What is State Guaranty Fund? What kind of support and tasks it implies? How it accumulates...

What is State Guaranty Fund? What kind of support and tasks it implies? How it accumulates fund?

Expert Solution

State guarantee fund is administered by US State to protect policyholders in case any insurance company defaults on benefit payments or declares itself as insolvent .The fund only protect beneficiaries of insurance companies that are licensed to sell insurance products in that state.

Support and Tasks

It guarantees payment to insurance policyholders when insurance company fails to meet its obligation or become insolvent.

Many states have guarantee laws where insurers must participate in a state’s guarantee fund if they are licensed to sell insurance products in that state. Unlicensed insurers such as reinsurers are not required to participate in state guarantee fund.

Accumulation of Funds

Most of the states maintain separate funds for property, casualty insurance , life and health insurance . These state guarantee funds act as a insurance for insurance funds by the insurance company. The amount of fund is generally ranging 1% to 2% of the net amount of insurance sell by the insurance company within the particular state .The amount of fund is paid by the insurance company to the State Guarantee Fund.

ekkarill92 answered 1 year ago

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What is State Guaranty Fund? What kind of support and tasks it implies? How it accumulates...

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