Convention statements are documents that must be filed yearly by life insurance companies. These annual statements must be filed in accordance with the laws of each state where the life insurance company is licensed to operate. In addition, each jurisdiction may require something other than a blanket convention statement, either in terms of the arrangement of the data or the degree of detail included in the statement.
While the exact structure of the convention statement may vary from one instance to another, there are a few basic types of information that are universally included. For each annual statement, the life insurance company must include the current financial status of the company by including details about the assets currently in the control of the corporation. This helps to ensure that the company has the resources to back up the policies issued to persons that are citizens of the jurisdiction.
Second, a convention statement will also include details about the any current liabilities as of the date of the filing. This information is essential to helping a given jurisdiction further evaluate the overall financial stability of the life insurance carrier. When the liabilities are judged to be reasonable when compared to the assets of the company, this is a sign that the company will remain viable for the upcoming year. A stable level of viability means the corporation will be able to honor all claims submitted against the policies issued, assuming the claims are considered to be valid.
Last, the convention statement will include information about any surplus currently in the possession of the life insurance company. Essentially, surplus can be any type of extras that are under the control of the corporation and could be brought to bear if the liabilities began to overcome available assets. This helps to add one more level of assurance that consumers residing in the state can reasonably expect the insurance companies to honor any policies currently in force.
The annual filing of a convention statement is one of the ways that government seeks to protect the interests of private citizens. By requiring that the statement be submitted on an yearly basis, the state government makes sure that insurance companies remain in compliance with standards that are necessary in order to operate within the jurisdiction.
