Dots - Guaranty Funds

Dwight K. Bartlett III (Maryland Insurance Commissione): Are you going to tell me, Bill, in all honesty that you really believe that the policyholders of Executive Life and Mutual Benefit Life have been well-served?

  • For example, with Mutual Benefit, if you opted out of that rehabilitation plan you get, as I recall, 55 cents on the dollar of your account value.
  • If you opt into the plan, you agreed to subject yourself to a moratorium period, which means you do not get full access to the cash values of your policy until the next century.
  • Are you going to say that's meaningful coverage for those policyholders?

I think that's ridiculous.

1994 - Valuation Actuary - Smposium Proceedings - Session 1 - Introduction and Overview - 110p

1995-2, NAIC Proceedings - Guaranty Fund Issues Working Group

(p515) - The working group identified several issues relevant to the charges, including:

  • Does the current structure for handling life insurer insolvencies encourage a policyholder "run"?
  • Are the shortcomings of the post insolvency assessment state-based guaranty fund system sufficient to justify serious consideration of alternative systems, or can the problems be fixed? 

2011 1116 - GOV (House) - Insurance Oversight and Legislative Proposals - pdf-131p 

(p24-25) - Mr. STIVERS.  I have a quick question for Mr. Monroe and Mr. Lanza. In the scenario that Mr. Schwarcz gave earlier about a run on life insurance companies, wouldn’t the State regulatory scheme under McCarran-Ferguson have to essentially completely collapse and fail and the State regulators not do their jobs?
Mr. LANZA. I believe so.
Mr. MONROE. I would have to agree with that. I can’t imagine a scenario where it would be a contagion from life insurance company to life insurance company. In fact, given the competitiveness of the insurance market, I think if there was a run on one, others would quickly step in.