How is the Connecticut Insurance Guaranty Association funded?

The Connecticut Insurance Guaranty Association is funded through assessments on member insurers. This funding mechanism is essential to ensure that the association has the financial resources necessary to meet its obligations to policyholders of insolvent insurers. When an insurance company becomes insolvent, the Guaranty Association steps in to provide benefits to policyholders, but these payouts must be funded. By assessing member insurers, the association creates a pool of funds that can be used to cover claims, thereby maintaining stability and consumer protection within the insurance market.

Relying on member insurance companies for funding is a key characteristic of many state guaranty associations, allowing them to operate without reliance on federal funds, member contributions, or state taxes. This structure is designed to create a self-sustaining system that is funded by the industry itself, which promotes accountability and ensures that the association can fulfill its purpose effectively.