What type of funding typically supports a guaranty fund for insurers?

A guaranty fund for insurers is primarily supported by assessments from licensed insurers. This fund is designed to protect policyholders by ensuring that they are compensated in the event that an insurance company becomes insolvent. The assessments are typically collected from solvent insurers operating within the state, which allows the guaranty fund to accumulate sufficient resources to pay claims made against insolvent insurers.

This financial structure reflects the collective responsibility of licensed insurers to support each other and safeguard the interests of policyholders. By leveraging funds from multiple insurers, the system is able to create a safety net that distributes the risk among all participating companies.

Other sources of funding, such as premium refunds from policyholders or state government appropriations, do not typically serve as the primary mechanism for supporting these funds. Premium taxes levied on surplus lines may contribute to overall insurance regulation funding but are not specifically designated for guaranty funds. Thus, assessments from licensed insurers remain the cornerstone of this protective financial framework.