Property & Casualty Pre-Liquidation Planning: Readiness Framework
FAQ’s
Pre-Liquidation Planning: Common Questions, Practical Solutions
Does involving guaranty funds too soon risk exposing the company’s condition to the market?
No. Guaranty funds and NCIGF do not share pre-liquidation information with their boards or
any market-facing entities. Access is limited, and confidentiality is maintained throughout the
community. Additionally, the scope of data needed for P&C companies is limited in this context
(claims count by line of business, data preparation, etc.)
Early coordination does not increase exposure—it improves planning and control.
Could early engagement with the guaranty fund cause the company to assume its failure is certain?
Engagement doesn’t mean closure—it’s contingency planning. Positioning it this way keeps company leadership focused and calm. Business professionals understand the value of preparing for worst-case scenarios.
Will involving guaranty funds earlier in the process make the situation appear worse than it is?
Done properly, it won’t. The essential planning can be limited to a small, confidential group. In fact, the most urgent task—testing and preparing data for transfer—can be done quietly through an IT vendor without involving the guaranty fund until necessary.
Who pays for early planning?
In pre-planning, expenses are typically covered by the Receivership or the company once insolvency appears likely. From an IT perspective, pre-planning costs generally range from $15,000 to $50,000 depending on the number of systems, data complexity, and the type of system.
If it is not possible for the Receivership to cover these expenses, Guaranty Associations may be willing to fund this early planning, including engaging an IT vendor. If the company becomes insolvent, they would request that the Receiver include these costs as administrative expenses for reimbursement.