1. 4470 POINTS
    Brandon Roberts
    Owner, The Insurance Pro Blog,
    Yes they can.  Just like any company.

    However due to regulatory intervention, it's extremely rare.  Life insurers are checked often by state regulators for financial well being and must maintain certain capital positions based on their outstanding liabilities.  They are required to maintain at a very minimum twice the amount of capital on hand needed to cover the expected claims they will incur in any given year.  If they fall near or below this number, then regulatory action begins to try and place the insurer in a better financial position.

    Additionally, if a company should fail, other companies typically purchase their assets and back the promises made by the failing insurer.
    Answered on August 22, 2013
  2. 37376 POINTS
    David G. Pipes, CLU®, RICP®
    Business Development Officer, T.D. McNeil Insurance Services, Fresno, California
    In California insurers are required to participate in a fund that acts to keep all the contractual promises made to customers of insurance companies.  Each company is assessed to cover the losses when a company gets into financial difficulties.  The company itself may leave the market but the individual policies will be picked up by another company in a way that is seamless to the consumer.  Sometimes the company remains but the management is changed. 
    Answered on March 6, 2014
  3. Did you find these answers helpful?
    Yes
    No
    Go!

Add Your Answer To This Question

You must be logged in to add your answer.


<< Previous Question
Questions Home
Next Question >>