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Under an order of liquidation, the Director of Insurance becomes Liquidator of an insurance company and, as
Liquidator, is vested with title to the company's property, assets, rights of action or lawsuits, books, records and
premises. Notices are mailed to persons and entities reflected on the company's books and records as being potential claimants
of the company. Claims properly filed against the company are evaluated and adjudicated by the Liquidator.
(Evaluation, Adjudication and Allowance of Claims). At the same time as he is addressing
claims filed against the insolvent company, the Liquidator will be working to marshal the assets of the company.
This can include the collection of contractual balances due the company, as well as filing lawsuits when warranted.
When sufficient assets exist in the company and claims liabilities have been finalized, the Liquidator will seek
court approval to make a distribution of assets. Distributions are made by priority level and are made on a
pro-rata basis, meaning that each allowed creditor at the same priority level receives payment at the same percentage
of its claim. Subsequent to a final distribution of assets, the company is closed.
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Can an Order of Liquidation be appealed?
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In the rare instance that this might happen, the Illinois statutes require that the Director file with the
Supervisory Court an "Appeal Pendency Plan" detailing how the Director will operate the insurer during the appeal.
Depending on many factors such as the size and complexity of the company, as well as its asset condition,
this plan can be a very complicated procedure, or something as simple as the preservation of the insurer's records,
and a moratorium upon the payment of claims and defense costs.
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I have a Property & Casualty policy. Am I still insured?
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The rights and liabilities of the company and its policyholders and creditors are fixed as of the date of
liquidation (What is a contingent claim?). However, all policies covered by a
Property & Casualty Guaranty Fund will be continued and covered by such Guaranty Fund to the extent
defined under your state's law for 30 days from the liquidation date. The policies covered by the Guaranty
Fund will be cancelled effective 12:01am Local Time on the 30th day after Liquidation unless the policy has
been terminated at an earlier date for any reason. Policies not covered by a Guaranty Fund are cancelled
effective upon the entry of the Order of Liquidation.
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I have a Life and Health insurance policy. Am I still insured?
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The rights and liabilities of the company and its policyholders and creditors are fixed as of the date of liquidation.
However, policies covered by a Life & Health Guaranty Association will be continued and covered by such Guaranty
Association to the extent defined under your state's law for an undetermined amount of time. You will receive notice
from your Guaranty Association with regard to when your policy will terminate. Policies not covered by a Guaranty Association
are cancelled effective upon the entry of the Order of Liquidation.
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Will the claims be paid now that the Company is in Liquidation?
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Claims covered by the Guaranty Fund will be paid by the Guaranty Fund subject to the limitations and restrictions
of the Guaranty Fund laws of the state in which you are a resident. Pre-liquidation claims in excess of applicable
Guaranty Fund limits of coverage and pre-liquidation claims that are not covered by a Guaranty Fund will be paid
by the Liquidator on a prorated basis depending upon the assets available in the company and the amount of all
claims allowed at the priority level at which the funds are being distributed.
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