Insurer Impairments – Insolvencies

The National Conference of Insurance Guaranty Funds recently issued a white paper on the status of the various state funds that “protect” insurance policyholders from insolvencies.

Naturally, the group reports that the group serves an important function. We’ll leave that to another day…

The report reports that “insurer impairments” were up in 2009.

2009 20 impairments

2008 15 impairments

2007 14 impairments

(Source – 2/12/10 issue of The Standard)

Practical point – state guarantee funds do little for most business insurance buyers. Sure, if your insurance company becomes “impaired” the payment the guarantee fund makes is better than nothing. Most states limit coverage to $400,000 or $500,000 for claims. Return premium can be as low as $2,500. Your best bet? Don’t buy insurance from a struggling insurer.

See your state’s provisions – http://ncigf.org/GF-laws-and-summaries-by-state.