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Bankruptcy and Defaults terms
Bankruptcy and Defaults in Homeowners Insurance: the news, the names and what changed.
AssessmentAn extra charge raised after a state-backed insurer or guaranty fund runs short of money, collected from insurers and sometimes passed on to policyholders.Demotech ratingA financial strength grade from an independent firm that rates mostly small and regional property insurers, often those AM Best and S&P do not cover.Guaranty fundA state safety net, financed by charges on licensed insurers, that pays covered claims up to a cap when an insurer is declared insolvent.InsolvencyThe condition of an insurer that cannot pay its claims and debts as they come due, or whose liabilities exceed its assets or required capital.Liquidation (insurer)The final stage of an insurer failure, when a court orders the company wound up, its policies ended and its assets sold to pay claims and creditors by priority.Policyholder surplusAn insurer's assets minus its liabilities under statutory accounting, the capital cushion that absorbs losses beyond its reserves and premiums.ReceivershipA court-supervised takeover of a troubled insurer, run by the state's insurance regulator or a designee, to either repair the company or wind it down.Rehabilitation (insurer)A court-ordered effort, run by a state-appointed rehabilitator, to restore a financially troubled insurer, which can end in recovery, a sale or a wind-down.