Insurer Failures:

Differences in Property/Casualty Guaranty Fund Protection and Funding Limitations

GGD-92-55BR: Published: Mar 12, 1992. Publicly Released: Apr 15, 1992.

Additional Materials:


Office of Public Affairs
(202) 512-4800

Pursuant to a congressional request, GAO provided information on state/property casualty guaranty funds, focusing on: (1) the differences in guaranty fund protection among the states; (2) current or potential problems such funds may encounter in paying insolvent companies' claims; and (3) the statutory framework defining the guaranty fund system.

GAO found that: (1) policyholders and claimants with unpaid claims resulting from an insurance insolvency can only collect those claims from states where they meet the states' guaranty fund statute claim requirements; (2) the National Association of Insurance Commissioners (NAIC) developed a model law that specifies the types of claims that should be covered and the maximum amount of coverage for each claim type; (3) although state guaranty funds generally follow the model, states' coverage varies greatly; (4) due to this variance, policyholders and claimants receive substantially different amounts of protection, and may receive less protection than the model's claim limit; (5) a review of coverages provided by funds concluded that 29 funds meet all claim limit coverages, 4 funds set claims limits higher than the $300,00 NAIC limit, and 18 funds have lower limits than 1 or more of the NAIC claim limits; (6) although assessment levels on surviving insurers have adequately paid claims, the increasing size of insolvencies has raised questions regarding a fund's ability to pay all claims at current assessment levels if additional insolvencies were to occur; and (7) a simulation concluded that about three-fourths of the funds would be inadequate to cover claims from a company failure with first-year claims of about $4 billion.

Nov 16, 2015

Oct 28, 2015

Sep 8, 2015

Jul 27, 2015

Jul 8, 2015

Jun 25, 2015

May 19, 2015

Apr 15, 2015

Feb 12, 2015

Dec 11, 2014

Looking for more? Browse all our products here