State Guaranty Fund

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State Guaranty Fund

A fund administered by the government of a U.S. state protecting policyholders and pensioners from the default of an insurance company. That is, if an insurance company is licensed to operate in a given state, policyholders within that state are protected because, if the company defaults on its payments, the state guaranty fund will pay the policyholder instead. Insurance companies pay a small percentage of their revenues to different states to finance state guaranty funds.
References in periodicals archive ?
Seven non-life insurance companies became insolvent in the second quarter of 2013--two more than the total number of liquidations in 2012, shows a report by the National Conference of Insurance Guaranty Funds (NCIGF).
Over recent decades, guaranty funds have been introduced when a country's insurance sector has assisted, in a cooperative effort with the regulator, in the liquidation of one (or more) defaulting companies.
These three Pennsylvania companies remain among the industry's top five property/casualty insolvencies, according to the National Conference of Insurance Guaranty Funds.
Based on the rules governing the re-house firms, each new outlet of the re-house firms has to turn in operating guaranty of NT$250,000 (US$8,065) to the Real Estate Agents Transaction Guaranty Foundation and at the end of 2010 such guaranty funds accumulated to NT$13.
This settlement is conditioned upon its adoption by at least 35 of the remaining 43 states and the District of Columbia by March 1, 2011, and settlements of AIG's pending litigation with insurer members of the workers compensation residual market and separate claims by insurance guaranty funds.
The summer of 2006 gave us a significant education in Property and Casualty Guaranty Funds 101 with the insolvency of three related property and casualty insurers.
ICE has established separate CDS risk pools for ICE Trust and ICE Clear Europe(R), including separate guaranty funds and margin accounts.
During the same period customers of a little over a dozen interstate annuity carriers received cash from state guaranty funds.
Additionally, RRGs do not participate in the system of state guaranty funds nor do their policyholders receive the financial backstop ensured by participation in guaranty funds.
State statutes consider that several guaranty funds may provide coverage and thus provide a pecking order for claims.
Perhaps the best indicator of the accumulating financial problems of insurance companies of all types is the amount of money assessed by state guaranty funds to pay for insolvencies.
In practice, annual assessments of solvent insurers by guaranty funds are limited to a small percentage of an insurer's state premium volume, with additional assessments, if needed, following in future years.