Mechanism
When an insurance company reports to its state insurance regulator that it is in financial trouble, the state will first attempt to assist the company back toward financial stability. If the state insurance department determines the company cannot be saved, then the insurance commissioner asks the state court to order the liquidation of the company. Once the order to liquidate a company that operates in multiple states is handed down, NOLHGA, on behalf of affected member state guaranty associations, assembles a task force of affected guaranty associations to analyze the company’s commitments to policyholders. Each affected state guaranty association pays out claims to the insurance company's policyholders in the state; in some instances, the associations arrange for policies to be transferred to a financially sound insurer. Each state guaranty association is governed by state law; most associations cover up to at least $300,000 for life insurance death benefits, $100,000 in cash surrender value for life insurance, $250,000 in withdrawal and cash values for annuities, and $100,000 in health insurance policy benefits.
Read more about this topic: National Organization Of Life And Health Insurance Guaranty Associations
Famous quotes containing the word mechanism:
“The law isn’t justice. It’s a very imperfect mechanism. If you press exactly the right buttons and are also lucky, justice may show up in the answer. A mechanism is all the law was ever intended to be.”
—Raymond Chandler (1888–1959)
“A mechanism of some kind stands between us and almost every act of our lives.”
—Sarah Patton Boyle, U.S. civil rights activist and author. The Desegregated Heart, part 3, ch. 2 (1962)
“Life is an offensive, directed against the repetitious mechanism of the Universe.”
—Alfred North Whitehead (1861–1947)