GUARANTY FUNDS ASSESSMENT LETTER

(March 2023)

 

A given state’s highest insurance authority, on behalf of the applicable guaranty fund, typically issues assessment letters to collect needed funds from participating insurers. Separate guaranty funds may be created for different lines of business, but they generally exist only in major groupings such as:

Below is a sample letter. Actual letters are likely to vary by state and their content is often controlled by statutory language requirements. This sample is meant only to illustrate such a document. Interested persons should contact the applicable state insurance department or guaranty fund for assessment letter details.

Sample Assessment Letter

 

Name of Regulatory Authority                                                    Document No:

 

Name of Commissioner/Board Chair

 

Re: Fund Assessment (or similar heading)

 

Pursuant to Section (applicable statutory reference), State statutes, the Board of Directors of the (Applicable State) Insurance Guaranty Association has by (letter date) certified to the (Applicable State Regulator) a need for an assessment against members in the (applicable) account doing business in the (applicable state).

Note: A copy of the applicable board letter may also be attached.

 

Section (applicable citation), (applicable state) statutes requires the (applicable regulator) to levy assessments as requested by the Board of Directors of the Fund. Pursuant to the (applicably delivered) letter from the Fund dated (_____________). The regulator has determined that all insurers defined by (applicable statute) in the applicable account shall be assessed as follows:

 

This section typically provides details on:

  • Who is subject to assessment
  • Percentage of assessment
  • The applicable line(s) of business to which percentage applies
  • The applicable written premium year that is being assessed
  • Due date for payment – Note: Payment date may also be according to statute, such as 30 days after date of letter receipt.

 

Done and ordered this (day, month, year)

 

Signature of Authorized Official

Letter Supplemental Information

 

Depending upon the state, a letter may be accompanied by additional information such as:

  • Citing of statutory references that justify the assessment
  • Contact information for insurers or others seeking additional information
  • Information on filing a dispute regarding the assessment
  • Warning about consequences of noncompliance

 

 

A financial obligation is created immediately upon an insurer’s receipt of a letter. Remittance of an assessment can differ according to the applicable state as well as according to the assessment source. Payment may need to be sent to the state’s insurance authority, the applicable fund or a third party established for collecting and handling a given assessment.