State RegulationsFL specificDifficulty 2/5
A Florida insurance company is declared insolvent and the court orders liquidation. In the receivership, the Department of Financial Services typically serves as
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
Under Florida's receivership process, a court appoints the Department of Financial Services as receiver of an insolvent insurer, charged with taking control of its assets, winding down its affairs, and distributing the estate under court supervision. Policyholders gain a further safety net through the guaranty association under Chapter 631, which pays covered claims up to statutory limits.
Why the other options are wrong
- A) Neither the state nor its taxes pay insurers' claims; the guaranty association - funded by assessments - pays only covered, capped claims.
- C) The receiver liquidates the estate; any assumption of policies would be a separate commercial transaction.
- D) The receiver acts for the court and the creditors as a whole, not as the insurer's private counsel.
Memory hook
Insolvent insurer: DFS takes the keys as receiver.