Indiana Life and Health Insurance Guaranty Association

Covered Contracts

§27-8-8-2.3(d) Except as otherwise excluded or limited by this chapter, this chapter provides coverage to the persons specified in subsection (a) for: (1) direct nongroup life insurance and health insurance policies or contracts, including health maintenance organization subscriber contracts and certificates; (2) direct nongroup annuity contracts; (3) supplemental contracts to direct nongroup policies and contracts described in subdivisions (1) and (2); (4) certificates under direct group life insurance and health insurance policies and contracts; (5) certificates under direct group annuity contracts; and (6) unallocated annuity contracts; issued by member insurers.

Non-Covered Contracts

§27-8-8-2.3(e) (1) A part of a certificate, policy, or contract: (A) not guaranteed by the member insurer; or (B) under which the risk is borne by the payee, certificate holder, or the policy or contract owner. (2) A reinsurance policy or contract, unless and to the extent that assumption certificates have been issued under the reinsurance policy or contract. (3) A part of a certificate, policy, or contract to the extent that the certificate’s, policy’s, or contract’s interest rate, crediting rate, or similar factor employed in calculating returns or changes in values, whether expressly stated in the certificate, policy, or contract or determined by use of an index or other external referent stated in the certificate, policy, or contract, either: (A) when averaged over a period of four (4) years immediately before the applicable coverage date, exceeds the rate of interest determined by subtracting two (2) percentage points from Moody’s Corporate Bond Yield Average averaged for the same four (4) year period or for a lesser period if the certificate, policy, or contract was issued less than four (4) years before the applicable coverage date; or (B) in effect under the certificate, policy, or contract on and after the applicable coverage date, exceeds the rate of interest determined by subtracting three (3) percentage points from Moody’s Corporate Bond Yield Average as most recently available on the applicable coverage date. However, this subdivision does not apply to a part of a certificate, policy, or contract (including a rider) that provides long term care or another health insurance benefit. (4) The obligations of a plan or program of an employer, an association, or another person to provide life, health, or annuity benefits to the employer’s, association’s, or other person’s employees, members, or others, including obligations arising under and benefits payable by the employer, association, or other person under a multiple employer welfare arrangement. (5) A minimum premium group insurance plan. (6) A stop-loss or excess loss insurance policy or contract providing for the indemnification of or payment to a policy owner, a contract owner, a plan, or another person obligated to pay life, health, or annuity benefits or to provide services in connection with a benefit plan or another plan, fund, or program for the provision of employee welfare or pension benefits. (7) An administrative services only contract. (8) A part of a certificate, policy, or contract to the extent that the certificate, policy, or contract provides for: (A) dividends or experience rating credits; (B) voting rights; or (C) payment of fees or allowances to a person, including the certificate holder or policy or contract owner, in connection with service with respect to or administration of the certificate, policy, or contract. (9) A certificate, policy, or contract issued in Indiana by a member insurer when the member insurer did not have a certificate of authority to issue the certificate, policy, or contract in Indiana. (10) An unallocated annuity contract issued to or in connection with a benefit plan protected by the federal Pension Benefit Guaranty Corporation, regardless of whether the federal Pension Benefit Guaranty Corporation has yet been required to make payments with respect to the benefit plan. (11) An unallocated annuity contract or part of an unallocated annuity contract that is not issued to or in connection with a benefit plan or a government lottery. (12) A certificate, policy, or contract or part of a certificate, policy, or contract with respect to which the Class B assessments contemplated by section 6 of this chapter may not be made or collected under federal or state law. (13) An obligation or claim that does not arise under the express written terms of the policy or contract issued by the member insurer to the contract owner or policy owner, including any of the following obligations and claims: (A) Obligations and claims based on marketing materials. (B) Obligations and claims based on side letters, riders, or other documents issued by the member insurer without meeting applicable policy or contract form filing or approval requirements. (C) Obligations and claims based on actual or alleged misrepresentations. (D) Obligations and claims that are extracontractual claims. (E) Obligations and claims for penalties or consequential, incidental, punitive, or exemplary damages. (14) An obligation to provide a book value accounting guaranty for defined contribution benefit plan participants by reference to a portfolio of assets that is owned by the: (A) benefit plan; or (B) benefit plan’s trustee; that is not an affiliate of the member insurer. (15) A part of a certificate, policy, or contract to the extent the: (A) certificate, policy, or contract provides for the certificate’s, policy’s, or contract’s interest rate, crediting rate, or similar factor employed in calculating returns or changes in values, to be determined by use of an index or other external referent stated in the certificate, policy, or contract; and (B) returns or changes in value have not been credited to the certificate, policy, or contract, or as to which the certificate holder’s or policy or contract owner’s rights are subject to forfeiture, as of the applicable coverage date. If a certificate’s, policy’s, or contract’s returns or changes in values are credited to the certificate, policy, or contract less frequently than annually, for purposes of determining the returns and values that have been credited and are not subject to forfeiture under this subdivision, the returns and changes in value determined by using the procedures defined in the certificate, policy, or contract must be considered credited as if the contractual date of crediting returns or changes in values were the applicable coverage date, and those credited returns or changes in value are not subject to forfeiture under this subdivision, but will be subject to any other applicable limitations under this chapter. (16) A funding agreement. (17) An annuity not subject to regulation as described in IC 27-1-12.4. (18) A certificate, policy, or contract that provides a hospital, medical, prescription drug, or other health care benefit under: (A) Part C of Title XVIII of the federal Social Security Act (42 U.S.C. 1395w-21 through 1395w-28); (B) Part D of Title XVIII of the federal Social Security Act (42 U.S.C. 1395w-101 through 1395w-153); (C) Title XIX of the federal Social Security Act (42 U.S.C.1396 et seq.); or (D) regulations adopted under a law specified in clause (A), (B), or (C).

Non-Resident Coverage

§27-8-8-2.3(a)(1). The Act covers nonresidents under all the following conditions: (i) The member insurer that issued the policy or contract is domiciled in Indiana. (ii) The state in which the person resides has an association similar to the association. (iii) The nonresident is not eligible for coverage by the other association referred to in item (ii) solely because the member insurer was not licensed in the state of residence at the time specified in the guaranty association law of the state of residence.

§27-8-8-2.3(f) The benefits that the association is obligated to cover do not exceed the lesser of the following: (1) The contractual obligations for which the member insurer is liable or would have been liable if the member insurer were not an impaired insurer or insolvent insurer. (2) The applicable limitations as follows: (A) With respect to certificates, policies, and contracts not subject to clause (B), (C), (E), or (F), with respect to one (1) life, regardless of the number of policies or contracts, the following limitations: (i) Three hundred thousand dollars ($300,000) in life insurance death benefits, but not more than one hundred thousand dollars ($100,000) in net cash surrender and net cash withdrawal values. (ii) One hundred thousand dollars ($100,000) in health insurance benefits (other than those relating to disability income insurance, health benefit plans, and long term care insurance), including net cash surrender and net cash withdrawal values. (iii) Three hundred thousand dollars ($300,000) in disability income insurance. (iv) Three hundred thousand dollars ($300,000) in long term care insurance benefits (as defined in IC 27-8-12-5). (v) Five hundred thousand dollars ($500,000) in health benefit plan benefits. (vi) Two hundred fifty thousand dollars ($250,000) in the present value of annuity benefits, including net cash surrender and net cash withdrawal values. (B) With respect to unallocated annuity contracts issued to or in connection with a governmental benefit plan established under Section 401, 403(b), or 457 of the United States Internal Revenue Code, two hundred fifty thousand dollars ($250,000) in the present value of annuity benefits, including net cash surrender and net cash withdrawal values, per participant. (C) With respect to structured settlement annuities, two hundred fifty thousand dollars ($250,000) in the present value of annuity benefits, including net cash surrender and net cash withdrawal values, per payee. (D) In addition to the foregoing limitations, the association is not obligated to cover more than: (i) an aggregate of three hundred thousand dollars ($300,000) in benefits with respect to any one (1) person under clauses (A), (B), and (C), except with respect to benefits for health benefit plans under clause (A)(v), an aggregate of five hundred thousand dollars ($500,000) with respect to any one (1) person; or (ii) with respect to one (1) owner of multiple nongroup policies of life insurance, whether the policy owner is an individual, a firm, a corporation, or another person, and whether the persons insured are officers, managers, employees, or other persons, five million dollars ($5,000,000) in benefits, including net cash surrender and net cash withdrawal values, regardless of the number of policies and contracts held by the owner. (E) With respect to unallocated annuity contracts issued to or in connection with a government lottery, five million dollars ($5,000,000) in benefits per contract owner, regardless of the number of contracts held by the contract owner. (F) With respect to unallocated annuity contracts: (i) issued to or in connection with a benefit plan; and (ii) not subject to clause (B); five million dollars ($5,000,000) in benefits per plan sponsor, regardless of the number of unallocated annuity contracts entitled to coverage under this chapter.

Discretionary Triggers

§27-8-8-5(a). If a member insurer is an impaired insurer. Amended effective 3/28/06.

Mandatory Triggers

§27-8-8-5(c). If a member insurer is an insolvent insurer. Amended effective 3/28/06.

Foreign Triggers

No separate provision under Act. Amended effective 3/28/06.

"Impaired Insurer"

§27-8-8-2(q) “Impaired insurer” means a member insurer that is: (1) not an insolvent insurer; and (2) placed under an order of rehabilitation or conservation by a court with jurisdiction.

"Insolvent Insurer"

§27-8-8-2(r) “Insolvent insurer” means a member insurer that is placed under an order of liquidation with a finding of insolvency by a court with jurisdiction.

"Member Insurer"

§27-8-8-2(s) “Member insurer” means any person that holds a certificate of authority to transact in Indiana any kind of insurance or health maintenance organization business for which coverage is provided under section 2.3 of this chapter. The term includes an insurer whose certificate of authority to transact such insurance in Indiana may have been suspended, revoked, not renewed, or voluntarily withdrawn but does not include the following: (1) A for-profit or nonprofit hospital or medical service organization. (2) A fraternal benefit society under IC 27-11. (3) The Indiana Comprehensive Health Insurance Association or any other mandatory state pooling plan or arrangement. (4) An assessment company or another person that operates on an assessment plan (as defined in IC 27-1-2-3(y)). (5) An interinsurance or reciprocal exchange authorized by IC 27-6-6. (6) A farm mutual insurance company under IC 27-5.1. (7) A person operating as a Lloyds under IC 27-7-1. (8) The political subdivision risk management fund established by IC 27-1-29-10 and the political subdivision catastrophic liability fund established by IC 27-1-29.1-7. (9) A person similar to any person described in subdivisions (1) through (8).

§27-8-8-3(a). For purposes of administration and assessment the association shall maintain the following two (2) accounts: (1) The health account. (2) The life insurance and annuity account, which includes the following subaccounts: (A) The life insurance subaccount. (B) The annuity subaccount, which includes annuity contracts issued to or in connection with a governmental benefit plan established under Section 401, 403(b), or 457 of the United States Internal Revenue Code, but otherwise excludes unallocated annuities. (C) The unallocated annuity subaccount, which excludes annuity contracts issued to or in connection with a governmental benefit plan established under Section 401, 403(b), or 457 of the United States Internal Revenue Code.

Assessment Limits

§27-8-8-6(i) Subject to subsection (j), the total of all assessments authorized by the association in one (1) calendar year against a member insurer for a given subaccount of the life insurance and annuity account or for the health account with respect to any single assessment base year must not exceed two percent (2%) of the member insurer’s premiums received in Indiana on the policies and contracts covered by the subaccount or account during the applicable assessment base year.

Assessment Classes

§27-8-8-6(b). There are two (2) classes of assessments as follows: (1) Class A assessments are assessments that are authorized and called by the board for the purpose of meeting administrative and legal costs and other expenses. Class A assessments may be authorized and called whether or not related to a particular impaired insurer or insolvent insurer. (2) Class B assessments are assessments that are authorized and called by the board to the extent necessary to carry out the powers and duties of the association under this chapter with regard to an impaired insurer or insolvent insurer.

§27-8-8-2.3(e)(3) Guaranty Association excludes from coverage: (3) A part of a certificate, policy, or contract to the extent that the certificate’s, policy’s, or contract’s interest rate, crediting rate, or similar factor employed in calculating returns or changes in values, whether expressly stated in the certificate, policy, or contract or determined by use of an index or other external referent stated in the certificate, policy, or contract, either: (A) when averaged over a period of four (4) years immediately before the applicable coverage date, exceeds the rate of interest determined by subtracting two (2) percentage points from Moody’s Corporate Bond Yield Average averaged for the same four (4) year period or for a lesser period if the certificate, policy, or contract was issued less than four (4) years before the applicable coverage date; or (B) in effect under the certificate, policy, or contract on and after the applicable coverage date, exceeds the rate of interest determined by subtracting three (3) percentage points from Moody’s Corporate Bond Yield Average as most recently available on the applicable coverage date. However, this subdivision does not apply to a part of a certificate, policy, or contract (including a rider) that provides long term care or another health insurance benefit.

§27-8-8-16. Yes. Up to 20% of assessment amount may be offset for each calendar year following payment, until the aggregate of those assessments have been offset by either credits against specified taxes or refunds from the association. Amended effective 3/28/2006.

§ 27-8-8-2 (y) “Premiums” means amounts, deposits, and considerations received on covered policies, less returned premiums, returned deposits, returned considerations, dividends, and experience credits. The term does not include the following: (1) Amounts, deposits, and considerations received for policies or contracts or parts of policies or contracts for which coverage is not provided under section 2.3(d) of this chapter, as qualified by section 2.3(e) of this chapter, except that an assessable premium must not be reduced on account of the limitations set forth in section 2.3(e)(3), 2.3(e)(15), or 2.3(f)(2) of this chapter. (2) Premiums in excess of five million dollars ($5,000,000) on an unallocated annuity contract not issued or not connected with a governmental benefit plan established under Section 401, 403(b), or 457 of the United States Internal Revenue Code.

§ 27-8-8-18 Using existence of association to sell insurance prohibited. (a) A person, including a member insurer, insurance producer, employee, agent, or affiliate of a member insurer, shall not make, publish, disseminate, circulate, or place before the public or cause, directly or indirectly, to be made, published, disseminated, circulated, or placed before the public, in any newspaper, magazine, or other publication, or in the form of a notice, circular, pamphlet, letter, or poster, or over any radio station or television station, or in any other way, an advertisement, an announcement, or a statement, written or oral, that uses the existence of the association for the purpose of the sale of, solicitation of, or inducement to purchase any form of insurance covered by this chapter. This section does not apply to the association or any other entity that does not sell or solicit insurance.