you can understand what this says, you would know that 100% of ELNY policyholders have not been covered 100%. The important words are those I've bolded. If claims or cash values or other policy benefits had been covered 100% there would be no need for "additional funding to help secure the benefits".



That's it. That's all the homework I'm doing for you on this. Now it's time for you to put in some effort and find the information you only speculate about here.

Quote:
I'm looking for someone to show me that I'm wrong because I can't find any information to the contrary.


You haven't found it because you haven't looked for it in the right places. If I can find it, so can you. The information exists. You don't like my answer because it's not the answer you want to believe. I've now given you the ability to contact two different and independent sources who have, and will give you, the answers that I've repeatedly given you. That inquiry would stand up to rigorous academic inquisition.



Do it or surrender.


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PostPosted: Sun Dec 11, 2011 4:11 am   Post subject:   

Max,



Sometimes you so very much want to be correct that you are willing to put your reading comprehension in the closet.



I keep talking about life insurance death claims having always been paid at 100%.



I appreciate the link. What does it say about life insurance death claims of Executive Life? It says absolutely nothing.



I quote, "The vast majority of the value of ELNY’s remaining contract liabilities are non-surrenderable

structured settlement annuities (SSAs). The installment payments that are owed on these annuities extend well into

the second half of this century, and, as is typical of SSAs, such payments are not level, but rather irregular and

targeted to key life events of the payees (e.g., college matriculation, retirement)."




In the past, I have spoken to more than one Guaranty Association. None of them have had any information for me about any company’s death claims not being paid 100%.



I can’t find a single thing showing that Executive Life’s death benefit obligations were not paid at 100%. As best as I can tell from my research, all life insurance policies went to Aurora Life and as such, the claims would not be paid by Guaranty Associations.



If you have ANYTHING that indicates that their life insurance death claims have not been paid 100%, please share that information.


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PostPosted: Sun Dec 11, 2011 4:13 am   Post subject:   

Max, you can find it, you say, but for some reason, you haven't shared the information. I don't care if I'm wrong on this issue. If I am, I simply want to know it.


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PostPosted: Sun Dec 11, 2011 4:23 am   Post subject:   

I have posted stuff repeatedly. You won't accept it. Fine. Another impasse. But you have the ability to get the answers with what I've given you above. Do it or not, it's not my responsibility to spoonfeed you. I'm not your mama.



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PostPosted: Sun Dec 11, 2011 4:55 am   Post subject:   

Max, you aren't my momma, just my sister's caterer.



This isn't an impasse. It is you posting annuity information when the subject is life insurance death benefits.



I'm not trying to win this argument. I'd be happy to be wrong. If you have information that talks about life insurance death benefits that haven't been paid, please post. I can't find anything.


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PostPosted: Mon Dec 12, 2011 2:30 am   Post subject:   

Quote:
If you have information that talks about life insurance death benefits that haven't been paid, please post




I am so sorry your teachers in elementary school failed to teach you to read.



Even though the memo talks about structured settlement annuities, the concept is exactly the same for life insurance. When the Guarantee Association is "activated" it is because the insurer is insolvent and there is not enough cash, reinsurance, or other assets to pay claims or policyholder values 100%. To be equitable to all policyholders in that circumstance, each state established the maximum value the Guarantee Association is liable for. NY is $500,000 for death benefits, CA was raised to $300,000 in Sept 2010 (still limited to 80% of death benefit). Most states are at about $300,000 today.



But that's what the beneficiary of someone who dies AFTER the insurer is declared insolvent will receive. They may stand in line with other general creditors and make a claim against the "estate" of the failed insurance company for any balance not paid by the Guarantee Association. Most people don't do that, and even those who do, generally get little or nothing in the final liquidation settlement.



That means some people LOSE MONEY when an insurer becomes insolvent.



But, again, if YOU were to call any of the Guarantee Associations and simply ask your question of them, as I have, you will get the answer you are seeking, and you can keep it to yourself or post it here.



I really don't care anymore. This is not about "winning" or "losing", it's about a basic failure on your part to understand (or deliberately NOT wanting to understand) what the whole subject is about.



Don't be offended if I don't respond to any of your future posts in this thread.

Quote:


I can't find anything.


As I said, it's because you refuse to look in the right places for the answer.


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PostPosted: Mon Dec 12, 2011 6:27 am   Post subject:   

Except Max, we aren't talking about concepts. With Executive Life, their SSAs were taken over by Guarantee Associations. Their life policies were not taken over by Guarantee Associations.



The reason that you will stop responding is because you always stop responding when you are incorrect. The difference this time is that I'm not positive that I'm correct which is why have been trying for years to find something indicating that I'm incorrect and still can't find anything.



The closest that I get is when people like you point to things that don't have anything to do with life insurance death benefits.



Like I said, I have spoken to Guaranty Associations and they have not been able to point me to any situations of death claims not being paid 100%.



I'm not convinced that I'm right which is why I'm pushing this subject.



What company has had death claims not paid 100%?


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