Massachusetts Enacts Aia-Supported Insolvency Fund Reform

Boston, MA - Gov. Mitt Romney ® has signed insolvency fund reform legislation that will create "a high net worth exclusion" into law, Chapter 342 of the Laws of 2006. This legislation was supported by the American Insurance Association (AIA).

The law defines a high net worth insured as a policyholder with a net worth exceeding $25M on Dec. 31 of the year before the year in which the insurer became insolvent. The Massachusetts Insurers Insolvency Fund (MIIF) will not be obligated to pay first party claims to a high net worth insured. Government entities are not included in the definition.

"The fund is intended to protect policyholders in the event of an insurer's insolvency. This reform will help ensure that the fund is able to provide benefits to those most in need of protection," said John Murphy, AIA vice president, Northeast Region. "This law aligns Massachusetts with the majority of other states. Thirty-four other states have similar exclusions."

The new law also gives MIIF the right to recover from high net worth insureds for third party claim payments. The law takes effect 90 days after being signed on Nov. 5, 2006, according to Gov. Mitt Romney ®.

SOURCE: Gov. Mitt Romney ®