Taxpayers ultimately could end up paying for losses in the collapse of a California insurance company, says the managing secretary of the Utah Life and Disability Insurance Guaranty Association.
Arthur Dummer said thousands of First Executive Corp. policyholders nationwide may not recoup all of their investments. Last year, Utahns paid about $10 million in premiums to Executive Life.If the company is deemed insolvent, Dummer's association will guarantee or reinsure policies and contracts of Utah residents.
But the association does not have liability over $100,000 per claimant for living benefits, cash surrenders or annuities and will limit liabilities at $300,000 for outstanding death benefits.
Policyholders should note that the association will roll back any high interest rates offered to a rate indexed to the Moody Bond Index over the last four years, Dummer said.
"Taxes might go up," Dummer said. "Ultimately the taxpayers of the state of Utah carry that burden, and the insurance companies carry the financing."
The insurance companies may write off the amount of assessments over five years on their premium taxes. So the state would have to make up the lost revenue, Dummer said, and would look to the taxpayer.