N.C. Insurance Guaranty Association Liable for Pre-Merger Workers’ Comp Claims, N.C. Appeals Court Rules

RALEIGH, N.C. — The North Carolina Insurance Guaranty Association (IGA) is estopped from denying that it is obligated under the North Carolina Insurance Guaranty Association Act to pay any workers’ compensation claims filed against a group self-insurer prior to its merger with a now-insolvent insurer.

On Jan. 20, the North Carolina Court of Appeals explained that when a novation occurs through such a merger, the transferring insurer is relieved of all insurance obligations transferred in the merger and the assuming insurer is directly and solely liable to the policyholder for those insurance obligations or risks. Because IGA stepped in the …