Oklahoma Life & Health Insurance Guaranty Association

Covered Contracts

§2025.B.1. The Oklahoma Life and Health Insurance Guaranty Association Act shall provide coverage to the persons specified in subsection A of this section for policies or contracts of direct, non-group life insurance, health insurance, which for the purposes of this act includes health maintenance organization subscriber contracts and certificates, or annuities and supplemental policies or contracts to any of these, and for certificates under direct group policies and contracts, except as limited by the Oklahoma Life and Health Insurance Guaranty Association Act. Annuity contracts and certificates under group annuity contracts include allocated funding agreements, structured settlement annuities and any immediate or deferred annuity contracts.

Non-Covered Contracts

§2025.B.2. Except as provided in paragraph 3 of this subsection, the Oklahoma Life and Health Insurance Guaranty Association Act shall not provide coverage for: a. a portion of a policy or contract not guaranteed by the insurer, or under which the risk is borne by the policy or contract owner, b. a policy or contract of reinsurance, unless assumption certificates have been issued pursuant to the reinsurance policy or contract, c. a portion of a policy or contract to the extent that the rate of interest on which it is based, or the interest rate, crediting rate or similar factor determined by use of an index or other external reference stated in the policy or contract employed in calculating returns or changes in value: (1) averaged over the period of four (4) years prior to the date on which the Association becomes obligated with respect to the policy or contract, exceeds a rate of interest determined by subtracting two (2) percentage points from Moody’s Corporate Bond Yield Average averaged for that same four-year period or for such lesser period if the policy or contract was issued less than four (4) years before the Association became obligated, and (2) on and after the date on which the Association becomes obligated with respect to the policy or contract, exceeds the rate of interest determined by subtracting three (3) percentage points from Moody’s Corporate Bond Yield Average as most recently available, d. a portion of a policy or contract issued to a plan or program of an employer, association or other person to provide life, health or annuity benefits to its employees, members or others, to the extent that the plan or program is self-funded or uninsured, including but not limited to benefits payable by an employer, association or other person under: (1) a Multiple Employer Welfare Arrangement as defined in 29 U.S.C. Section 1144, (2) a minimum premium group insurance plan, (3) a stop-loss group insurance plan, or (4) an administrative services only contract, e. a portion of a policy or contract to the extent that it provides for: (1) dividends or experience rating credits, (2) voting rights, or (3) payment of any fees or allowances to any person, including the policy or contract owner, in connection with the service to or administration of the policy or contract, f. a policy or contract issued in this state by a member insurer at a time when it was not licensed or did not have a certificate of authority to issue the policy or contract in this state, g. a portion of a policy or contract to the extent that the assessments required by Section 2030 of this title with respect to the policy or contract are preempted by federal or state law, h. an obligation that does not arise under the express written terms of the policy or contract issued by the member insurer to the enrollee, certificate holder or contract or policy owner, including without limitation: (1) claims based on marketing materials, (2) claims based on side letters, riders or other documents that were issued by the member insurer without meeting applicable policy or contract form filing or approval requirements, (3) misrepresentations of or regarding policy or contract benefits, (4) extra-contractual claims, or (5) a claim for penalties or consequential or incidental damages, i. a contractual agreement that establishes the obligations of the member insurer 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 benefit plan or its trustee, which in each case is not an affiliate of the member insurer, j. an unallocated annuity contract, k. a portion of a policy or contract to the extent it provides for interest or other changes in value to be determined by the use of an index or other external reference stated in the policy or contract, but which have not been credited to the policy or contract, or as to which the policy or contract owner’s rights are subject to forfeiture, as of the date the member insurer becomes an impaired or insolvent insurer under the Oklahoma Life and Health Insurance Guaranty Association Act, whichever is earlier. If a policy’s or contract’s interest or changes in value are credited less frequently than annually, then for purposes of determining the values that have been credited and are not subject to forfeiture under this subparagraph, the interest or change in value determined by using the procedures defined in the policy or contract will be credited as if the contractual date of crediting interest or changing values was the date of impairment or insolvency, whichever is earlier, and will not be subject to forfeiture, or l. a policy or contract providing any hospital, medical, prescription drug or other health care benefits pursuant to Part C or Part D of Subchapter XVIII, Chapter 7 of Title 42 of the United States Code, commonly known as Medicare Part C or Part D, or Subchapter XIX, Chapter 7 of Title 42 of the United States Code or any regulations issued pursuant thereto.

Non-Resident Coverage

§2025.A.1.b.(2) Non residents are covered, but only under all of the following conditions:(a) the member insurer that issued the policies or contracts are domiciled in this state, (b) the states in which the persons reside have associations similar to the Oklahoma Life and Health Insurance Guaranty Association created by this act, and the persons are not eligible for coverage by an association in any other state due to the fact that the insurer or health maintenance organization was not licensed in the state at the time specified in the guaranty association law of the state;

§2025.C.C. The benefits that the Association may become obligated to cover shall in no event exceed the lesser of: 1. The contractual obligations for which the member insurer is liable or would have been liable if it were not an impaired or insolvent insurer; or 2. a. with respect to any one life, regardless of the number of policies or contracts: (1) Three Hundred Thousand Dollars ($300,000.00) in life insurance death benefits, but not more than One Hundred Thousand Dollars ($100,000.00) in net cash surrender and net cash withdrawal values for life insurance, (2) for health insurance benefits: (a) One Hundred Thousand Dollars ($100,000.00) for coverages not defined as disability income insurance or health benefit plans or long-term care insurance as defined in Section 4424 of this title, including any net cash surrender and net cash withdrawal values, (b) Three Hundred Thousand Dollars ($300,000.00) for insurance providing income payments to an insured wage earner when income is interrupted or terminated because of illness, sickness or accident, commonly known as disability income insurance and Three Hundred Thousand Dollars ($300,000.00) for long-term care insurance as defined in Section 4424 of this title, and (c) Five Hundred Thousand Dollars ($500,000.00) for health benefit plans, or (3) Three Hundred Thousand Dollars ($300,000.00) in the present value of annuity benefits, including net cash surrender and net cash withdrawal values, or b. with respect to each payee of a structured settlement annuity or beneficiary or beneficiaries of the payee if the payee is deceased, Three Hundred Thousand Dollars ($300,000.00) in present value annuity benefits, in the aggregate, including net cash surrender and net cash withdrawal values, c. however, in no event shall the Association be obligated to cover more than: (1) an aggregate of Three Hundred Thousand Dollars ($300,000.00) in benefits with respect to any one life under this subparagraph and subparagraphs a and b of this paragraph except with respect to health benefit plans under division (2) of subparagraph a of this paragraph, in which case the aggregate liability of the Association shall not exceed Five Hundred Thousand Dollars ($500,000.00) with respect to any one individual, or (2) with respect to one owner of multiple non-group policies of life insurance, whether the policy or contract owner is an individual, firm, corporation or other person, and whether the persons insured are officers, managers, employees or other persons, more than Five Million Dollars ($5,000,000.00) in benefits, regardless of the number of policies and contracts held by the owner

Discretionary Triggers

§2028.A. If a member insurer is an impaired insurer, Amended effective 11/1/2010.

Mandatory Triggers

§2028.B. If a member insurer is an insolvent insurer, Amended effective 11/1/2010.

Foreign Triggers

No separate provision.

"Impaired Insurer"

§2024.8. “Impaired insurer” means a member insurer which, after the effective date of this act, is not an insolvent insurer and is placed under an order of rehabilitation or conservation by a court of competent jurisdiction;

"Insolvent Insurer"

§2024.9. “Insolvent insurer” means a member insurer which, after the effective date of this act, is placed under an order of liquidation by a court of competent jurisdiction with a finding of insolvency;

"Member Insurer"

§2024.10. “Member insurer” means any nonprofit hospital service and medical indemnity corporation and any insurer or health maintenance organization licensed or that holds a certificate of authority to transact in this state any kind of insurance or health maintenance organization business for which coverage is provided under Section 2025 of this title, and includes any insurer or health maintenance organization whose license or certificate of authority in this state may have been suspended, revoked, not renewed or voluntarily withdrawn, but does not include: a. a fraternal benefit society, b. a mandatory state-pooling plan, c. a mutual assessment company or other person that operates on an assessment basis, d. an insurance exchange, e. an organization that has a certificate or license limited to the issuance of charitable gift annuities under Sections 4071 through 4082 of this title, or f. any entity similar to any of the above;

§2023.B. For purposes of administration and assessment, the Association shall maintain three accounts: 1. The health account; 2. The life insurance account; and 3. The annuity account.

Assessment Limits

§2030.E. The total of all assessments upon a member insurer for each account in any one (1) calendar year shall not exceed two percent (2%) of such average premiums of the insurer received in this state during the three (3) calendar years preceding the assessment on the policies and contracts covered by the account and in which the member insurer became an impaired or insolvent insurer. If the maximum assessment together with the other assets of the Association in any account does not provide in any one (1) year in either account an amount sufficient to carry out the responsibilities of the Association, the necessary additional funds shall be assessed as soon thereafter as permitted by the Oklahoma Life and Health Insurance Guaranty Association Act. The Board may provide in the plan of operation, a method of allocating funds among claims, whether relating to one or more impaired or insolvent insurers, when the maximum assessment will be insufficient to cover anticipated claims.

Assessment Classes

§2030.B. There shall be two classes of assessments, as follows: 1. Class A assessments shall be made for the purpose of meeting administrative and legal costs and other expenses and examinations. Class A assessments may be made whether or not related to a particular impaired or insolvent insurer; 2. Class B assessments shall be made to the extent necessary to carry out the powers and duties of the Association under Section 2028 of this title with regard to an impaired or an insolvent foreign or domestic insurer.

§2025.B.2.c. a portion of a policy or contract to the extent that the rate of interest on which it is based, or the interest rate, crediting rate or similar factor determined by use of an index or other external reference stated in the policy or contract employed in calculating returns or changes in value: (1) averaged over the period of four (4) years prior to the date on which the Association becomes obligated with respect to the policy or contract, exceeds a rate of interest determined by subtracting two (2) percentage points from Moody’s Corporate Bond Yield Average averaged for that same four-year period or for such lesser period if the policy or contract was issued less than four (4) years before the Association became obligated, and (2) on and after the date on which the Association becomes obligated with respect to the policy or contract, exceeds the rate of interest determined by subtracting three (3) percentage points from Moody’s Corporate Bond Yield Average as most recently available,

§2030.I. Yes. Up to 20% of assessment amount may be offset for next 5 years following year of assessment; covers all but administrative expenses.

§ 2024 14. “Premiums” means amounts or considerations by whatever name called, received on covered policies or contracts less returned premiums, considerations and deposits and less dividends and experience credits. “Premiums” does not include amounts or considerations received for policies or contracts or for the portions of any policies or contracts for which coverage is not provided under subsection B of Section 2025 of this title except that assessable premium shall not be reduced on account of subparagraph c of paragraph 2 of subsection B of Section 2025 of this title relating to interest limitations and paragraph 2 of subsection C of Section 2025 of this title relating to limitations with respect to one individual, one participant and one policy or contract owner. Premiums does not include: a. premiums on an unallocated annuity contract, or b. premiums in excess of Five Million Dollars ($5,000,000.00) on multiple non-group policies of life insurance owned by one owner, whether the policy or contract owner is an individual, firm, corporation or other person, and whether the persons insured are officers, managers, employees or other persons, regardless of the number of policies or contracts held by the owner;

§2043 “Advertising prohibited--Exemptions--Preparation of summary document—Disclaimer--Notice of noncoverage” (A) No person, including a member insurer, agent or affiliate of a member insurer, shall 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, any advertisement, announcement or statement which uses the existence of the Oklahoma Life and Health Insurance Guaranty Association of this state for the purpose of sales, solicitation or inducement to purchase any form of insurance or other coverage covered by the Oklahoma Life and Health Insurance Guaranty Association Act. Provided, however, that this section shall not apply to the Oklahoma Life and Health Insurance Guaranty Association or any other entity which does not sell or solicit insurance or coverage by a health maintenance organization.