What happens to a member insurer's obligations upon the termination of its license?

When a member insurer's license is terminated, it does not absolve the insurer from obligations that were incurred while the insurer was actively licensed. This means that they remain liable for any claims or obligations that arose prior to the termination of their license. The liabilities from policies issued and premiums collected while the insurer was licensed still hold, and the insurer must fulfill these obligations, including paying claims that arise from those policies.

This principle is rooted in the regulation of insurers, which ensures that policyholders are protected even in the event of an insurer losing its license. It is common in the insurance industry to hold insurers accountable for their past actions to maintain trust and stability within the market.

Other options, such as being absolved from all future claims, losing the right to collect already paid premiums, or being able to renew their license automatically, do not reflect the legal framework governing member insurers’ responsibilities and obligations upon license termination.