PACICC

protect p.h. from undue financial loss as a result of insolvency of their insurer without exposing insurance industry to unlimited liability for claims against the insurer

• Life insurance, aircraft, credit, crop, D&O, employer's liability, E&O (MM not excluded), fidelity, financial guarantee, marine, mortgage, surety and title insurance.
• Auto insurance in MB/SK; BI in QC

• PACICC:
  • Pay claims and UEP
  • Collect assessment from solvent members
  • Find a liquidator
  • work with liquidator as soon as wind-up order is made
• claimant:
  • prove that all sources of compensation (from solvent insurers) are exhausted
  • Get paid from PACICC for claims and UEP
  • Assign right to recovery from insolvent insurer's estate to PACICC
• solvent members:
  • Pay assessment
  • Make contribution to PACICC

1. court appoints liquidator
2. PACICC helps develop a model wind-up order
3. once liquidator and PACICC come to consensus, PACICC makes payment

Hard to evaluate:

• cost of lost jobs, salary, pension plan
• cost of accountants
• cost of judicial involvement in liquidation process

• UEP recovery: 70% of UEP (<=1000) so max recovery from PACICC is 700
• Claims recovery: max recovery from PACICC is 250k for all covered policies (personal property max is 300k) for all claims arising from policies issued to a single insured by insolvent insurer and from a single occ

1. payment made by PACICC enables transfer of rights to PACICC to receive any distribution thru winding up and liquidation (claim on insurer's liquidated assets) or from TP (subrogation) -> PACICC recovers from funds that eventually become available from insolvent insurer (shorfall will come from assessments)
2. Before a payment is made by PACICC, p.h. needs to have exhausted all policies against all solvent insurers covering the loss.
   • distribution example: insured with a claim of 300k: PACICC pays 250k, in a distribution of 150k by liquidator, insured receives no participation; if the distribution is 275k, insured receives 25k

1. Insurer must receive a windup order from OSFI/superintendent
2. Insurer must be a member of PACICC

1. Assessments of participating insurers
2. A compensation fund
3. Liquidated assets of the insolvency insurer
4. Recoveries from third parties

A participating insurer is assessed in jurisd where insolvent insurer was licenced

• A=B*C/D
• 'B' = total amount being assessed against all participating insurers
• 'C' = total direct WP for protected policies of participating insurer
• 'D' = total direct WP for protected policies of all participating insurers
• Max annual levy for an insurer in a jurisd is 1.5% of its direct WP for that jurisd