Under Ohio law, when an Ohio domiciled insurance company becomes insolvent and requires liquidation the Superintendent of the Ohio Department of Insurance initiates a court action to place the company in liquidation. By law, the Superintendent is appointed as Liquidator of the company, subject to oversight by the court. The Superintendent established the Ohio Insurance Liquidation Office and tasked it to oversee and administer the liquidations of Ohio domiciled insurance companies placed in liquidation.  The Superintendent appoints a Chief Deputy Liquidator, who is responsible for the operations of the liquidation office.

When the court orders a company into liquidation, the liquidation proceeds under the authority and by the guidelines of Ohio Revised Code Chapter 3903. Under this statute, the Liquidator has broad powers to liquidate all assets of and resolve all claims against the insolvent insurance company.  The Liquidator's Office assumes control of the insolvent company’s offices and personnel. Ultimately, the Liquidator's office closes the insolvent company’s offices and moves its operations to the Liquidator's headquarters at 50 W Town Street, Columbus, Ohio. Depending on the size of the company, it may take several months before the company's facilities close.

In addition to closing the company's offices, the Liquidator must forward all open claim files to the appropriate guaranty association. Although the liquidation may be in Ohio, companies often have licenses and operations in several states.  Each state has one or more guaranty association or guaranty fund, which have statutory obligations to defend and pay certain claims when an insurance company goes into liquidation.  The guaranty association in each state must receive the files for those claims that are its responsibility, so it can handle those claims following its own state's statutory requirements.

Upon the filing of a new liquidation, the Liquidator also moves quickly to begin liquidating all assets of the company. Some assets can be liquidated promptly; others may take longer - such as real estate or potential claims to be litigated against individuals or other entities. As assets are collected and liquidated, they are invested until disbursed to creditors.

The amount and timing of payments made by the Liquidator are difficult to predict. Chapter 3903.42 of the Ohio Revised Code establishes priority for distribution of the assets of a liquidated company. Under the statute, all claims of a particular class must be paid 100% before claimants in the next lower class are paid.

Because it takes a long time to resolve all claims and collect all assets of an insolvent company, several years may pass after a company is placed in liquidation before the Liquidator can make distributions. To the extent a claim arising under an insured's policy issued by the insolvent company is covered and paid by a guaranty association, such payments should proceed quickly. However, if the guaranty association does not pay the claim, it will likely be several years before the Liquidator will make a distribution.

The liquidation office pays claims after careful review of a proof of claim (POC). When a company is placed in liquidation, the court establishes a bar date for filing of all POC's in the liquidation. This date is usually one year from the date of the liquidation order. The liquidation office attempts to identify all insureds and other parties, who may have claims against the insolvent company, as reflected by the records of the company. Once identified, the office sends POC forms to those who may have a claim to assert. Because the Liquidator's efforts in this regard are intentionally broad, individuals who have no claim often receive a POC form. The receipt of a POC form does not mean that you have a claim, but simply that at some time you may have had some dealings with the insolvent company.  Anyone who receives a POC and believes they have a claim should file the POC with the liquidation office before the bar date established by the court.

In due course, the Liquidator reviews all POC's and sends the claimant a letter relaying the Liquidator's determination as to the appropriate amount and the priority distribution classification for the claim. If the claimant agrees with the Liquidator's determination, he need do nothing and will receive distribution on his claim in accordance with the statutory priorities. If, however, a claimant disagrees with the Liquidator's determination, he will have sixty days to file a written objection to the Liquidator's determination. If the claimant objects, and the Liquidator and the claimant are unable to resolve their disagreement, a hearing will be set with the liquidation court to resolve the dispute.