Insurance industry guarantee funds do not eliminate runs on insurers because
I. the funds are not backed by the federal government.
II. the funds lack permanent reserves to back policies.
III. the size of the required contributions differs widely from state to state.

Question

Quizplus · Accepted Answer

Insurance industry guarantee funds do not eliminate runs on insurers for several reasons: they are not backed by the federal government, which means there's less confidence in their ability to support failing insurers; they lack permanent reserves, making it uncertain whether they can always cover policyholder claims; and the size of required contributions varies significantly by state, leading to inconsistency in the level of protection offered to policyholders across different jurisdictions.

Insurance Industry Guarantee Funds Do Not Eliminate Runs on Insurers