PACICC UEP portion
Hi, is it fair to interpret this UEP portion as in "oops sorry we went under, here's your refund"? (except it's capped at 70%*2500)
Related to that, under the section "Distributions", right above the "mini battleQuiz2" button, there's a sentence saying "the policyholder is still short 50,000". I can see this is calculated as 400,000-300,350-49,650. However, wouldn't we want to include the UEP portion there as well? So technically, the policyholder is still short 50,500? Or would PACICC cap reimbursement amount to 400,000, the actual loss amount?
Either way, the 300,350 (under the outdated limits) is the cap before the insurer's distribution amount, not an overall cap?
Thank you!!
Comments
Yes. Since the company has gone insolvent, they will no longer be able to provide coverage and the policyholder is returned 70% of the unearned premium.
In this example, the policyholder had been advanced $300,350. The PACICC receives $350,000 from the liquidator. The PACICC "pays themselves" the amount they already advances, and provides the surplus to the policyholder. The surplus amounting to $49,650. This brings the total policyholder compensation to $350,000. They suffered a $400,000 loss, and are short $50,350 still. Are you asking if the policyholder should receive the rest of their unearned premium, e.g. 30% x 500 = $150? That would bring the total amount they are "short" to $50,350 + $150.
If you are asking that, it's possible. The source material doesn't take it that far, and I can't give a definitive answer here. The absolute priority would be ensuring policyholders are indemnified for their full loss amount if possible, but I can't imagine that goal would be achieved for every policyholder in an insolvency anyways.