What will happen if an Insurance Agency is distressed?

Before with satisfy the title-question, it is worthy to note that an insurance agency is precisely regulated by Insurance Commission. Be that as it may, the IC is imposing several requirements before it allows an insurance agency to operate. The primary requirements are: first, it must meet the minimum capital and assets, and, it must be able to lawfully obtain a certificate of authority from the insurance commissioner. Once these basic demands have been fulfilled, a corporation will be allowed to operate as an insurance agency with an additional requirement of maintaining its financial capacity. Once an insurance agency failed to sustain the required capital and asset, it will be considered as an “insurance agency in distress”. As a result, this agency may either be placed in conservator-ship or receivership, or worse, be ultimately dissolved and liquidated.

Conservatorship or receivership is somewhat a remedial process to save an insurance agency in distress. In the case, the Insurance Commission will designate a “conservator” or “receiver”. Such person will have the power to manage the agency including managing and contracting in behalf of the agency’s name. The conservator or receiver will also have the power to excise all necessary steps to preserve the asset of the said company. If, despite of the remedy, the insurance agency was not able to survive, then the last step of dissolution and liquidation will be considered.