Life & Health · Chapter 20 · Enforcement
Receivership, Rehabilitation & Liquidation
Definition
A financially unstable insurer may be placed into receivership, with a third-party receiver controlling its operations. The Department of Financial Services serves as receiver of every insurer placed into receivership in Florida; its Division of Rehabilitation and Liquidation administers the process. The Division first attempts rehabilitation — it may conduct all business, hire and discharge employees, manage assets, and file for release if grounds no longer exist. If rehabilitation is impossible, the Department petitions the court for liquidation: marshaling assets, assisting policyholders' transition to other coverage, investigating the causes of insolvency, collecting debts, selling property, and paying claims with available assets. The liquidation order appoints the DFS as receiver.
In plain English
Insurance's version of intensive care: the state takes the wheel, tries to nurse the company back, and if that fails, winds it down and pays out what's left.
Exam tip
Two-step sequence the exam tests: rehabilitate first, liquidate only if rehabilitation fails — and the receiver is always the DFS.
Easy to confuse with
These are what this term gets tested against — if you can't tell them apart cold, drill the contrast.
Related terms