| Abstract: | In the wake of our nation's financial crisis, protection against insurer insolvency is more critical than ever to the insurance-buying public. All U.S. jurisdictions provide partial statutory protection in the event of insurer insolvency through the creation of various state insurance guaranty associations that are governed by statutes primarily based on a model act promulgated by the National Association of Insurance Commissioners. Guaranty associations are an integral part of each state's regulatory process for addressing insurer insolvency. Through a matrix of state-specific enabling statutes, state insurance guaranty associations levy and collect assessments from member insurers, pay statutorily defined “covered” claims, and defend against appropriate claims that are in litigation. Together with the domestic regulator of the insolvent insurer (usually the commissioner or superintendent of insurance) and the deputy liquidator (typically approved by the court presiding over the liquidation process and selected by the commissioner or superintendent of insurance as statutory liquidator), the guaranty association community (comprised of associations located in virtually each state in which a policyholder resides) functions as a unified system to manage and at least partially mitigate the impact of an insurer insolvency. |
