Which of the following is a reason for the establishment of a security fund under Insurance Law?

The establishment of a security fund under Insurance Law primarily aims to pay claims from insolvent insurers. This mechanism is crucial in protecting policyholders and ensuring that they receive compensation even when their insurer is unable to meet its financial obligations due to insolvency. By maintaining such a fund, the insurance industry can foster consumer confidence, knowing that there are safeguards in place to address potential losses resulting from insurer failures.

The security fund helps to mitigate the impact of an insurer's insolvency on policyholders, ensuring that legitimate claims are honored, thus upholding the integrity of the insurance system. In this way, it acts as a financial safety net, which is vital for maintaining stability within the entire insurance market.

Supporting regulated rates, facilitating the establishment of new insurance agencies, or funding fraud investigations do not fall under the primary purpose of a security fund. These functions may be handled by different entities or through different mechanisms within the regulatory framework but are not the fundamental reason for the existence of a security fund.