insurance guarantee funds

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PostPosted: Thu Dec 18, 2008 6:57 am   Post subject: insurance guarantee funds  

Any info on insurance guarantee funds!!


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PostPosted: Thu Dec 18, 2008 10:52 am   Post subject:   

The insurance guarantee fund safeguards the interests of the insureds against the financially weak insurance companies. The performance of the insurance companies gets monitored by the state's regulatory authority, which annually collects data on the insurance companies' financial health.



The guarantee fund pays out losses of the insolvent insurance companies, which are unable to attain the claims. It pays out the state defined limit or the individual policy limit whichever is less towards the claims.

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PostPosted: Thu Dec 18, 2008 12:23 pm   Post subject:   

Insurance is certainly meant to support us whenever it becomes difficult to cover the outstanding claims. But just think of a time when it is even difficult for an insurance co. to cover for such an event. It would then be the turn of the state insurance guaranty fund system to perform the rest. It is the only ray of hope for those who're unable to come out of their losses easily.


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PostPosted: Thu Dec 18, 2008 11:49 pm   Post subject:   

Quote:
It would then be the turn of the state insurance guaranty fund system to perform the rest.


Not exactly.



There is no such fund or pool of money.



Nor is this paid for by taxpayer dollars.



The state Department of Insurance takes over the company and pays claims out of the insolvent company's assets and if that's NOT enough money to pay claims they "access" each and every other company engaged in that form of insurance to pay the claims.



Insurance companies bury their own dead, at least in Florida. Then the state sells the company and what's left of their block of business to a healthy company for pennies on the dollar.



Quote:
(1) For the purpose of providing the funds necessary to carry out the powers and duties of the association, the board of directors shall assess the member insurers separately, for each of the accounts referred to in s. 631.715 at such time and for such amounts as the board finds necessary. Assessments shall be due not less than 30 days after written notice to the member insurers.


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PostPosted: Fri Dec 19, 2008 5:04 am   Post subject: insurance  

GARY......you mean if an Insurance company agrees to pay out a claim, they MAY NOT have the funds to do so? So.......they almost have to 'steal from Peter to pay Paul' kind of thing? You wouldn't think Insurance co's would have those kind of troubles. I mean, I'm sure they pay out claims everyday..ya know?

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PostPosted: Fri Dec 19, 2008 8:32 am   Post subject:   

Well, Sdcharger, the insurance companies certainly pay-out the claims everyday, since that is there business. However, there are instances where the premium earned by a company may exceed the amount due in claims. The recent tornados have caused huge losses to the insurance companies near the costal areas. The loss amount has tilted the asset-liability balance of many of these insurance companies. so, the insolvency of the insurance companies might not be happening on a everyday basis, but its certainly not an unusual incident.

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PostPosted: Fri Dec 19, 2008 8:37 am   Post subject:   

No, sdchargersfan, they are talking about insolvent insurance companies that the state takes over.



The state will "assess" all the other insurance companies operating in the state to pay the claims of the insolvent insurer until the state can find a buyer for that company's block of business.



The point I was attempting to make is there isn't any pool of money or fund the state has set aside. Nor is any taxpayer money used. Some of the posts above could easily be interpreted as if there is some actual pool of money lying around OR that taxpayers pay for this.



See THIS LINK for Florida (Life & Health) insolvencies.

Every state has this type of thing.





Quote:
What happens when my insurance company goes out of business?



In general, a court of competent jurisdiction will work with the department of insurance in determining when an insurance company requires special regulatory control. Some steps that might be taken are not publicly announced, but may include supervision of some kind. If early steps do not turn the company around, a period of public rehabilitation may follow. This means a receiver is appointed for purposes of operating the company more effectively. The receiver's power allows for strong actions to be taken, some of which might affect policies. In rare cases, the problems cannot be worked out and the court decides the company should be liquidated. This means that the receiver now becomes a liquidator who is charged with selling off the company assets for the benefit of policyholders and creditors. At the point of liquidation, FLAHIGA takes on the obligation of protecting Florida policyholders. We obtain the policy records and history from the liquidator, collect premiums that become due, administer the policies and pay all valid claims. FLAHIGA will normally continue coverage as long as premiums are paid or cash value exists. We may do this directly, or through service agents. Since FLAHIGA is a safety net but not an insurance company, we will seek to transfer policies to a sound insurer as soon as it is practical to do so. When possible under the terms of the policy, FLAHIGA may also elect to cancel policies after notice is given to you and after all valid claims have been paid.


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PostPosted: Sun Dec 28, 2008 3:28 am   Post subject:   

http://www.nolhga.com/factsandfigures/main.cfm/location/stateinfo Here is the link to each states fund.



But, let you be warned that it is not to be talked about. Use the link and read the rules. There are also limits to the amount of each claim and tons of rules.



Agents read the rules on this before you talk about it, or you can be fined up to 10,000 dollars. NO JOKE!!!
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PostPosted: Sun Dec 28, 2008 3:54 am   Post subject: insurance  

" Not to be talked about?"........mmm. If something is NOT to be talked about, that kind of tells me that there is 'someone' who is trying to hide something. I'm ASSUMING it can be talked about because it was ALREADY 'confirmed' in the above posts. .......correct? There are ALOT of Agents on this forum.

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PostPosted: Sun Dec 28, 2008 1:14 pm   Post subject:   

sdchargersfan, the existence of state Insurance Guaranty Associations are not to be used in a sales interview by an agent.



You're not supposed to bring it up with a client or make statements that the insurance company or its policies are safe and sound because the state has a mechanism in place for insolvent insurers or use that fact in any way to solicit insurance sales.



See THIS LINKY. (Florida)



Quote:
INSURER INSOLVENCY; GUARANTY OF PAYMENT



631.735 Prohibited advertisement of Florida Life and Health Insurance Guaranty Association Act in sale of insurance.--No person shall make, publish, disseminate, circulate, or place before the public, or cause directly or indirectly to be made, published, disseminated, circulated, or placed before the public, in any newspaper, magazine, or other publication, or in the form of a notice, circular, pamphlet, letter, or poster, or over any radio station or television station, or in any other way, any advertisement, announcement, or statement which uses the existence of the Insurance Guaranty Association of this state for the purpose of sales, solicitation, or inducement to purchase any form of insurance covered by the Florida Life and Health Insurance Guaranty Association Act. However, this section shall not apply to the Florida Life and Health Insurance Guaranty Association or any other entity which does not sell or solicit insurance.


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PostPosted: Sun Dec 28, 2008 2:52 pm   Post subject: insurance  

I;m not trying to make a 'big thing' about this,.........but, what ISN'T an Insurance Agent suppose to bring it up? I would think this would be the 'BEST' time to bring it up. Let me explain a bit: The way the Economy is, and the 'closing' of alot of Insurance Companies, I would be concerned how my claims are being paid. 'We' may nedd that little 'piece of mind' of where these 'back up' funds are coming from.

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PostPosted: Sun Dec 28, 2008 9:29 pm   Post subject:   

We don't make the rules. It is not worth us paying 10,000 fine to explain it to you or losing our lic. If you want to know anything about it, you should click the link.



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PostPosted: Sun Dec 28, 2008 9:53 pm   Post subject:   

Quote:
The way the Economy is, and the 'closing' of alot of Insurance Companies,


sdchargersfan, I'm not sure where you are getting your information.



So far I know of two (2) companies out the thousands in the USA, who,... EXCEPT for Gubment intervention,... are out of business:



#1) AIG

#2) Standard Life Insurance of Indiana



There are NOT a lot of insurance companies closing.



Exactly two (2) have went down. Compare that to all the bankrupt banks and investment firms that no longer exist or were bailed out by the Gubment.



Regarding the state Insurance Guaranty Associations there isn't any problem knowing of their existence and "if a client asks" it's perfectly acceptable to provide them with the information that such a thing exists.



What's NOT acceptable is... PLEASE READ....BIG RED LETTERS



INSURER INSOLVENCY; GUARANTY OF PAYMENT



631.735 Prohibited advertisement of Florida Life and Health Insurance Guaranty Association Act in sale of insurance.--No person shall make, publish, disseminate, circulate, or place before the public, or cause directly or indirectly to be made, published, disseminated, circulated, or placed before the public, in any newspaper, magazine, or other publication, or in the form of a notice, circular, pamphlet, letter, or poster, or over any radio station or television station, or in any other way, any advertisement, announcement, or statement which uses the existence of the Insurance Guaranty Association of this state for the purpose of sales, solicitation, or inducement to purchase any form of insurance covered by the Florida Life and Health Insurance Guaranty Association Act. However, this section shall not apply to the Florida Life and Health Insurance Guaranty Association or any other entity which does not sell or solicit insurance.


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PostPosted: Sun Dec 28, 2008 9:55 pm   Post subject:   

Advertising Prohibition



§ 33-38-21 “References to the association in advertisements for insurance” (a) No person, including an insurer or agent or affiliate of an insurer, shall make, publish, disseminate, circulate, or place before the public or cause directly or indirectly to be made, published, disseminated, circulated, or placed before the public, in any newspaper, magazine, or other publication; in the form of a notice, circular, pamphlet, letter, or poster; over any radio station or television station; or in any other way, any advertisement, announcement, or statement which uses the existence of the association for the purposes of sales, solicitation, or inducement to purchase any form of insurance covered by this chapter. This Code section shall not apply to the association or any other entity which does not sell or solicit insurance. (b) Any person who violates subsection (a) of this Code section may, after notice and hearing and upon order of the Commissioner, be subject to one or more of the following: (1) A monetary penalty of not more than $1,000.00 for each act or violation, but not to exceed an aggregate penalty of $10,000.00; or (2) Suspension or revocation of his license or certificate of authority.



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