Colorado Bankers (CB Life)...
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- 4,920
There is no fund. Once court cases figure bout who owns what, what assets remain, they will know if there is or isn't enough assets to satisfy policyholders. If or when the entity is determined to be insolvent, the guaranty association would bill the good carriers to kick in to cover up to the insured limits. As you can imagine, the good carriers that play by the rules will petition to try to minimize the negative impact to their own policyholders having to come to the rescue of a carrier that that was fraudulent & state regulators failed to properly regulate
- 19,535
I know. But I hear about the wonderful state guaranty fund all the time.
A fraternal would have taken care of this already.
- 10,725
A fraternal would give policy holders less recourse than a SGA covered entity.
The company is destitute because of massive fraud. No way for the carrier itself to "take care of this".
If the fraternal had engaged in massive fraud the policyholders would get zero ever .Eventually these policyholders will get their principal back from the guarantees .
- 19,535
- 19,535
One person could not put a fraternal in this kind of position. It would take several working together. Of course that could happen. But very unlikely.
But hey, you got the state guaranty fund to bail out the non fraternals. That's got to be of great comfort to the CB policy holders right now.
- 17,053
This is a perfect example that the federal government really should require an actual FDIC type of coverage on all insurance transactions like they set out to do 30-years ago. The insurance companies fought hard against it and came up with State Guarantee Funds thing as a band aid to self regulate the industry. But no one is ever happy that has been through it.
If they allowed the creation of the FDIC style protection for consumers it would raise premiums on everything around 5% but there would be real money there for these occurrences and federal oversite over the industry.
Always against more regulation but in this case I see the need for it. Our industry is run just like a bunch of good ol boys making up their own rules as they go along.
If they allowed the creation of the FDIC style protection for consumers it would raise premiums on everything around 5% but there would be real money there for these occurrences and federal oversite over the industry.
Always against more regulation but in this case I see the need for it. Our industry is run just like a bunch of good ol boys making up their own rules as they go along.
Not in favor of turning regulation over to the feds. However, there is nothing to prevent the states actually funding their guaranty funds using a premium tax.
- 4,920
agree, only issue I see is with so many carriers being in multiple or all 50 states. If a state creates a funded guaranty association, will residents of that state at time of purchase have true funded protection or will they always have it based on which state they purchased it in. add in online & phone sales & it can get more complicated as to "where" the purchase took place.
Even in this CBL situation, a pre-funded Guaranty Association still cant do anything until all the court hearings to figure out who owns what, what assets exists, which were loaned out, stolen, etc. As of now, I believe they are still in rehab, with no declaration of insolvency or order of liquidation..................................that could still be a long ways off whether or not a guaranty assoc was pre-funded.
keep in mind, as with many things run by the govt, a pre-funded program would likely add tons of cost with bloated overhead & too many workers getting paid waiting for the once every 10-20 year insolvency.
