What is insolvency?
An insurance company is declared to be insolvent when it no longer meets the statutory definition of solvency. Even though the company may still have assets, the company is deemed to be "Unable to pay its outstanding lawful obligations as they mature in the regular course of business ..." and the existing assets of the company are then preserved to allow for the settlement of outstanding claims and debts to creditors.
How does insolvency affect my claim?
Unfortunately, the rehabilitation or liquidation of an insolvent insurance carrier usually means a delay in the settlement of outstanding claims. Where a solvent insurance company may settle claims in a matter of weeks, the complications of dealing with an insolvent company can lengthen the process considerably.
This is the case for a number of reasons. All outstanding claims need to be investigated, and coverage must be verified. Oftentimes there are delays in receiving or reconstructing files. Once a claim is investigated, and coverage is established, many settlements must be approved by a judge, as the laws of New York State require that disbursements of an insolvent company's assets be approved by the court.
Once the settlement is approved, it then is submitted to one of the Security Funds, depending upon the type of claim. When the Fund releases the money for the settlement, it is sent to the claimant.
It is often impossible to predict with any degree of certainty the time involved from start to finish. The New York Liquidation Bureau staff will do everything in their power to expedite all claims - but because there are other entities involved in the process, we ask that you understand that there will be extra time involved. We are happy to answer your questions at any time, and will do our best to make this difficult and time-consuming process as painless as possible.
What are we doing to make the process faster?
The NYLB is dedicated to reducing the amount of time required to settle claims and to close estates. We have committed to a reorganization and streamlining process that will enable us to achieve more while becoming more economically efficient at the same time - fulfilling our fiduciary responsibilities to claimants and creditors.
What is meant by Domestic?
Domestic, as it applies to the New York Liquidation Bureau, means that the company was domiciled (headquartered) in the State of New York and the Superintendent of Financial Services was appointed Rehabilitator or Liquidator.
What is meant by Non-Domestic?
Non-Domestic, as it applies to the New York Liquidation Bureau, means that the company was not domiciled (headquartered) in the State of New York. However, the company conducted an insurance business in the State of New York and the Superintendent of Financial Services was appointed Ancillary Receiver. Under New York Insurance Law, covered claims are paid by three funds - the New York Property / Casualty Insurance Security Fund, the New York Public Motor Vehicle Liability Security Fund, and the New York Workers Compensation Security Fund.