What Happens to Workers Compensation Claims when an Insurance Company goes Bankrupt?

When a workers' compensation insurance company goes bankrupt the claims of the insolvent company go to the Michigan Property & Casualty Guarantee Association (MPCGA). The MPCGA then becomes the carrier for those claims.

The issue was recently discussed by the Court of Appeals in Smith v. Parkland Inn, 22 MIWCLR (LRP) 122:

"MPCGA is an association of all insurers authorized to engage in the business of insurance in Michigan. The statutory purpose of MPCGA is to fulfill the obligations of an insolvent insurer in regard to covered claims. To effectuate this purpose, MPCGA assumes the rights of an insolvent."

All insurance companies licensed to operate as workers compensation insurnace companies pay premiums into, or "fund" the MPCGA.

"Each insurer is a member of the association as a condition of its authority to transact insurance business in this state. MCL 500.7911(1). To fund the cost of MPCGA's operations, all member insurers are levied assessments by MPCGA. MCL 500.7941(1).

Any claims assumed by the MPCGA are processed like any other claim. The MPCGA becomes just like any other workers compensation insurance carrier and is subject to the the laws of this state:

MPCGA is subject to the laws "of this state to the extent that it would be subject to those laws if it were an insurer organized and operating under [MCL 500.5000 et seq.], to the extent that those other laws are consistent with this chapter." MCL 500.7911(3)."

Comments

[The Insurance Claim Specalist]

Good read! People really don't think about these freak situations, but that's why there are laws out there to protect people when an insurance company goes bankrupt.

[paul]

Good to know. I've often wondered what would happen in this situation and now I know for sure. Kind of reminds of the AIG debacle and the bailout, but they weren't paying premiums.

[Work injury compensation]

hello sir,
Last month i got accident in my office due to fall from roof.I have insurence.When i claim for compensation From my insurence company they denied to give me.Advice me what to do know?

[Construction Injury Compensation]

One in five of all construction workers suffer an annual work-related injury, and many of these are serious enough to warrant a construction injury compensation payment. According to the Health and Safety Authority of Ireland despite having the 3rd lowest rate of construction accidents in the EU, there were still 5,814 non-fatal injuries and 15 fatal injuries in 2008 alone. If you have suffered as a result of an accident you should talk to an experience solicitor to get construction injury compensation claim.

[Injury Compensation Ireland]

The purpose of injury compensation is to compensate victims of accidents for their pain and loss. If you have been hurt in a road traffic accident, sustained an injury at work, been the victim of clinical malpractice, or even just fallen over in a public place, you may be entitled to make a claim for injury compensation, provided you were not completely to blame for the accident.

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Successful marriages are a product of a mix of various components. Two of the most important ones are happiness and fulfillment.

[Structured Settlement]

Structured settlement with insurance company is not good anymore.

[Emily Wilkinson]

Also what about unfair dismissal claims when a company declared itself bankrupt - is another good question...