During an insurer insolvency, what are insurers and their agents prohibited from doing?

During an insurer insolvency, insurers and their agents are prohibited from conducting new business in the state. This restriction is in place to protect policyholders and the overall financial stability of the insurance market. When an insurer is insolvent, it means that they do not have sufficient resources to meet all their obligations to policyholders. Allowing these insurers to write new business could exacerbate their financial difficulties, potentially leading to greater losses for existing policyholders and increasing the risk of further insolvency.

Preventing the writing of new policies ensures that the insurer focuses on managing existing commitments and stabilizing their financial situation. This is a common regulatory practice intended to mitigate risks and protect the interests of all stakeholders involved, especially the policyholders relying on their existing coverage.