Insurance Security Funds
When an insurance company incorporated in New York State becomes
insolvent, the Insurance Department assumes control of the company and pays the company's
outstanding insurance claims. These payments are made from the liquidated assets of the
company and from three security funds maintained by the Department. The three funds are
financed by periodic assessments against active insurance companies. We examined the use
and status of the three security funds. We found that fund disbursements were appropriate
and the combined fund balance, though declining, was still adequate to meet anticipated future
needs. We did note that improvements could be made in the procedures used to collect
receivables due from insolvent insurance companies that are incorporated in another state but
operate in New York State. When such companies become insolvent, the claims of New
Yorkers are paid by the Department from the security funds, and these payments are later
reimbursed by the other state after the company is liquidated. At the time of our audit, the
Department was owed about $296 million from out-of-state liquidators. We recommend that
the Department more actively pursue the collection of these receivables.
For a complete copy of 95-S-2 click here.
For a copy of the 90-day response click here.