Chapter 7 is well-known as the “liquidation bankruptcy’’ for the reason that it discharges nearly all of your unsecured liability including credit card obligation, medical bills, and personal loans. It is a very common, most simplistic, and most agile type of bankruptcy. According to the study in 2019, around 63% of the 774,940 cases filed under Minnesota Chapter 7 Bankruptcy.

“Bankruptcy is about financial death and financial rebirth. Bankruptcy is the great American story rewritten. We’re a nation of debtors.” -Elizabeth Warren

Era where the Insured’s, Mediators and Industry Allies File for bankruptcy: Highlighted Points for Non- US Insurers:

Between the Coronavirus (COVID-19) pandemic and alike commercial upheaval, bankruptcy filings in the United States are on the pitch. Non-US insurers should reconsider contractual agreements with US insurers and brokers, and specify an agenda to manage bankruptcy filings across the United States in a uniform manner.

Things non-US insurers must know about the US bankruptcy?

In common, insurers should be eligible to file cases all along with further common creditors for unpaid insurance premiums for coverage periods before to a filing of bankruptcy. Unpaid premium payments may be more urgent now than earlier as they would have been lacking Coronavirus (COVID-19) orders from insurance regulators, given the many states that have compelled cancellation/nonrenewal moratoriums and/or premium payment deferrals for insureds impacted by COVID-19 ever since March 2020 (and that may widen and/or reimpose such moratorium and deferrals).

Address challenges below?

• Any prescribed procedure in place to discuss procedures in place to discuss and enact amended minimum contract schemes once the period of moratoriums is over?
• Do you deal with agents to follow up with insurers that are postponing payments of premium especially whose renewal dates are coming?
• Can you grant the renewal on the basis of a "full earned premium at the start?"
• Can you offset pre-petition claims and/or return premium obligations against pre-petition premiums owed?
• Where a policyholder is in bankruptcy, an automatic stay disallows the

Postponement of an insurance contract solely based on the nonpayment of pre-petition premiums due.

Usually, debtors resuming in an enterprise (Chapter 11 filers) will aim to verify a diversity of marketable contracts comprising insurance contracts. If you planned to carry on to ensure the debtor, premium payments for coverage periods after a bankruptcy filing normally should be conserved during the Chapter 11 process (but if the debtor opts for a MN Chapter 7 bankruptcy, there will be renewed coverage for pre-conversion premiums due).

Think about the below issues:

• Do you follow up or work with brokers to monitor protected bankruptcy filings?
• Can you set up broker tracking processes so that you are first and foremost aware of laws and are aware of critical dates during the bankruptcy process — for instance, "bar days" for filing claims?

Policy/Procedure Buyback:

Basically exchange, possibly beneficial in scenarios wherein bankrupt debtor can claims toward Chapter 7 (or equivalent) far surpass the coverage limits accessible.

Insolvent Broker/MGAs/Cover holders

• Almost Every insurance mediator is obligated to pay premiums in a premium trust account loaned to insurers. The separate account should act as safeguard pipeline premiums.

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