2022 Insolvency Cost Information Report Now Available
NOLHGA has issued its annual Insolvency Cost Information Report, which assists member companies in establishing accruals for life, annuity, and health guaranty association assessments pursuant to Statement of Statutory Accounting Principle No. 35R - Revised Guaranty Fund and Other Assessments (finalized March 2000, revised October 2010) and Accounting Standards Codification 405-30, Insurance-Related Assessments (ASC 405-30) (previously known as SOP 97-3 - Accounting by Insurance and Other Enterprises for Guaranty Fund and Certain Other Insurance-Related Assessments (released December 1997 by the AICPA)). The report contains information regarding the cost of insolvencies, assessable premium by state, and summaries of each state’s general assessment and premium tax offset provisions.
These reports have been issued by NOLHGA annually since 1992. This year’s report is available for download from NOLHGA’s website in the Facts & Figures—Insolvency Cost Files section. The report contains the following data files:
Insolvency Costs Workbook: An Excel workbook with individual insolvency cost information along with various summary schedules and premium information by state.
Insolvency Costs Report: A PDF file that includes commentary on various insolvencies along with the schedules from the Costs file. Also included are general assessment and premium tax offset state provisions along with premiums by state.
In addition, there is a special attachment dealing with the Penn Treaty/ANIC (see 2017 section) cost estimates.
Summary assessment information (called and refunded) as of year-end 2021 has been included on each insolvency case for use by member companies in their accrual process as they deem necessary. This information is compiled from the annual assessment submissions of each guaranty association. It is not audited by NOLHGA; therefore, NOLHGA will not be able to address any questions that member companies may have on the accuracy or completeness of the information. Those inquiries should be directed to the appropriate guaranty association.
This year’s report includes information on the Global Bankers companies (Colorado Bankers Life, Bankers Life, and Southland National) in the “pre-liquidation” category for insurers that may want to establish a pending accrual in the event the companies are placed in liquidation. In addition, the special section for Lincoln Memorial and the anticipated funding schedule for ELIC are no longer included in the report.
This year’s report again features the segregation of costs associated with long-term care (LTC) as a result of amendments to the NAIC’s GA Model Act made in 2017, which included a new method for allocating LTC assessments beginning with cases occurring in 2018 or later. The new method allocates assessments associated with LTC business 50/50 between life/annuity and health insurance member companies (as defined in the new Model Act amendment), assuming the state adopted the 50/50 ratio in the new Model Act.
While LTC business had previously been assessed solely under the health account, assessments will now be allocated among all applicable accounts (life, allocated and unallocated annuity, and health) according to the formula spelled out in the state’s guaranty association statute. For states that have adopted the new allocation method, LTC costs have been segregated from other health business. When accruing for LTC costs, companies will have to use the premiums from all their accounts to determine their market share to apply to the cost estimate. Senior American Insurance Company is the only case included in the report that is impacted by the new provisions to date.
Please note that some of the financial schedules will print in very small text and may be difficult to read. If the text is too small, it might help to set those pages to legal size and print them separately from the rest of the report.
Staff Contact - Keith SheridanWilliam Falck Passes Away
William Falck, former Executive Director of the Florida Life & Health Insurance Guaranty Association, passed away on December 3, 2022. He was 78.
William joined the Florida association in 1987 and served as Executive Director and General Counsel for more than 30 years before retiring in January 2020. He served as Chair of NOLHGA’s Members’ Participation Council (MPC) from 2000 to 2003 and also served as Chair or a member of more than 70 insolvency task forces, working groups, and committees, including the Penn Treaty/ANIC, ELIC, Mutual Security, and Mutual Benefit task forces.
William was the principal author of NOLHGA's Insolvency Protocols (the initial version of the MPC Insolvency Task Force Guidelines), and he served on the NOLHGA Board of Directors from 2006 to 2012 (in addition to his time on the Board during his MPC Chair tenure).
Before joining the Florida guaranty association, William worked as the clerk for Chief Justice Vassar Carlton on the Florida Supreme Court, joined the law firm Greene and Greene, and went on to be the General Counsel for University Medical Center. He graduated from Florida State University and received his Juris Doctor from the University of Florida.
William was a leader in the guaranty community for decades, and his passion for the work of the guaranty associations was an inspiration for all who worked with him. We will miss his wit, wisdom, and expertise on a seemingly inexhaustible range of subjects, from photography to antique cannons. His obituary can be found here.
Please join NOLHGA in expressing our sympathy to William’s wife and family during this difficult time.
Staff Contact - Sean McKenna