Massachusetts Gov. Mitt Romney (R) has signed legislation that creates a high net worth exclusion into the state law governing the fund that covers claims when an insurer becomes insolvent.
A high net worth policyholder is defined as one with a net worth exceeding $25 million on Dec. 31 of the year before the year in which the insurer became insolvent. The Massachusetts Insurers Insolvency Fund (MIIF) will not be obligated to pay first party claims to a high net worth insured. Government entities are not included in the definition.
This legislation was supported by the American Insurance Association.
“The fund is intended to protect policyholders in the event of an insurer’s insolvency. This reform will help ensure that the fund is able to provide benefits to those most in need of protection,” said John Murphy, AIA vice president, Northeast Region.
Murphy said the new law aligns Massachusetts with 34 other states.
The new law also gives MIIF the right to recover from high net worth insureds for third party claim payments. The law takes effect 90 days after being signed on Nov. 5, 2006.
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