Impaired Insurer
What Does Impaired Insurer Mean?
An impaired insurer is an insurance company whose financial condition is weak enough to potentially affect its ability to meet obligations to policyholders. The insurance regulator in each state may declare an insurer impaired after reviewing its financial records and determining that it has a financial deficiency. The regulator will notify the company of this deficiency and provide a time frame within which the company must restore its financial standing.
Insuranceopedia Explains Impaired Insurer
An impaired insurer is not yet insolvent but is at risk of becoming so. If the insurance company fails to address its impairment within the specified time frame, the regulator can petition the court to place the insurer under rehabilitation or conservation until it can regain financial stability. If the company remains unable to recover from the rehabilitation or conservation phase, it will be declared insolvent and undergo liquidation.
