2021.ncigf.org2021 NCIGF Annual Report |

Overview Messages Key Accomplishments Financials Board of Directors Select Page NCIGF 2021 Annual Report Supporting the Insurance Promise ; Image: Indianapolis, Indiana Overview The past two years have been challenging for the entire world. While not immune, the state insurance guaranty system navigated the choppy waters successfully. Not only has there been no interruption in service to insurance policyholders, but also a number of major goals were achieved. In 2021, NCIGF further established itself as the ultimate source of information and support when a property and casualty insurance company fails. Developments in technology, data security and public policy have solidified NCIGF’s critical role in state insurance regulation. NCIGF members were united under their policyholder protection banner and NCIGF continued to provide value to all stakeholders. NCIGF’s presence continues to bind our community together in pursuit of our policyholder protection mission. Image: Cloud Gate The Bean” Chicago, Illinois Our Vision To be the definitive national leader on matters related to insolvency and its consequences to policyholders and claimants protected by the state-based property and casualty guaranty fund system. Image: Independence Hall, Philadelphia, Pennsylvania Our Mission To bring the greatest possible value to the member state property & casualty guaranty funds and the state-based guaranty fund system in operational support, communications and public policy development. Image: San Francisco, California A Video Message from NCIGF Leadership A Video Message from NCIGF Leadership Key Accomplishments Scroll through using the arrow buttons or your touch screen to view each accomplishment NCIGF Public Policy Efforts In 2021, NCIGF efforts to promote an acceptable approach on large deductible programs came to fruition after more than 20 years of engagement... NCIGF collaborated with the NAIC Large Deductible Working Group and Receivership and Insolvency Task Force to develop a guideline that says the Large Deductible asset will insure 100 percent to the state guaranty fund to the extent of their claims payments, resolving a 20-year conflict with regulators. The disagreement concerned disposition of the deductible asset – usually in the form of collections from policyholders and collateral drawdowns. Guaranty funds have asserted that these recoveries should inure in full to the guaranty funds. Receivers often take the view that these amounts are general assets of the insolvent estate – meaning all creditors would take a proportionate share in accordance with the state’s priority distribution statute. The deductible amounts are quite often $100,000 or more making this a a significant issue of dispute. During the past two years NCIGF has worked with the Large Deductible Working Group at the NAIC to develop guidelines on the matter. At its Spring 2021 national meeting, the NAIC agreed to the NCIGF proposal. Restructured business statutes that would authorize insurance company divisions or insurance business transfers (IBTs) continue to be adopted in various states, generating concerns about the status of guaranty fund coverage. The matter is particularly urgent in that both division statutes and IBTs make it clear that there is no remaining liability on the part of the transferring entity for the claims transferred under these statutes. The NCIGF Board of Directors adopted a position on this matter stating that if coverage existed on a claim before the restructuring transaction it should remain in place after the transaction. Conversely, if coverage was not available before the transaction it should not be created by the transaction. As many current guaranty fund laws may not resolve these claims in this way, NCIGF developed a statutory remedy. This remedy has been adopted in three states and efforts continue to promote the amendment in additional jurisdictions. Cyber Security Insurance Coverage in Insolvency: Cyber security insurance coverage in insolvency is an evolving issue. No specific policy forms have thus far been developed to address these risks. Moreover, the policies provide notification, remediation, and forensic services along with claim payments. Response time to provide such services is often quite short. Should an entity that covers these risks become insolvent and be ordered into liquidation the guaranty funds would be called upon to act. The NCIGF has developed statutory language in this regard and will be implementing educational programs for our own member community, industry groups and organizations such as the NAIC. Relationships with NAIC and Regulators Throughout 2021 NCIGF continued to educate regulators on the need for pre-liquidation planning and offered specific proposals in this regard... NCIGF continues to interact with the NAIC’s Receivership Financial Working Group (RFAWG) and the Financial Analysis Working Group (FAWG) and had the opportunity to present to both groups on the need for pre-liquidation collaboration with regulators and receivers. NCIGF is continuing its efforts at the NAIC and as opportunities arise in various states. NCIGF briefed the Receivership and Insolvency Task Force (RITF) at the April NAIC meeting. At the state level, proposals in Illinois and California were progressing at the end of 2021. Insolvency Support and Customized Services NCIGF, working through its subsidiary Guaranty Support Inc. (GSI), was a key player in multiple insolvencies affecting nearly all NCIGF Members... Here’s a summary of GSI’s insolvency activity: ASI Pool Companies: Assisted the Illinois Office of Special Deputy in receivership with the transfer of claims images and creation of a custom process to extract policy documents from the Atlas Systems. Bedivere Insolvency: One of the most complex insolvencies in recent times, GSI owned the entire UDS production pipeline under the direction of the Pennsylvania Liquidation Department. Bedivere claims and policy information from inception to date was extracted from 7 different companies. GSI produced over twenty thousand A records, and well over five million F, G, and I records. Additionally, GSI created a custom process to facilitate the transfer of claims between states as the general data typically used to identify a destination state was unreliable. Physician’s Standard Insurance Company: Previously captured claims data was refactored to replicate the functionalities of the company’s original claim system. This resulted in the estate to still being able to run reports and mine information, while not incurring the expense of a hosted claim system. Gulfstream Insolvency: Gulfstream was an insolvency in partnership with the Florida Department of Financial Services. This insolvency was comprised of an enormous volume of data from five different systems under a strict schedule. Additionally, this was the first instance of GSI creating non-UDS data for a receiver. GSI created DFS’ proprietary format called OLCP which has higher standards for data completeness and scope than UDS. GSI gathered, filtered, transformed, and sent over fifty million records to DFS comprising policy information, claim information, policy documents, and claim documents. While there were intense time pressures, the GSI team was able to rise to the challenge and deliver data on a schedule satisfactory to DFS. Louisiana Insolvencies: GSI has assisted and continues to assist the Louisiana Insurance Guaranty Association in processing their unprecedented volume and velocity of insolvencies. GSI has created custom integrations into specialty systems for the Louisiana Guaranty Fund to scale to meet their demands. GSI is responsible for the entire data production pipeline for all insolvency data. Ongoing Insolvency Work: GSI has multiple insolvencies that it continues to manage (i.e. reopened files, first notices of loss, and image requests) for as long as the receiver and guaranty funds need. GSI has multiple...