Can an insurance company charge assessments when it is going out of business?

The only time an insurance company can do this is in the case where they had a contract that specifically states this type of assessment. Insurance companies don't generally go out of business. They are almost always purchased or at least taken over by another insurance company so that clients are not put in bad positions.

The impact upon the policyholder is always of prime concern. Insurance companies are regulated by the states in which they do business; more specifically, primary regulatory authority is vested in the Department of Insurance in the state in which the insurer is domiciled. Other states in which the company issues policies also have regulatory authority.

An insurer does not simply shutter its windows and cease operating. The insurance departments of each state have departments within them that initially attempt to rehabilitate the company. This might involve trying to get an infusion of money from the stakeholders in the company or from an outside source. If that fails, each state has a very organized process of placing a company into receivership, which is the insurance company version of bankruptcy. The receivership office of the department of insurance will essentially take over the operation of the insurer-either itself-or will hire others to do it, and thereby carefully oversee the wind-down of affairs. There is likewise a statutory process of handling claims (both first and third-party). It is often a lengthy, albeit organized, process.