Imagine this scenario–Mega Store has its primary insurance coverage with Super Insurance Company, which was recently declared insolvent and ordered liquidated by a court; Super Insurance was domiciled in Mega Store's home state (a small southern state). Super Insurance Company also insured a number of other large retailers and corporations around the country in addition to writing some personal lines. Super ran into financial difficulties due to the severe underpricing of their various lines of business along with excessive losses with a bit of corporate fraud thrown in on top, thus rendering them statutorily insolvent and unable to pay their claims. The various state guaranty associations (GAs) are triggered by the liquidation order to fulfill their statutory obligations.

Mega Store is worth billions of dollars. Their primary insurance policy limits and outstanding claims amounts alone would exhaust the entire yearly guaranty assessment capacity of the other than auto assessment account for that guaranty association even with the application of the per claim statutory limitations.

With Mega Store's claims at the time of insolvency exceeding the yearly assessment capacity of the guaranty association in their home state, the guaranty fund would not be able to meet all of its obligations in the other than auto account to the policyholders in that state. This results in the GA having to prorate claims to all covered claims had that small southern state not adopted the Net Worth Exclusion in their guaranty association act. Additionally, several other states affected by the Super Insurance Company insolvency would also be in the same boat with the large number of high net worth insured claims versus the claims of the company's smaller insureds and personal lines insureds causing GA capacity issues without the adoption of the net worth exclusion.