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).
Twenty-five P&C funds were liquidated from 2011 to the second quarter of 2013. Florida guaranty funds were especially hard-hit because the state's hurricane-prone location caused regional companies to fold (Hurricane Irene caused $800 million of damage in the state), with six out of 11 occurrences of insolvency affecting Florida insurers in 2011.
Guaranty funds are safety nets administered by U.S. states to protect policyholders in case an insurance company fails. When a state court liquidates an insurance company, its qualified claims are paid from money consisting of the company's remaining assets, statutory deposits, and taxes on the state's insurers. Since their establishment in 1969, guaranty funds have paid $27 million to claimants and beneficiaries of more than 550 disassembled companies.
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