Considerations for Surplus Det. under ACA & Insolvency

Question 1

Characteristics of the ideal insolvency process (10)

Answer 1

1. Good relationships between the task force and receiver
2. Good policy records
3. Few uncovered obligations
4. Facts and solution are clear and agreed on by the receiver and the task force
5. Joint solicitation of proposals and negotiation of an assumption reinsurance agreement with a strong reinsurer
6. No resistance to a court order of liquidation with a finding of insolvency
7. Prompt regulatory approvals of agreements among the receiver and the affected guaranty associations
8. Quick closing to move policyholders to a solid insurer
9. Guaranty associations’ obligations fully satisfied at closing
10. Task force involvement in asset recovery

Question 2

Duties of the state-appointed receiver of a health insurer at risk of insolvency (5)

Answer 2

1. Sell members and/or assets to another health insurer
2. Examine corporate holdings for previously unidentified assets
3. Prioritize providers and vendors for payment adjudication
4. Determine the payment amount for each provider and vendor
5. Draw on state funding to support care transitions for affected members

Question 3

Reasons why companies need surplus (4)

Answer 3

1. To fund future capital investments and growth
2. To support loss reserves
3. To prepare for future regulatory changes
4. To protect themselves and their policyholders from adverse cash flow shocks

Question 4

Important elements of task force and receiver joint work plan (5)

Answer 4

1. ) Policyholder communications
2. ) Claims payment
3. ) Short term admin arrangements
4. ) Long term admin arrangements
5. ) Improve admin arrangements