Originally Posted by
nikosmom
First- every insurance company is required by law to participate AND pay into its state's guaranty association so there is continual funding. The guaranty associations limit the amount they will pay out to avoid bankruptcy/insolvency on their part but also, they will move policies to a different (more financially sound) company when possible. The way they work is similar to the way the FDIC backs up bank failures.
The guaranty association will pay out the max per its state's limits then the balance of the claim will be made against the insurance company. Any remaining assets are then paid to the policyholders.
Thank you so much!
So consumers are not worried that a guaranty association fails due to, for instance, wrong doing in its fund management or flaud? Like we are not worried about FDIC?
I'm studying about health insurance system of your country from overseas and don't really know how Americans feel about it. Secure or not secure, etc.