Unearned Premium Claim Process in Insolvencies

With the increasing number of insurance company insolvencies especially in Florida and Louisiana, an explanation of the unearned premium process for insolvencies may be helpful. While the guaranty fund statutes in each state may differ in the amount of unearned premium that is covered, including any applicable floors, maximums or statutory deductibles, the process that all guaranty funds go through in calculating unearned premium by the liquidator/receiver of the insolvent insurer is the same.

In a property and casualty insurance company insolvency, the liquidation order in most cases will cancel all policies of the insolvent insurer 30 days post-liquidation date. On rare occasions, like in the case of the St. Johns’ insolvency, the liquidator will transfer the policies and reserves to another insurer.