| 1. |
What happens when an insurance company is placed into liquidation? |
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It may be helpful to think of a liquidation as similar to a bankruptcy. When an insurance company is liquidated, its assets (real estate, automobiles, artwork, etc.) are sold and converted to cash. The proceeds are invested for the estate until they are distributed to claimants. Next, the company's liabilities are determined. The Liquidator sends the company's customers, vendors, and creditors a form, called a Proof of Claim (POC), on which they can make a claim. When the Proof of Claim forms are returned, the Liquidator evaluates them for merit. A distribution plan of the company's assets is prepared and sent to the court for approval. Finally, the assets are distributed. As you can imagine, this process is complex and time consuming. Some liquidations can take many years to complete. |
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| 2. |
What do I do if I am turned over to collections for unpaid medical bills? |
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The law does not allow medical providers that have a contract with an insurance company containing a hold harmless clause to pursue a member for payment on a medical claim, except for co-pays and/or deductibles required by contract. Some insurance companies also set up temporary agreements with providers. A referral can be, but is not always, where a non-contracted provider accepts an agreement to perform the service and only look to the insurance company for payment, excluding co-pays and deductibles. If no legal action can be taken against a provider to stop the pursuit of collections, the policyholder should clear the matter with the collections agency and file a Proof of Claim for partial or full reimbursement for payments made. |
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| 3. |
How will a claim under my policy be handled? |
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An Insurance Guaranty Association (IGA) will cover many policy claims against an insolvent insurer. In these instances, the IGA will step in the shoes of the insolvent insurance company and handle the claim. If the claim is not covered by an IGA, or its value exceeds the IGA's maximum claim value, such claims will be handled directly by the Liquidator. Claims handled directly by the Liquidator will receive payment out of the available assets, if any, of the insolvent insurer at some time in the future on a pro-rata basis with all other claims of the same class |
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| 4. |
What is a Guaranty Association? |
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A guaranty association is an association of all insurers licensed to write property and casualty or life and health insurance in a state. Subject to statutory eligibility and claims payment limits, a guaranty association assumes the policyholder obligations of licensed insolvent insurers in that state for residents or property insurance in that state. A guaranty association obtains funds to meet its obligation by assessing member companies. |
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| 5. |
What do I do if the Guaranty Association will not handle my claim? |
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Under some circumstances, the guaranty association may deny coverage due to their statutory provisions. When this occurs, the claim becomes the responsibility of the policyholder to provide their own defense and pay any losses incurred. The Liquidator is prohibited from providing a defense or paying counsel to defend you. Any costs incurred as a result of the liquidation should be submitted on a Proof of Claim form to the Liquidation Office. |
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| 6. |
Must I still pay my premiums? |
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Yes. You must pay the earned premium for the time your insurance policy was in force. The Liquidator has a duty to pursue collection of all assets of the company including premiums due. Failure to pay the premium due through the cancellation date of your policy could jeopardize your coverage under the policy. |
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| 7. |
Will you cancel my policy because of the liquidation? |
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Pursuant to Ohio law, all insurance policies and bonds issued by an insolvent insurance company are cancelled no later than 30 days after the liquidation date. Policy coverage terminates at its normal expiration date or 30 days after the liquidation date, whichever is sooner. There are some exceptions to this rule in life or health insurance and annuities. |
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| 8. |
As an agent, am I permitted to refund payments to clients? |
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No. Policies cancelled after the liquidation date are treated as unearned premium claims through the liquidation proceeding. Agents are not permitted to refund any amounts on policies cancelled after the liquidation date. Agents who do so, do so at their own risk. The Liquidator can pursue the agent for any amounts due the insolvent company that were wrongfully paid to the insured. |
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| 9. |
What is a Proof of Claim form? |
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A Proof of Claim, or POC, is the form a potential claimant uses to file any type of claim against a company in liquidation. A POC form must be received from any person who wishes to assert a claim against the company in liquidation. |
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| 10. |
Why did I receive a Proof of Claim form? |
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The Liquidator sends Proof of Claim forms to policyholders, claimants, reinsurance companies, agents, general creditors, and other persons that are found in the company's records as having done business with the insolvent insurer and who may have a claim against the assets of the estate in liquidation. We realize not everyone has a claim, but we are required to notify you of the liquidation and your opportunity to file a claim, if appropriate. |
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| 11. |
Do I need to file a Proof of Claim? |
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Filing a Proof of Claim (POC) will protect your rights as a creditor in the liquidation proceeding. If you do not file a POC, you may have no standing in the liquidation. Even if a guaranty association handles your claim, the portion not covered by them will be a claim against the liquidated estate. Generally, it is in your best interest to file a POC if you believe you have or may have a claim in the future. |
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| 12. |
How do I file a Proof of Claim? |
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If you believe you have a claim or may have a claim in the future, you must file a Proof of Claim (POC) with the Liquidator. Even if a claim was pending before the liquidation, it must be resubmitted to the Liquidator for consideration in the proceedings. All claim forms should include complete documentation to support the claim. You can get a POC by calling our office. |
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| 13. |
What supporting documents must I file with my Proof of Claim? |
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You should submit all relevant documentation that supports your claim with your Proof of Claim (POC). This includes, but is not limited to, cancelled checks, finance agreements, suit papers, unpaid invoices, HCFA-1500 forms or UB-92 forms. Policyholders submitting medical claims may have to contact the provider that performed the services for the appropriate billing forms. Credit card statements, account balances, collections notices, etc. alone are not considered supporting documentation, due to the lack of specific information provided. |
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| 14. |
How long do I have to file a Proof of Claim? |
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A claimant has until the court approved claim filing deadline to file his/her claim against the company in liquidation. A Proof of Claim (POC) postmarked on or before the filing deadline is called a Timely Filed Proof of Claim. Claims received after the claim filing deadline may be considered late filed. |
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| 15. |
How do I amend a claim previously submitted in the liquidation? |
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You may amend a POC until it interferes with the liquidation or until the POC is processed, valued, and determined, whichever is sooner. To amend a POC, (1) submit a copy of the original POC with the new claim amount; (2) include all documentation supporting your amendment(s) to the original POC and; (3) include a letter stating you wish to amend your POC. |
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| 16. |
Who can sign the Proof of Claim form? |
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The individual, the subscriber of the policy, or a legal representative must sign a Proof of Claim for a policyholder. If the policyholder is a minor, the guardian of the minor may sign the form. For all other claimants, approved signers are a health care provider, manager, supervisor, CEO, CFO, legal representative, or physician. |
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| 17. |
When can I expect payment for my claim? |
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In a state where the insurance company was licensed to operate, the insurance guaranty association of that state may handle the claims of policyholders or claimants against a policyholder. The guaranty association will handle claims according to that state's statute. Claims may be subject to statutory deductibles and maximum claim amounts. If the guaranty association denies part of, or the entire claim, the Liquidator will review the claim for classification after the final bar date. This process is complex and could take many years to complete. |
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| 18. |
If I do not have a claim, what should I do? |
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If you do not have a potential or outstanding claim against the company in liquidation, you may either discard the POC form or complete and return it to our office with the words "No Claim" in the Amount Claimed section. Please note that should you choose not to file a POC, you may be forfeiting any future standing in the liquidation. |
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| 19. |
How do I handle my unreported claim? |
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Depending upon the type of policy you had with the insurance company, you may be entitled to coverage for claims not reported before liquidation. If you receive notice of a new claim and you believe coverage still existed, please notify us. You will need all documentation, a brief description including the name of the insurance company, policy number, insured name, and the allegations against you. Send this to the Liquidation Office Claims Department. The Liquidator will review your submittal and either deny coverage or create a claim file and forward it to the appropriate guaranty fund. If we open a claim file you will receive a Proof of Claim form from the Liquidator pertaining to the new claim. |
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| 20. |
How do I check the status of my claim? |
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The legalities involved in a company's liquidation are frequently complex and lengthy. If an Insurance Guaranty Association (IGA) is handling the claim, you may contact the IGA directly for an update. If the claim is being handled directly by the Liquidator, the Liquidator will value your claim and you will be notified via a Determination Letter. Until such time as a Determination Letter is issued the Liquidator will be unable to provide you with any substantive information regarding your claim. When a claim is valued and a plan is made for distribution, the claimant will be notified with a determination letter. |
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| 21. |
What does the class of my claim mean? |
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A claim's class is determined according to Section 3903.42 of the Ohio Revised Code. Every claim in each class shall be paid in full or adequate funds retained for such payment before the members of the next class receive any payment. In most liquidations, the higher your class number (Class 1 being higher than Class 5) the more likely funds may exist to pay at least part of your claim. |
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| 22. |
I received a letter titled “Determination of Claim”, what should I do? |
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This letter, also called a “Determination Letter,” means the Liquidator reviewed the proof of claim you filed and made a decision whether to allow your claim in the liquidation. Usually, this letter indicates whether your claim is denied or allowed. If your claim is allowed, the Letter will also indicate the class and value of the claim. If you object to all or part of the liquidator’s determination made in the Determination Letter, you must file a written objection with the liquidator within 60 days of the date of the Determination Letter. If you file an objection to the liquidator’s determination of your claim, and if you and the liquidator cannot resolve your objection to the appropriate determination for the claim, the liquidator will schedule a hearing with the court overseeing the liquidation. You will be given notice of this hearing and will have an opportunity to appear at the hearing to present your position to the court. This procedure is set forth by statute at Ohio Revised Code 3903.39. |
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| 23. |
I received a payment for my claim. Do I need to complete a W-9 Form? |
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In some cases, you will receive a payment for a claim. If this payment can be considered income, vendors and others (attorneys) may be required to complete Federal form W-9 Request for Taxpayer Identification Number and Certification and file it with us. Because we will be reporting this to the IRS, this step is important. You can find the current year’s form at the IRS website.
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