RECIPROCAL OF AMERICA AND
THE RECIPROCAL GROUP
  In Receivership for Liquidation  

 

     

GUARANTY ASSOCIATIONS AND YOUR CLAIM

Question: Are the insurance guaranty associations ("GAs") in various states involved with handling insurance policy claims now that ROA is in liquidation?
   
Answer: Yes. Once the State Corporation Commission of the Commonwealth of Virginia (the "Commission") entered its Order of Liquidation with a Finding of Insolvency and Directing the Cancellation of Direct Insurance Policies, the GAs of all applicable states in which ROA conducted business were triggered.
   
Question: How were the GAs triggered by the liquidation of ROA?
   
Answer: Each GA is organized by state statute and the state statute should be consulted for the most complete information. Generally, GA statutes "trigger" a GA so that it becomes responsible for paying "covered claims" when a final order of liquidation with a finding of insolvency is entered in the receivership. In some cases, a final order of liquidation is by itself a sufficient trigger, and in others only a finding of insolvency is necessary. Other states may have different requirements, so it is advisable to consult the laws of each state carefully.
   
Question: What happens when a GA is triggered?
   
Answer: When a GA is triggered, it becomes responsible for the payment of "covered claims" of insureds of the insolvent company, subject to various limits, caps, deductibles, eligibility requirements, and other conditions. The functions and responsibilities of the GA are governed by state statutes which, among other things, define what constitutes a "covered claim" and who is eligible to receive claim payments. Generally, when a GA pays a claim, it is subrogated to the rights of the policyholder or insured to the extent of such payment. Therefore, the GA may assert its own claim against ROA (or, some times, other parties) for the amount paid and costs associated with such payment. For further information about a particular GA's limitations, please consult the applicable state statute.
   
Question: What GA statute is applicable to my claim?
   
Answer: For workers' compensation claims, the applicable GA statute is generally that of the state in which the injured employee resided at the time of the injury. For liability claims, the applicable GA statute generally is that of the state in which the insured entity is located. If there is permanent property involved, the applicable GA statute is often that of the state in which the property is located. There are exceptions to these general guidelines, so it is advisable to consult the applicable state statute for complete information.
   
Question: Since the GAs have been triggered, what action has been taken to allow the GAs to pay insurance policy claims?
   
Answer: All relevant insurance policy claim files have been sent to the applicable GAs for processing and determination of claim coverage. See also THE LIQUIDATION OF ROA AND TRG section of the Frequently Asked Questions.
   
Question: Should new insurance policy claims be submitted directly to the GAs?
   
Answer: No. All claims should have been submitted to ROA for initial processing by the Final Bar Date of September 30, 2004. ROA will send the claim to the applicable GA. For further information on the Final Bar Date and filing a new claim with ROA, see the FILING A CLAIM AND THE PROOF OF CLAIM PROCESS section of the Frequently Asked Questions.
   
Question: How can I know whether my insurance policy claim is being handled by a GA?
   
Answer: If your claim was assigned to a GA, you should have been notified by the GA that it is handling the claim. If you have questions, please contact the claims department at ROA.
   
Question: Is there a window of time after which the GA will not pay a claim?
   
Answer: Most GAs do not pay claims that arise after a specified period of time. For the ROA receivership, in all applicable states other than Rhode Island, New Jersey, and Virginia, GA coverage applies only to claims that arose no later than 30 days after the determination of insolvency (or through July 20, 2003), or before the expiration or the cancellation or replacement of the policy by the insured, if earlier than that date. The time period of coverage after determination of insolvency was 60 days in Rhode Island (or through August 19, 2003), 90 days in New Jersey (or through September 18, 2003), and 91 days in Virginia (or through September 19, 2003), or coverage ceased on the date of expiration or the cancellation or replacement of the policy by the insured, if earlier.
   
Question: What if the GA does not pay a claim?
   
Answer: If the claim is covered by an ROA policy, ROA retains the responsibility for payment of that claim. However, ROA is not making any claim payments at this time. For further information, see the CLAIM PAYMENTS FROM THE RECEIVERSHIP ESTATE section of the Frequently Asked Questions.