How is the maximum assessment determined for a member insurer after insolvency?

The maximum assessment for a member insurer after insolvency is determined by the insurer's net direct written premiums from the preceding year. This approach ensures that the assessment burden is proportionate to the business volume of each insurer. By using net direct written premiums as the basis for assessment, the system establishes a fair method of allocating the financial responsibilities associated with the insolvency of a member insurer.

This method reflects the relative size and market activity of each member insurer, as those with higher premiums will contribute more to the assessment needed to cover losses from the insolvent insurer. This equitable system helps maintain stability within the insurance market, allowing for a collective handling of insolvencies without disproportionately affecting smaller insurers.

The other options, while they might appear reasonable at first glance, do not align with the regulatory framework for surplus lines insurance as it pertains to assessments following insolvency. The board's discretion can lead to unequal assessments, total claims made might not necessarily reflect the financial standing or obligations of the member insurer, and state-wide assessments could introduce inefficiencies and inequities in funding.