Information regarding Colorado Bankers Life Insurance Company (“CBL”) and Bankers Life Insurance Company (“BLIC”)

Guaranty Association Laws

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Each state’s life and health insurance guaranty association is governed by state law. Use the menus below to review a summary of certain key provisions in a state’s law or to compare specific provisions among all states.

Wyoming

Account Structure

§26-42-104(a). For purposes of administration and assessment the association shall maintain the three (3) following accounts: (i) The life insurance account; (ii) The health account; and (iii) The annuity account.

Advertising Prohibition

§26-42-116 “Prohibited advertisement of association chapter in insurance sales; notice” (a) No person including a member insurer, agent or affiliate of an 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, in the form of a notice, circular, pamphlet, letter or poster, over any radio station or television station, or in any other way, any advertisement, announcement or written or oral statement which uses the existence of the association of this state for the purpose of sales, solicitation or inducement to purchase any form of insurance or other coverage covered by this act. This subsection shall not apply to the association or any other entity which does not sell or solicit insurance or health maintenance organization coverage.

Assessments

Assessment Limits

§26-42-107(g). (i) Subject to paragraph (ii) of this subsection, the total of all assessments authorized by the association with respect to a member insurer for each account shall not in any one (1) calendar year exceed two percent (2%) of the insurer’s average premiums received in this state on the policies and contracts covered by the account during the three (3) calendar years preceding the year in which the member insurer became an impaired or insolvent insurer;

Assessment Classes

§26-42-107(b). There shall be two (2) assessments as follows: (i) Class A assessments shall be authorized and called to pay administrative and legal costs and other expenses and examinations conducted under the authority of W.S. 26-42-110(e). Class A assessments may be authorized and called whether or not related to a particular impaired or insolvent insurer; (ii) Class B assessments shall be authorized and called as necessary to carry out the powers and duties of the association under W.S. 26-42-106 with regard to an impaired or an insolvent insurer.

Benefit Limits

§26-42-103(d). The benefits for which the association may be liable shall in no event exceed the lesser of: (i) The contractual obligations for which the member insurer is liable or would have been liable if it was not an impaired or insolvent insurer; or (ii) With respect to any one (1) life, regardless of the number of policies or contracts: (A) 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; (B) For health insurance benefits: (I) One hundred thousand dollars ($100,000.00) for coverages not defined as disability insurance, disability income insurance, health benefit plan or long term care insurance including any net cash surrender and net cash withdrawal values; (II) Three hundred thousand dollars ($300,000.00) for disability insurance, disability income insurance and long-term care insurance; (III) Three hundred thousand dollars ($300,000.00) for health benefit plans. (C) Two hundred fifty thousand dollars ($250,000.00) in the present value of annuity benefits including net cash surrender and net cash withdrawal values; (D) With respect to each payee of a structured settlement annuity or beneficiary or beneficiaries of the payee if deceased, two hundred fifty thousand dollars ($250,000.00) in present value annuity benefits, in the aggregate, including net cash surrender and net cash withdrawal values; (E) However, in no event shall the association be obligated to cover more than: (I) An aggregate of five hundred thousand dollars ($500,000.00) in benefits with respect to any one (1) life under paragraphs (A) through (D) of this subsection; or (II) With respect to one (1) owner of multiple nongroup policies of life insurance, whether the policy owner 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.

Coverages

Covered Contracts

§26-42-103(b). This act shall provide coverage to persons specified in subsection (a) of this section for policies or contracts of direct, nongroup life insurance, health insurance including health maintenance organization subscriber contracts and certificates, annuities and supplemental contracts to any of these policies or contracts and for certificates under direct group policies and contracts issued by member insurers except as limited by this 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

§26-42-103(c). This act shall not provide coverage for: (i) Any portion of a policy or contract not guaranteed by the insurer or under which the risk is borne by the policyholder or contract holder; (ii) Any policy or contract of reinsurance unless assumption certificates have been issued pursuant to the reinsurance policy or contract; (iii) Excluding any portion of a policy or contract, including a rider, that provides long term care or other health insurance benefits, any portion of a policy or contract to the extent that the rate of interest on which it is based: (A) Averaged over the period of four (4) years prior to the date on which the member insurer becomes an impaired or insolvent insurer under this act, exceeds a rate of interest determined by subtracting two (2) percentage points from Moody’s Corporate Bond Yield Average averaged for that same four (4) year period or for a lesser period if the policy or contract was issued less than four (4) years before the member insurer becomes an impaired or insolvent insurer under this act; and (B) On and after the date on which the member insurer becomes an impaired or insolvent insurer under this act, exceeds the rate of interest determined by subtracting three (3) percentage points from the most recent and available Moody’s Corporate Bond Yield Average. (iv) Any 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 similar entity under: (A) A multiple employer welfare arrangement as defined in Section 3(40) of the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1002(40); (B) A minimum premium group insurance plan; (C) A stop-loss group insurance plan; or (D) An administrative services only contract. (v) Any portion of a policy or contract to the extent it provides dividends or experience rating credits, voting rights or provides payment of any fees or allowances to any person, including the policyholder or contract holder, in connection with the service to or administration of the policy or contract; (vi) Any 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; (vii) Any annuity contract or group annuity certificate which is not issued to and not owned by an individual, except to the extent of any annuity benefits guaranteed to an individual by an insurer under the contract or certificate; (viii) Any annuity contract or group annuity certificate which is issued by a nonprofit insurance company exclusively for the benefit of nonprofit educational institutions and their employees for the purpose of providing retirement benefits; (ix) A portion of a policy or contract to the extent that the assessments required by W.S. 26-42-107 with respect to the policy or contract are preempted or otherwise not permitted by federal or state law; (x) 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, contract owner or policy owner, including without limitation: (A) Claims based on marketing materials; (B) 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; (C) Misrepresentations of or regarding policy or contract benefits; (D) Extra-contractual claims; or (E) A claim for penalties or consequential or incidental damages. (xi) A contractual agreement that establishes the member insurer’s obligations 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; (xii) An unallocated annuity contract; (xiii) 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 & D) or Subchapter XIX, Chapter 7 of Title 42 of the United States Code (commonly known as Medicaid) or any regulations issued pursuant thereto; (xiv) 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 this 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 provision, 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; (xv) Structured settlement annuity benefits to which a payee or beneficiary has transferred his rights in a structured settlement factoring transaction as defined in 26 U.S.C. § 5891(c)(3)(A), regardless if the transaction occurred before or after 26 U.S.C. § 5891(c)(3)(A) became effective.

Non-Resident Coverage

§26-42-103(a)(i)(B). Yes, but only under all of the following conditions: (I) The member insurer that issued the policies or contracts is domiciled in this state; (II) The states in which the persons reside have associations similar to the association created by this act; and (III) 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 state’s guaranty association law.

Definition Of Premium

§ 26-42-102(xv) “Premiums” means amounts received on covered policies or contracts less premiums, considerations and deposits returned thereon, and less dividends and experience credits thereon, but does not include any amounts received for any policies or contracts or for the portions of any policies or contracts for which coverage is not provided by W.S. 26-42-103(b) except that assessable premium shall not be reduced due to W.S. 26-42-103(c)(iii) relating to interest limitations and W.S. 26-42-103(d)(ii) relating to limitations with respect to any one (1) individual, one (1) participant and one (1) policy owner or contract owner. “Premiums” shall not include: (A) Premiums on an unallocated annuity contract; or (B) With respect to multiple nongroup policies of life insurance owned by one (1) owner, whether the policy owner or contract owner is an individual, firm, corporation or other person, and whether the persons insured are officers, managers, employees or other persons, premiums in excess of five million dollars ($5,000,000.00) with respect to these policies or contracts, regardless of the number of policies or contracts held by the owner.

Interest Rate Adjustments

§26-42-103(c)(iii). (iii) Excluding any portion of a policy or contract, including a rider, that provides long term care or other health insurance benefits, any portion of a policy or contract to the extent that the rate of interest on which it is based: (A) Averaged over the period of four (4) years prior to the date on which the member insurer becomes an impaired or insolvent insurer under this act, exceeds a rate of interest determined by subtracting two (2) percentage points from Moody’s Corporate Bond Yield Average averaged for that same four (4) year period or for a lesser period if the policy or contract was issued less than four (4) years before the member insurer becomes an impaired or insolvent insurer under this act; and (B) On and after the date on which the member insurer becomes an impaired or insolvent insurer under this act, exceeds the rate of interest determined by subtracting three (3) percentage points from the most recent and available Moody’s Corporate Bond Yield Average.

Tax Offsets

§26-42-111(a). Yes. Member insurers may offset up to 10% of the assessment amount for 10 years following the year in which the assessment was paid; covers all assessments except class A assessments.

Triggers

Discretionary Triggers

§26-42-106(a). If a member insurer is an impaired insurer. (Amended effective 7/1/2014)

Mandatory Triggers

§26-42-106(d). If a member insurer is an insolvent insurer. (Amended effective 7/1/2014)

Foreign Triggers

No separate provision. (Amended effective 7/1/2014)

“Impaired Insurer”

§26-42-102(a)(ix). “Impaired insurer” means a member insurer which is not an insolvent insurer and is placed under an order of rehabilitation or conservation by a court of competent jurisdiction. (Amended effective 7/1/2014)

“Insolvent Insurer”

§26-42-102(a)(x). 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”

§26-42-102(a)(xi). “Member insurer” means any insurer or health maintenance organization which is licensed or holds a certificate of authority to transact in this state any kind of insurance or health maintenance organization business for which coverage is provided by W.S. 26-42-103 and includes any insurer or health maintenance organization business whose license or certificate of authority in this state may have been suspended, revoked, not renewed or voluntarily withdrawn, but does not include: (A) Repealed By Laws 1997, ch. 125, § 1. (B) Repealed by Laws 1995, ch. 210, § 5. (C) A fraternal benefit society; (D) A mandatory state pooling plan; (E) A stipulated premium insurance company; (F) A local mutual burial association; (G) A mutual assessment company or any entity that operates on an assessment basis; (H) An insurance exchange; or (J) Any entity similar to any of the above.

Wisconsin

Account Structure

§646.11(2). The fund shall be composed of 6 segregated accounts, one for life insurance, one for annuities, one for disability insurance other than policies issued or coverage provided by a health maintenance organization insurer, one for health maintenance organization insurers, one for all other kinds of insurance subject to this chapter and an administrative account.

Advertising Prohibition

§ 628.34. “Unfair marketing practices” … (10) Insurance security fund. No insurer or insurance intermediary may make use in any manner of the protection given policyholders by ch. 646 (guaranty association statute) as a reason for buying insurance from the insurer or intermediary.

Assessments

Assessment Limits

§646.51(4)(a) The total of all assessments for an amount authorized by the board under this section with respect to an insurer may not, in one calendar year, exceed 2% of the insurer’s assessable premiums under sub. (3) (am) or (b) on the types of policies and contracts that are covered by the account. Amended effective 4/30/04; amended effective 4.08.2008.

Assessment Classes

§646.51(3) Two classes of assessments: (am)General, and (c) administrative. (Amended effective 4/30/04).

Benefit Limits

§646.31(4) Maximum claim. (ag) For purposes of this subsection, “disability insurance” means comprehensive health in-surance policies and major medical health insurance policies. “Disability insurance” does not include hospital in-demnity; loss of time; accidental benefits; limited or specified benefit or other ancillary coverages; disability income insurance coverage; long-term care insurance coverage; insurance coverage that is supplemental to another insurance policy or program, including Medicare supplement insurance; or similar types of policies. (ap) Except in regard to worker’s compensation insurance and except as provided in par. (b), the obligation of the fund on a single risk, loss, or life, regardless of the number of policies or contracts, may not exceed $300,000, except that the aggregate liability of the fund for a single risk, loss, or life with respect to benefits for property insurance, liability insurance, and disability insurance, regardless of the number of those policies, may not exceed $500,000. (b) The fund is not obligated to pay a claimant an amount in excess of the loss obligation of the insurer in liquidation under the policy or coverage from which the claim arises. (Amended effective 4/20/12)

Coverages

Covered Contracts

§646.01(1)(a). All kinds and lines of direct insurance, except as proved in §646.01(1)(b).

Non-Covered Contracts

§646.01(1)(b). 1. Any portion of a life insurance policy or annuity contract that is not guaranteed by the insurer or under which the risk is borne by the policy or policyholder. 2. Title insurance. 3. Surety bonds, fidelity bonds and any other bonding obligations. 4. Bail bonds. 5. Mortgage guaranty, financial guaranty and other forms of insurance offering protection against investment risks. 6. Ocean marine insurance. 7. Credit insurance. 8. Product liability or completed operations liability insurance, and comprehensive general liability including either of these coverages, provided to a risk purchasing group or a member of a risk purchasing group. 9. Any self-funded, self-insured, or partially or wholly uninsured plan of an employer or other person to provide life insurance, annuity, or disability benefits to its employees or members to the extent that the plan is self-funded, self-insured, or uninsured. 10. Any liability for dividends or experience rating credits payable after the date of entry of the order of liquidation under an insurance or annuity contract, and any fees or allowances due any person, including the policyholder, in connection with service to or administration of the contract. 11. Any warranty or service contract. 11m. Any contractual liability policy that is issued to a warrantor, warranty plan, warranty plan administrator, or service contract provider and that provides coverage of any liability or performance arising out of or in connection with a warranty or service contract. 12. Municipal bond insurance. 13. Any transaction or combination of transactions between a person, including affiliates of such person, and an insurer, including affiliates of such insurer, which involves the transfer of investment or credit risk unaccompanied by transfer of insurance risk. 14. A policy issued by an insurer to, or a contract entered into by an insurer with, a care management organization, as defined in s. 46. 2805(1), or the department of health services or any other governmental entity under any state law to provide prepaid health care to medical assistance recipients. 15. An unallocated annuity contract. 16. A contractual agreement that obligates an insurer to provide a book value accounting guarantee for defined contribution benefit plan participants by reference to a portfolio of assets that is owned by the benefit plan or its trustee, neither of which is an affiliate of the insurer. 17. Any liability under a policy or contract to the extent that it provides for interest or other changes in value that are to be determined by the use of an index or other external reference stated in the policy or contract and to the extent that the interest or other changes in value have not been credited to the policy or contract as of the date of the entry of the order of liquidation and are subject to forfeiture. If a policy’s or contract’s interest or other changes in value are credited less frequently than annually, for purposes of determining the values that have been credited and that are not subject to forfeiture, the interest or change in value determined by using the procedures specified in the policy or contract will be credited as if the contractual date of crediting interest or other changes in value was the date of entry of the order of liquidation and will not be subject to forfeiture. 18. The deductible, self-funded, or self-insured portion of a claim under a liability or worker’s compensation insurance policy, regardless of the timing or method provided in the policy, endorsement, or any other agreement for payment of the deductible, self-funded, or self-insured amount by the insured. This subdivision does not apply to a worker’s compensation insurance policy if the insured under the policy is a debtor under 11 USC 701, et seq., as of the deadline set by the liquidator for filing claims against the insolvent insurer. 19. A policy issued by an insurer to an enrollee under Title XVIII of the federal social security act, 42 USC 1395 to 1395ccc, or Title XIX of the federal social security act, 42 USC 1396 to 1396v, or a contract entered into by an insurer with the federal government or an agency of the federal government under Title XVIII or Title XIX of the federal social security act, to provide health care or prescription drug benefits to persons enrolled in Title XVIII or Title XIX programs. Amended effective 5/28/2010.

Non-Resident Coverage

§646.31(2)(b). Yes, where the claim is made under a life or disability insurance policy or annuity contract subject to this section and issued by a domestic insurer and the claimant is a resident of another state that provides coverage similar to the coverage provided under this chapter but does not provide coverage for the claimant because the insurer was not licensed in that state at the time specified as a requirement for coverage under that state’s guaranty association law. (Amended effective 4-30-04)

Definition Of Premium

§ 646.51 (1c)(c) “Premiums” means gross premiums and other considerations received for direct insurance and annuities, including considerations for a plan established under ss. 185.981 to 185.985, less return premiums and other considerations, dividends, and experience credits paid or credited to policyholders on such business. The term “premiums” does not include premiums or other considerations received for policies or contracts, or for portions of policies or contracts, for which coverage is not provided under this chapter, except that the amount of assessable premiums or other considerations shall not be reduced on account of limitations with respect to a single risk, loss, or life under s. 646.31 (4) or on account of interest limitations under s. 646.35 (6) (c).

Interest Rate Adjustments

§646.35(6)(c) 1. Security Fund excludes from coverage: Any benefit payment liability, arising on or after the date of entry of the order of liquidation, 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 and employed in calculating returns or changes in value exceeds the rate of interest, which may not be less than zero, determined by subtracting 3 percentage points from the monthly corporate bond yield average, as most recently published by Moody’s investors service or its successor. 2. Any benefit payment liability, arising before the date of entry of the order of liquidation, to the extent that the payment exceeds the rate of interest, which may not be less than zero, determined by subtracting 2 percentage points from the monthly corporate bond yield average, as published by Moody’s investors service or its successor, when averaged over the 4-year period ending on the date of entry of the order of liquidation or averaged over such lesser period if the contract was issued less than 4 years before that date. Amended effective 4.08.2008.

Tax Offsets

§646.51(7). Yes. Member insurers may offset up to 20% of the assessment amount paid, for the next 5 calendar years following year of assessment, if premium rates on the class of business are fixed so that it is not possible to recoup assessments by increasing rates.

Triggers

Discretionary Triggers

No provision.

Mandatory Triggers

§646.35(3)(am) If an insurer that is subject to this chapter is in liquidation. (Amended effective 4/30/04).

Foreign Triggers

No separate provision.

“Impaired Insurer”

No provision. Removed effective 5.28.2010.

“Insolvent Insurer”

646.03(2p) “Insolvent insurer” means an insurer subject to this chapter that is placed under an order of liquidation by a court of competent jurisdiction with a finding of insolvency. (Added effective 4/30/04).

“Member Insurer”

No provision

WestVirginia

Account Structure

§33-26A-6(a). For purposes of administration and assessment, the association shall maintain the following two accounts: (1) The life insurance and annuity account which includes the following subaccounts: (A) Life insurance account; (B) Annuity account which shall include annuity contracts owned by a governmental retirement plan or its trustee established under section 401, 403(b), or 457 of the United States Internal Revenue Code, but shall otherwise exclude unallocated annuities; and (C) Unallocated annuity account which shall exclude contracts owned by a governmental retirement plan or its trustee established under section 401, 403(b), or 457 of the United States Internal Revenue Code. (2) The health account.

Advertising Prohibition

§ 33-26A-19. Prohibited advertisement of insurance guaranty association act in insurance sales; notice to policyholders (a) A person, including a member insurer, 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, any advertisement, announcement, or statement, written or oral, which uses the existence of the 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 West Virginia Life and Health Insurance Guaranty Association Act: Provided, That this section shall not apply to the association or any other entity which does not sell or solicit insurance or coverage by a health maintenance organization.

Assessments

Assessment Limits

§33-26A-9(e)(1). (A) Subject to the provisions of §33-26A-9(e)(1)(B) of this code, the total of all assessments authorized by the association with respect to a member insurer for each subaccount of the life and annuity account and for the health account shall not in any one calendar year exceed two percent of such insurer’s average annual premiums received in this state on the policies and contracts covered by the subaccount or account during the three calendar years preceding the year in which the member insurer became an impaired or insolvent insurer.

Assessment Classes

§33-26A-9(b). There shall be two classes of assessments, as follows: (1) Class A assessments shall be authorized and called 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 or insolvent insurer. (2) Class B assessments shall be authorized and called to the extent necessary to carry out the powers and duties of the association under §33-26A-8 of this code with regard to an impaired or insolvent insurer.

Benefit Limits

§33-26A-3(c)The benefits that the association may become liable for 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 one life, regardless of the number of policies or contracts: (i) $300,000 in life insurance death benefits, but no more than $100,000 in net cash surrender and net cash withdrawal values for life insurance; (ii) For health insurance benefits: (I) $100,000 for coverages not defined as disability income insurance or health benefit plans or long-term care insurance as defined in §33-15A-4 of this code, including any net cash surrender and net cash withdrawal values; (II) $300,000 for disability income insurance, and $300,000 for long-term care insurance as defined in §33-15A-4 of this code; (III) $500,000 for health benefit plans; (iii) $250,000 in the present value of annuity benefits, including net cash surrender and net cash withdrawal values; or (B) With respect to each individual participating in a governmental retirement plan established under section 401, 403(b), or 457 of the United States Internal Revenue Code covered by an unallocated annuity contract or the beneficiaries of each such individual if deceased, in the aggregate, $250,000 in present value annuity benefits, including net cash surrender and net cash withdrawal values; (C) With respect to each payee of a structured settlement annuity, or beneficiary or beneficiaries of the payee if deceased, $250,000 in present value annuity benefits, in the aggregate, including net cash surrender and net cash withdrawal values, if any; (D) However, in no event shall the association be obligated to cover more than: (i) An aggregate of $300,000 in benefits with respect to any one life under §33-26A-3(c)(2)(A), §33-26A-3(c)(2)(B), or §33-26A-3(c)(2)(C) of this code except with respect to benefits for health benefit plans under §33-26A-3(c)(2)(A)(ii) of this code, in which case the aggregate liability of the association shall not exceed $500,000 with respect to any one individual; or (ii) With respect to one owner of multiple nongroup 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 $5 million in benefits, regardless of the number of policies and contracts held by the owner. (E) With respect to either one contract owner provided coverage under §33-26A-3(a)(3)(B) of this code, or one plan sponsor whose plans own directly or in trust one or more unallocated annuity contracts not included in §33-26A-3(c)(2)(B) of this code, $5 million in benefits, irrespective of the number of contracts with respect to the contract owner or plan sponsor. However, in the case where one or more unallocated annuity contracts are covered contracts under this article and are owned by a trust or other entity for the benefit of two or more plan sponsors, coverage shall be afforded by the association if the largest interest in the trust or entity owning the contract or contracts is held by a plan sponsor whose principal place of business is in this state. In no event shall the association be obligated to cover more than $5 million in benefits with respect to all of these unallocated contracts.

Coverages

Covered Contracts

§33-26A-3(b)(1). This article shall provide coverage to the persons specified in §33-26A-3(a) of this code for policies or contracts of direct, nongroup life insurance, health insurance (which for the purposes of this article includes health maintenance organization subscriber contracts and certificates), or annuities, and supplemental contracts to any of these, for certificates under direct group policies and contracts, and for unallocated annuity contracts issued by member insurers, except as limited by this article. Annuity contracts and certificates under group annuity contracts include, but are not limited to, guaranteed investment contracts, deposit administration contracts, unallocated funding agreements, allocated funding agreements, structured settlement annuities, annuities issued in connection with government lotteries, and any immediate or deferred annuity contracts

Non-Covered Contracts

§33-26A-3(b)(2). Except as otherwise provided in §33-26A-3(b)(3) of this code, this article shall not provide coverage for: (A) A portion of a policy or contract not guaranteed by the member 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: (i) Averaged over the period of four years prior to the date on which the member insurer becomes an impaired or insolvent insurer under this article, whichever is earlier, exceeds the rate of interest determined by subtracting two 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 years before the member insurer becomes an impaired or insolvent insurer under this article, whichever is earlier; and (ii) On and after the date on which the member insurer becomes an impaired or insolvent insurer under this article, whichever is earlier, exceeds the rate of interest determined by subtracting three 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: (i) A multiple employer welfare arrangement as defined in section 514 of the Employee Retirement Income Security Act of 1974, 29 U.S.C. §1144, as amended; (ii) A minimum premium group insurance plan; (iii) A stop-loss group insurance plan; or (iv) An administrative services only contract; (E) A portion of a policy or contract to the extent that it provides for: (i) Dividends or experience rating credits; (ii) Voting rights; or (iii) 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) An unallocated annuity contract issued to or in connection with a benefit plan protected under the federal pension benefit guaranty corporation, regardless of whether the federal pension benefit guaranty corporation has yet become liable to make any payments with respect to the benefit plan; (H) A portion of any unallocated annuity contract that is not issued to or in connection with a specific employee, union, or association of natural persons benefit plan or a government lottery; (I) A portion of a policy or contract to the extent that the assessments required by §33-26A-9 of this code with respect to the policy or contract are preempted by federal or state law; (J) 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, contract owner, or policy owner, including without limitation: (i) Claims based on marketing materials; (ii) 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; (iii) Misrepresentations of or regarding policy or contract benefits; (iv) Extra-contractual claims; or (v) A claim for penalties or consequential or incidental damages; (K) A contractual agreement that establishes the member insurer’s obligations 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; (L) 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 this article, 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, 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; (M) 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 & D), or Subchapter XIX, Chapter 7 of Title 42 of the United States Code (commonly known as Medicaid), or any regulations issued pursuant thereto; or (N) Structured settlement annuity benefits to which a payee (or beneficiary) has transferred his or her rights in a structured settlement factoring transaction as defined in 26 U.S.C. § 5891, regardless of whether the transaction occurred before or after that section became effective.

Non-Resident Coverage

§33-26A-3(a)(2)(B). Yes. Covers nonresidents, but only under all of the following conditions: (i) The member insurer that issued the policies or contracts is domiciled in this state; (ii) The states in which the persons reside have associations similar to the association created by this article; and (iii) The persons are not eligible for coverage by an association in any other state because the insurer or the health maintenance organization was not licensed in the state at the time specified in the state’s guaranty association law.

Definition Of Premium

§ 33-26A-5 (18) “Premiums” means amounts or considerations (by whatever name called) received on covered policies or contracts less premiums, considerations, and deposits, and less dividends and experience credits thereon. “Premiums” does not include amounts or considerations received for policies or contracts or for the portions of policies or contracts for which coverage is not provided under §33-26A-3(b) of this code, except that assessable premium shall not be reduced on account of §33-26A-3(b)(2)(C) of this code relating to interest limitations and §33-26A-3(c)(2) of this code relating to limitations with respect to any one individual, one participant, and one policy or contract owner. Premiums shall not include: (A) Premiums in excess of $5 million on any unallocated annuity contract not issued under a government retirement plan or its trustee established under sections 401, 403(b), or 457 of the United States Internal Revenue Code; or (B) With respect to multiple nongroup 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, premiums in excess of $5 million with respect to these policies or contracts, regardless of the number of policies or contracts held by the owner.

Interest Rate Adjustments

§33-26A-3(b)(2)(C) Guaranty Association excludes from coverage: 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: (i) Averaged over the period of four years prior to the date on which the member insurer becomes an impaired or insolvent insurer under this article, whichever is earlier, exceeds the rate of interest determined by subtracting two 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 years before the member insurer becomes an impaired or insolvent insurer under this article, whichever is earlier; and (ii) On and after the date on which the member insurer becomes an impaired or insolvent insurer under this article, whichever is earlier, exceeds the rate of interest determined by subtracting three percentage points from Moody’s Corporate Bond Yield Average as most recently available;

Tax Offsets

No provision.

Triggers

Discretionary Triggers

§33-26A-8(a). If a member insurer is an impaired insurer. (Amended effective 7.10.09).

Mandatory Triggers

§33-26A-8(b). If a member insurer is an insolvent insurer. (Amended effective 7.10.09).

Foreign Triggers

No separate provision.

“Impaired Insurer”

§33-26A-5(11). “Impaired insurer” means a member insurer which, after the effective date of this article, is not an insolvent insurer, and (1) is deemed by the commissioner to be potentially unable to fulfill its contractual obligations or (2) is placed under an order of rehabilitation or conservation by a court of competent jurisdiction. (Amended effective 7.10.09).

“Insolvent Insurer”

§33-26A-5(12) “Insolvent insurer” means a member insurer which, after the effective date of this article, is placed under an order of liquidation by a court of competent jurisdiction with a finding of insolvency. (Amended effective 7.10.09).

“Member Insurer”

§33-26A-5(13) “Member insurer” means any insurer or health maintenance organization licensed or which 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 §33-26A-3 of this code, and includes an insurer or health maintenance organization whose license or certificate of authority in this state may have been suspended, revoked, not renewed, or voluntarily withdrawn, and includes nonprofit service corporations as defined in §33-24-1 et seq. of this code and health care corporations as defined in §33-25-1 et seq. of this code, but does not include: (A) A fraternal benefit society; (B) A mandatory state pooling plan; (C) A mutual assessment company or any entity that operates on an assessment basis; (D) An insurance exchange; (E) An organization which has a certificate or license limited to the issuance of charitable gift annuities under §33-13B-1 et seq. of this code; or (F) Any entity similar to any of the above.

Virginia

Account Structure

§38.2-1702. A. For purposes of administration and assessment, the Association shall maintain two accounts: (i) the accident and sickness insurance account; and (ii) the life insurance and annuity account, which includes the following subaccounts: (a) the life insurance account, (b) the annuity account, which shall include unallocated annuity contracts covered under subdivision D 2 b of § 38.2-1700, but shall otherwise exclude unallocated annuities, and (c) the unallocated annuity account, which shall consist of contracts covered under subdivisions D 2 d, e, and f of § 38.2-1700, but shall otherwise exclude unallocated annuities.

Advertising Prohibition

§ 38.2-1715. Prohibited advertisement of Association coverage in insurance sales; notice to policy owners 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, written or oral, that uses the existence of the Association of the Commonwealth for the purpose of sales, solicitation, or inducement to purchase any form of insurance or other coverage covered by this chapter. This subsection shall not apply to the Association or any other entity that does not sell or solicit insurance or coverage by a health maintenance organization.

Assessments

Assessment Limits

§38.2-1705.E. 1. a. Subject to the provisions of subdivision E 1 b, the total of all assessments authorized by the Association with respect to a member insurer for each subaccount of the life insurance and annuity account and for the accident and sickness account shall not in any one calendar year exceed two percent of that member insurer’s average annual premiums received in the Commonwealth on the policies and contracts covered by the subaccount or account during the three calendar years preceding the year in which the member insurer became an impaired or insolvent insurer.

Assessment Classes

§38.2-1705.B. There shall be two classes of assessments, as follows: 1. Class A assessments shall be authorized and called 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 or insolvent insurer. 2. Class B assessments shall be authorized and called to the extent necessary to carry out the powers and duties of the Association under § 38.2-1704 with regard to an impaired or an insolvent insurer.

Benefit Limits

§38.2-1700.D.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 insurer is liable or would have been liable if it were not an impaired or insolvent insurer; or 2. With respect to: a. One life, regardless of the number of policies or contracts: (1) $ 300,000 in life insurance death benefits, but not more than $ 100,000 in net cash surrender and net cash withdrawal values for life insurance; (2) For accident and sickness insurance benefits, (i) $ 100,000 for coverage not defined as disability income insurance, health benefit plans, or long-term care insurance including any net cash surrender and net cash withdrawal values; (ii) $ 300,000 for disability income insurance and $ 300,000 for long-term care insurance; and (iii) $ 500,000 for health benefit plans; and (3) $ 250,000 in the present value of annuity benefits, including net cash surrender and net cash withdrawal values; b. Each individual participating in a benefit plan established under Section 401, 403(b) or 457 of the U.S. Internal Revenue Code who (i) selected an investment option that includes investment in unallocated annuity contracts and (ii) is covered by such an unallocated annuity contract, including the beneficiaries of each such individual if deceased, in the aggregate, $ 250,000 in present value of annuity benefits, including net cash surrender and net cash withdrawal values; c. Each payee of a structured settlement annuity (or beneficiary or beneficiaries of the payee if deceased), $ 250,000 in present value annuity benefits, in the aggregate, including net cash surrender and net cash withdrawal values, if any; and d. One plan sponsor whose plans own directly or in trust one or more unallocated annuity contracts part or all of any of which is not included in subdivision 2 b, $ 5 million in benefits, irrespective of the number of contracts with respect to the plan sponsor. However, in the case where one or more unallocated annuity contracts are covered contracts under this chapter and are owned by a trust or other entity for the benefit or two or more plan sponsors, coverage shall be afforded by the Association if the largest interest in the trust or entity owning the contract or contracts is held by a plan sponsor whose principal place of business is in the Commonwealth and in no event shall the Association be obligated to cover more than $ 5 million in benefits with respect to all such unallocated contracts. e. In no event shall the Association be obligated to cover (i) more than an aggregate of $ 350,000 in benefits with respect to any one life under subdivisions D 2 a, b, and c except with respect to benefits for health benefit plans under subdivision D 2 a (2), in which case the aggregate liability of the Association shall not exceed $ 500,000 with respect to any one individual, or (ii) with respect to one owner of multiple nongroup 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 $ 5 million in benefits, regardless of the number of policies and contracts held by the owner.

Coverages

Covered Contracts

§38.2-1700.C. This chapter shall: 1. Provide coverage to the persons specified in subsection B for policies or contracts of direct, nongroup life insurance, accident and sickness insurance, which for the purposes of this chapter includes health maintenance organization subscriber contracts and certificates, or annuities, and supplemental contracts to any of these, for certificates under direct group policies and contracts, and for unallocated annuity contracts issued by member insurers, in each case except as limited by this chapter. Annuity contracts and certificates under group annuity contracts include guaranteed investment contracts, deposit administration contracts, unallocated funding agreements, allocated funding agreements, structured settlement annuities, and any immediate or deferred annuity contracts. This chapter shall apply also to dental benefit contracts entered into with a dental plan organization as provided in Chapter 61 (§ 38.2-6100 et seq.).

Non-Covered Contracts

§38.2-1700.C.2. Except as otherwise provided in subdivision 3, not provide coverage for: a. A portion of a policy or contract not guaranteed by a member 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 years prior to the date on which the member insurer becomes an impaired or insolvent insurer under this chapter, whichever is earlier, exceeds the rate of interest determined by subtracting two 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 years before the member insurer becomes an impaired or insolvent insurer under this chapter, whichever is earlier; and (2) On and after the date on which the member insurer becomes an impaired or insolvent insurer under this chapter, whichever is earlier, exceeds the rate of interest determined by subtracting three 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. § 1144; (2) A minimum premium group insurance plan; (3) A stop-loss agreement described in subsection B of § 38.2-109; 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 the Commonwealth by a member insurer at a time when its license to issue the policy or contract in the Commonwealth had been suspended, revoked, not renewed, or voluntarily withdrawn; g. An unallocated annuity contract issued to or in connection with a benefit plan protected under the federal Pension Benefit Guaranty Corporation, regardless of whether the federal Pension Benefit Guaranty Corporation has yet become liable to make any payments with respect to the benefit plan; h. A portion of an unallocated annuity contract that is not issued to or in connection with a specific employee, union, or association of natural persons benefit plan; i. A portion of a policy or contract to the extent that the assessments required by § 38.2-1705 with respect to the policy or contract are preempted by federal or state law; j. 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, contract owner, or policy owner, including: (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; k. A contractual agreement that establishes the member insurer’s obligations 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; l. 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 this chapter, 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 subdivision, 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; m. 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 (known as Medicare Parts C and D); Subchapter XIX, Chapter 7 of Title 42 of the United States Code (known as Medicaid); § 32.1-352 (known as FAMIS); or any regulations issued pursuant thereto; or n. A charitable gift annuity as defined in § 38.2-106.1.

Non-Resident Coverage

§38.2-1700.B.2.b. Yes, covers non residents if (i) the member insurer that issued the policies or contracts is domiciled in the Commonwealth, (ii) the states in which the persons reside have associations similar to the Association, and (iii) 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 state’s guaranty association law.

Definition Of Premium

§ 38.2-1701 “Premiums” means amounts or considerations, by whatever name called, received on covered policies or contracts, less any 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 policies or contracts for which coverage is not provided under subsection C of § 38.2-1700 except that assessable premium shall not be reduced on account of subdivision C 2 of § 38.2-1700 relating to interest limitations and subdivision D 2 of § 38.2-1700 relating to limitations with respect to one individual, one participant, and one policy or contract owner. “Premiums” shall not include (i) premiums for coverage in excess of $ 5 million on an unallocated annuity contract covered under subdivisions D 2 d, e, and f of § 38.2-1700 or (ii) with respect to multiple nongroup 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, premiums for coverage in excess of $ 5 million with respect to these policies or contracts, regardless of the number of policies or contracts held by the owner.

Interest Rate Adjustments

§38.2-1700 C.2.c. Guaranty Association excludes from coverage: 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 years prior to the date on which the member insurer becomes an impaired or insolvent insurer under this chapter, whichever is earlier, exceeds the rate of interest determined by subtracting two 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 years before the member insurer becomes an impaired or insolvent insurer under this chapter, whichever is earlier; and (2) On and after the date on which the member insurer becomes an impaired or insolvent insurer under this chapter, whichever is earlier, exceeds the rate of interest determined by subtracting three percentage points from Moody’s Corporate Bond Yield Average as most recently available;

Tax Offsets

§38.2-1709. Yes. A member may show a certificate of contribution as an asset, in the form approved by the Commission, at the original face amount for the calendar year of issuance. Such amount may be amortized as follows: 1. Certificates of contribution issued before Jan. 1, 1998 shall be amortized in each succeeding calendar year through December 31, 1997, at an amount not to exceed 0.05 of 1% of the direct gross premium income for the classes of insurance in the account for which the member is assessed. If the amount of the certificate has not been fully amortized by the contributing insurer by December 31, 1997, the unamortized balance of the certificate amount shall be amortized at the option of the contributing insurer, either (i) in the same manner as the certificate was amortized prior to Jan. 1, 1998; however, if not amortized in full prior to calendar year 2010, the unamortized balance of the certificate shall be amortized in full during the calendar year 2010, or (ii) over the 10 successive calendar years commencing Jan. 1, 1998, in amounts each equal to 10% of such unamortized balance. A contributing insurer whose certificate has not been fully amortized by December 31, 1997, shall notify the Commission in writing of the amortization schedule option it has selected on or before March 1, 1998. If a contributing insurer fails to notify the Commission by such date, the insurer shall be deemed to have selected to continue amortization under the original schedule.

Triggers

Discretionary Triggers

§38.2-1704.A. If the member insurer is an impaired insurer. Amended effective 7/1/2010.

Mandatory Triggers

§38.2-1704.B. If the member insurer is an insolvent insurer. Amended effective 7/1/2010.

Foreign Triggers

No separate provision.

“Impaired Insurer”

§38.2-1701. A member insurer considered by the Commission to be potentially unable to fulfill its contractual obligations. Amended effective 7/1/2010.

“Insolvent Insurer”

§38.2-1701. A member insurer that is placed under an order of liquidation by a court of competent jurisdiction with a finding of insolvency. Amended effective 7/1/2010.

“Member Insurer”

§38.2-1701. “Member insurer” means an insurer or health maintenance organization licensed to transact in the Commonwealth any class of insurance or health maintenance organization business to which this chapter applies under § 38.2-1700, including an insurer or health maintenance organization whose license to transact the business of insurance in the Commonwealth has been suspended, revoked, not renewed, or voluntarily withdrawn, but does not include cooperative nonprofit life benefit companies, mutual assessment life, accident and sickness insurance companies, burial societies, fraternal benefit societies, dental and optometric services plans, and health services plans not subject to this chapter pursuant to § 38.2-4213.

Washington

Account Structure

§48.32A. Section 6.(1). Two accounts: (a) life insurance and annuity, which includes subaccounts: (i) Life insurance; (ii) Annuity which includes IRC §§ 401, 403(b), or 457, but otherwise excludes unallocated annuities; and (iii) unallocated annuity; and (b) disability insurance, which includes health benefit plans, disability benefit policies and contracts, and long- term care policies and contracts.

Advertising Prohibition

§48.32A.185 “Prohibited advertisement of insurance guaranty association act in insurance sales–Notice to policy owners” (1) No person, including an insurer, agent, or affiliate of an insurer may 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, written or oral, which uses the existence of the insurance guaranty association of this state for the purpose of sales, solicitation, or inducement to purchase any form of insurance covered by the Washington life and disability insurance guaranty association act. However, this § does not apply to the Washington life and disability insurance guaranty association or any other entity which does not sell or solicit insurance.

Assessments

Assessment Limits

§48.32A. Section 9.(5)(a)(i) Two percent (2%) of the average premiums in state for policies covered by the account during the three calendar years preceeding the impairment or insolvency. Amended effective 7/22/01.

Assessment Classes

§48.32A. Section 9.(2) The amount of a class A assessment is determined by the board and may be authorized and called on a pro rata or nonpro rata basis. If pro rata, the board may provide that it be credited against future class B assessments. The amount of a class B assessment, except for assessments related to long-term care insurance, must be allocated for assessment purposes between the accounts and among the subaccounts of the life insurance and annuity accounts, pursuant to an allocation formula which may be based on the premiums or reserves of the impaired or insolvent insurer or any other standard determined by the board to be fair and reasonable under the circumstances. The amount of the class B assessment for long-term care insurance written by an impaired or insolvent insurer must be allocated according to a methodology included in the plan of operation and approved by the commissioner. The methodology must provide for 50 percent of the assessment to be allocated to disability and health member insurers and 50 percent to be allocated to life and annuity member insurers.

Benefit Limits

§48.32A. Section 3(3)(b)(i) With respect to one life, regardless of the number of policies or contracts: (A) Five hundred thousand dollars in life insurance death benefits, but not more than five hundred thousand dollars in net cash surrender and net cash withdrawal values for life insurance; (B) In disability insurance benefits: (I) Five hundred thousand dollars for coverages not defined as disability income insurance or basic hospital, medical, and surgical insurance or major medical insurance including any net cash surrender and net cash withdrawal values; (II) Five hundred thousand dollars for disability income insurance; (III) Five hundred thousand dollars for basic hospital medical and surgical insurance or major medical insurance; or (C) Five hundred thousand dollars in the present value of annuity benefits, including cash surrender values; (ii) With respect to each individual participating in a governmental retirement benefit plan established under section 401, 403(b), or 457 of the United States Internal Revenue Code covered by an unallocated annuity contract or the beneficiaries of each such individual if deceased, in the aggregate, one hundred thousand dollars in present value annuity benefits, including cash surrender values; (iii) With respect to each payee of a structured settlement annuity, or beneficiary or beneficiaries of the payee if deceased, five hundred thousand dollars in present value annuity benefits, in the aggregate, including net cash surrender and net cash withdrawal values, if any; (iv) However, in no event shall the association be obligated to cover more than: (A) An aggregate of five hundred thousand dollars in benefits with respect to any one life under (i), (ii), and (iii) of this subsection (3)(b) except with respect to benefits for basic hospital, medical, and surgical insurance and major medical insurance under (i)(B) of this subsection (3)(b), in which case the aggregate liability of the association shall not exceed five hundred thousand dollars with respect to any one individual; or (B) with respect to one owner of multiple nongroup policies of life insurance, whether the policy 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 in benefits, regardless of the number of policies and contracts held by the owner; (v) With respect to either: (A) One contract owner provided coverage under subsection (1)(d)(ii) of this section; or (B) one plan sponsor whose plans own directly or in trust one or more unallocated annuity contracts not included in (ii) of this subsection (3)(b), five million dollars in benefits, irrespective of the number of contracts with respect to the contract owner or plan sponsor. Amended effective 7/22/01.

Coverages

Covered Contracts

§48.32A. Section 3(2)(a). Direct, nongroup life, disability, or annuity policies or contracts and supplemental contracts to any of these, certificates under direct group policies and contracts, and unallocated annuity contracts issued by member insurers, except as limited by this chapter. Amended effective 7/22/01.

Non-Covered Contracts

§48.32A. Section 3(2)(b). (i) 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; (ii) A policy or contract of reinsurance, unless assumption certificates have been issued pursuant to the reinsurance policy or contract; (iii) 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; (iv) A portion of a policy or contract issued to a plan or program of an employer, association, or other person to provide life, disability, 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: (A) A multiple employer welfare arrangement as defined in 29 U.S.C. Sec. 1144; (B) A minimum premium group insurance plan; (C) A stop-loss group insurance plan; or (D) An administrative services only contract; (v) A portion of a policy or contract to the extent that it providesfor: (A) Dividends or experience rating credits; (B) Voting rights; or (C) 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; (vi) 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; (vii) An unallocated annuity contract issued to or in connection with a benefit plan protected under the federal pension benefit guaranty corporation, regardless of whether the federal pension benefit guaranty corporation has yet become liable to make any payments with respect to the benefit plan; (viii) A portion of an unallocated annuity contract that is not issued to or in connection with a specific employee, union, or association of natural persons benefit plan or a government lottery; (ix) A portion of a policy or contract to the extent that the assessments required by section 9 of this act with respect to the policy or contract are preempted by federal or state law; (x) An obligation that does not arise under the express written terms of the policy or contract issued by the insurer to the contract owner or policy owner; (xi) A contractual agreement that establishes the member insurer’s obligations 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; or (xii) 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 this chapter, whichever is earlier.

Non-Resident Coverage

§48.32A.Section (3)(1)(b)(2) Yes. Covers persons who are not residents, but only under all of the following conditions: (A) The insurer that issued the policies or contracts is domiciled in this state; (B) The states in which the persons reside have associations similar to the association created by this chapter; and (C) The persons are not eligible for coverage by an association in any other state due to the fact that the insurer was not licensed in the state at the time specified in the state’s guaranty association law; (Amended effective 7/22/2001)

Definition Of Premium

§ 48.32A.045 (17) “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 policies or contracts for which coverage is not provided under RCW 48.32A.025(2), except that assessable premium shall not be reduced on account of RCW 48.32A.025(2)(b)(iii) relating to interest limitations and RCW 48.32A.025(3)(b) relating to limitations with respect to one individual, one participant, and one contract owner. “Premiums” does not include: (a) Premiums in excess of five million dollars on an unallocated annuity contract not issued under a governmental retirement benefit plan, or its trustee, established under section 401, 403(b), or 457 of the United States Internal Revenue Code; or (b) With respect to multiple nongroup policies of life insurance owned by one owner, whether the policy owner is an individual, firm, corporation, or other person, and whether the persons insured are officers, managers, employees, or other persons, premiums in excess of five million dollars with respect to these policies or contracts, regardless of the number of policies or contracts held by the owner.

Interest Rate Adjustments

§48.32A.025 (2)(b)(iii) Guaranty Association excludes from coverage: 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: (A) Averaged over the period of four years prior to the date on which the member insurer becomes an impaired or insolvent insurer under this chapter, whichever is earlier, exceeds the rate of interest determined by subtracting two 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 years before the member insurer becomes an impaired or insolvent insurer under this chapter, whichever is earlier; and (B) On and after the date on which the member insurer becomes an impaired or insolvent insurer under this chapter, whichever is earlier, exceeds the rate of interest determined by subtracting three percentage points from Moody’s corporate bond yield average as most recently available.

Tax Offsets

§48.32A. Section 13. Yes. Up to 20% of assessment amount may be offset for 5 years following payment; covers class B assessments only.

Triggers

Discretionary Triggers

§48.32A.075(1) If a member insurer is an impaired insurer.

Mandatory Triggers

§48.32A.075(2) If a member insurer is an insolvent insurer. Amended effective 7/22/01.

Foreign Triggers

No separate provision.

“Impaired Insurer”

§48.32A.045(10) A member insurer which, after the effective date of this section, is not an insolvent insurer, and is placed under an order of rehabilitation or conservation by a court of competent jurisdiction. Amended effective 7/22/01.

“Insolvent Insurer”

§48.32A.045(11) A member insurer which, after the effective date of this section, is placed under an order of liquidation by a court of competent jurisdiction with a find of insolvency. Amended effective 7/22/01.

“Member Insurer”

§48.32A.045(12) An insurer licensed, or that holds a certificate of authority, to transact in Washington any kind of insurance for which coverage is provided under RCW 48.32A.025, and includes an insurer 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 health care service contractor, whether profit or nonprofit; (b) A health maintenance organization; (c) A fraternal benefit society; (d) A mandatory state pooling plan; (e) A mutual assessment company or other person that operates on an assessment basis; (f) An insurance exchange; (g) An organization that has a certificate or license limited to the issuance of charitable gift annuities under RCW 48.38.010; or (h) An entity similar to (a) through (g) of this subsection.

Vermont

Account Structure

§4176(a). Two accounts, which include: (1) health and (2) life and annuity.

Advertising Prohibition

Vt. Stat. Ann. tit. 8, § 4189(a) No person, including a member insurer, or 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, written or oral, that uses the existence of the Insurance Guaranty Association of Vermont for the purpose of sales, solicitation, or inducement to purchase any form of insurance or other coverage covered by this chapter. However, this section shall not apply to the Vermont Life and Health Insurance Guaranty Association or any other entity that does not sell or solicit insurance or coverage by a health maintenance organization.

Assessments

Assessment Limits

Vt. Stat. Ann. tit. 8, § 4179(e)(1)(A) Subject to the provisions of subdivision (1)(B) of this subsection (e), the total of all assessments authorized by the Association with respect to a member insurer for each subaccount of the life insurance and annuity account and for the health account shall not in one calendar year exceed two percent of that member insurer’s average annual premiums received in Vermont on the policies and contracts covered by the subaccount or account during the three calendar years preceding the year in which the member insurer became an impaired or insolvent insurer.

Assessment Classes

§4179(b). Two classes of assessments: Class A for administrative costs and other general expenses; Class B to carry out the powers and duties of the association.

Benefit Limits

Vt. Stat. Ann. tit. 8, § 4173(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 one life, regardless of the number of policies or contracts: (i) $300,000.00 in life insurance death benefits, but not more than $100,000.00 in net cash surrender and net cash withdrawal values for life insurance; (ii) for health insurance benefits: (I) $100,000.00 for coverages not defined as disability income insurance or health benefit plans or long-term care insurance, including any net cash surrender and net cash withdrawal values; (II) $300,000.00 for disability income insurance, and $300,000.00 for long-term care insurance; (III) $500,000.00 for health benefit plans; (iii) $250,000.00 in the present value of annuity benefits, including net cash surrender and net cash withdrawal values; or (B) with respect to each individual participating in a governmental retirement benefit plan established under section 401, 403(b), or 457 of the U.S. Internal Revenue Code covered by an unallocated annuity contract or the beneficiaries of each such individual if deceased, in the aggregate, $250,000.00 in present value annuity benefits, including net cash surrender and net cash withdrawal values; (C) with respect to each payee of a structured settlement annuity, or beneficiary or beneficiaries of the payee if deceased, $250,000.00 in present value annuity benefits, in the aggregate, including net cash surrender and net cash withdrawal values, if any; (D) however, in no event shall the Association be obligated to cover more than: (i) an aggregate of $300,000.00 in benefits with respect to any one life under subdivisions (2)(A)–(C) of this subsection (c) except with respect to benefits for health benefit plans under subdivision (2)(A)(ii) of this subsection (c), in which case the aggregate liability of the Association shall not exceed $500,000.00 with respect to any one individual; or (ii) with respect to one owner of multiple nongroup 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 $5,000,000.00 in benefits, regardless of the number of policies and contracts held by the owner; (E) with respect to either one contract owner provided coverage under subdivision (a)(3)(B) of this section, or one plan sponsor whose plans own directly or in trust one or more unallocated annuity contracts not included in subdivision (2)(B) of this subsection (c), $5,000,000.00 in benefits, irrespective of the number of contracts with respect to the contract owner or plan sponsor. However, in the case where one or more unallocated annuity contracts are covered contracts under this chapter and are owned by a trust or other entity for the benefit of two or more plan sponsors, coverage shall be afforded by the Association if the largest interest in the trust or entity owning the contract or contracts is held by a plan sponsor whose principal place of business is in Vermont and in no event shall the Association be obligated to cover more than $5,000,000.00 in benefits with respect to all these unallocated contracts. (F) The limitations set forth in this subsection (c) are limitations on the benefits for which the Association is obligated before taking into account either its subrogation and assignment rights or the extent to which those benefits could be provided out of the assets of the impaired or insolvent insurer attributable to covered policies. The costs of the Association’s obligations under this chapter may be met by the use of assets attributable to covered policies or reimbursed to the Association pursuant to its subrogation and assignment rights. (G) For purposes of this chapter, benefits provided by a long-term care rider to a life insurance policy or annuity contract shall be considered the same type of benefits as the base life insurance policy or annuity contract to which it relates.

Coverages

Covered Contracts

Vt. Stat. Ann. tit. 8, § 4173(b)(1) – This chapter shall provide coverage to a person specified in subsection (a) of this section for a policy or contract of direct, nongroup life insurance, health insurance, which for purposes of this chapter includes health maintenance organization subscriber contracts and certificates, an annuity, or a certificate under a direct group policy or contract, and supplemental policies or contracts to any of these, and for an unallocated annuity contract, in each case, issued by a member insurer, except as limited by this chapter. An annuity contract or certificate under a group annuity contract includes a guaranteed investment contract, guaranteed interest contract, guaranteed accumulation contract, deposit administration contract, unallocated funding agreement, allocated funding agreement, structured settlement annuity, annuity issued to or in connection with a government lottery, and any immediate or deferred annuity contract.

Non-Covered Contracts

Vt. Stat. Ann. tit. 8, § 4173 Except as otherwise provided in subdivision (3) of this subsection, this chapter shall not provide coverage for: (A) a portion of a policy or contract not guaranteed by the member insurer or under which the risk is borne by the policy or contract holder; (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: (i) averaged over the period of four years prior to the date on which the member insurer becomes an impaired or insolvent insurer under this chapter, whichever is earlier, exceeds a rate of interest determined by subtracting two 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 years before the member insurer becomes an impaired or insolvent insurer under this chapter, whichever is earlier; and (ii) on and after the date on which the member insurer becomes an impaired or insolvent insurer under this chapter, whichever is earlier, exceeds the rate of interest determined by subtracting three percentage points from Moody’s Corporate Bond Yield Average as most recently available;

Non-Resident Coverage

Vt. Stat. Ann. tit. 8, § 4173(a)(2)(B). Is not a Vermont resident, provided all of the following conditions are met: (i) the member insurer that issued the policy or contract is domiciled in Vermont; (ii) the state in which the person resides has an association similar to the Association created by this chapter; and (iii) the person is not eligible for coverage by an association in any other state due to the fact that the insurer or the health maintenance organization was not licensed in that state at the time specified in that state’s guaranty association law.

Definition Of Premium

Vt. Stat. Ann. tit. 8, § 4175(19) “Premiums” mean 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 4173(b) of this chapter except that assessable premium shall not be reduced on account of subdivision 4173(b)(2)(C) of this chapter, relating to interest limitations, and of subdivision 4173(c)(2) of this chapter, relating to limitations with respect to one individual, one participant, and one policy or contract owner. “Premiums” shall not include: (A) premiums in excess of $5,000,000.00 on an unallocated annuity contract not issued under a governmental retirement benefit plan, or its trustee, established under 26 U.S.C. § 401, 403(b), or 457 of the U.S. Internal Revenue Code; or (B) with respect to multiple nongroup 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, premiums in excess of $5,000,000.00 with respect to these policies or contracts, regardless of the number of policies or contracts held by the owner.

Interest Rate Adjustments

Vt. Stat. Ann. tit. 8, § 4173 this chapter shall not provide coverage for: 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: (i) averaged over the period of four years prior to the date on which the member insurer becomes an impaired or insolvent insurer under this chapter, whichever is earlier, exceeds a rate of interest determined by subtracting two 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 years before the member insurer becomes an impaired or insolvent insurer under this chapter, whichever is earlier; and (ii) on and after the date on which the member insurer becomes an impaired or insolvent insurer under this chapter, whichever is earlier, exceeds the rate of interest determined by subtracting three percentage points from Moody’s Corporate Bond Yield Average as most recently available;

Tax Offsets

Vt. Stat. Ann. tit. 8, § 4183(a) A member insurer may offset against its premium tax liability to Vermont an assessment described in subsection 4179(h) of this chapter to the extent of 20 percent of the amount of the assessment for each of the five calendar years following the year in which the assessment was paid. In the event a member insurer should cease doing business, all uncredited assessments may be credited against its premium tax liability for the year it ceases doing business.

Triggers

Discretionary Triggers

§4178(a). If a member insurer is an impaired insurer.

Mandatory Triggers

§4178(b). If a member insurer is an insolvent insurer.

Foreign Triggers

No separate provision.

“Impaired Insurer”

Vt. Stat. Ann. tit. 8, § 4175(12) “Impaired insurer” means a member insurer that, after the effective date of this chapter, is not an insolvent insurer and who is placed under an order of rehabilitation or conservation by a court of competent jurisdiction.

“Insolvent Insurer”

Vt. Stat. Ann. tit. 8, § 4175 (13) “Insolvent insurer” means a member insurer that, after the effective date of this chapter, is placed under an order of liquidation by a court of competent jurisdiction with a finding of insolvency.

“Member Insurer”

Vt. Stat. Ann. tit. 8, § 4175(14) “Member insurer” means 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 4173 of this chapter and includes an 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 hospital or medical service organization, whether for-profit or nonprofit; (B) a fraternal benefit society; (C) a mandatory State pooling plan; (D) a mutual assessment company or other person that operates on an assessment basis; (E) an insurance exchange; (F) an organization that has a certificate or license limited to the issuance of charitable gift annuities under section 3718a of this title; or (G) an entity similar to any of the above.

Utah

Account Structure

§31A-28-106(1)(d). Two classes: The association shall allocate assessments among the following classes or subclasses: (i) the life insurance and annuity class, which includes the following subclasses: (A) the life insurance subclass; (B) the annuity subclass: (I) which includes annuity contracts owned by a governmental retirement plan, or its trustee, established under Section 401, 403(b), or 457, Internal Revenue Code; and (II) otherwise excludes unallocated annuities; and (C) the unallocated annuity subclass, which excludes contracts owned by a governmental retirement benefit plan, or its trustee, established under Sections 401, 403(b), or 457, Internal Revenue Code; and (ii) the accident and health insurance class.

Advertising Prohibition

§ 31A-28-119. Prohibited advertisement of the association–Notice to owners of policies and contracts (1) (a) Except as provided in Subsection (1)(b), a person, including a member insurer, producer, or affiliate of a member insurer may 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 a newspaper, magazine, or other publication, or in the form of a notice, circular, pamphlet, letter, or poster, or over a radio station or television station, or in any other way, any advertisement, announcement, or statement written or oral, that uses the existence of the association for the purpose of sales, solicitation, or inducement to purchase any form of insurance or coverage for which the guaranty association provides coverage under this part. (b) This section does not apply to: (i) the association; or (ii) another entity that does not sell or solicit insurance.

Assessments

Assessment Limits

§31A-28-109(5). (a) (i) Subject to Subsection (5)(b), the total of the assessments authorized by the association on a member insurer for each class or subclass may not in any one calendar year exceed 2% of the member insurer’s average annual assessable premium in that class or subclass as defined in Subsection (3).

Assessment Classes

§31A-28-109(2) There are two classes of assessments: (a) a Class A assessment: (i) shall be authorized and called for the purpose of meeting administrative and legal costs and other expenses; and (ii) may be authorized and called regardless of whether the assessment is related to a particular impaired or insolvent insurer; and (b) a Class B assessment shall be authorized and called to the extent necessary to carry out the powers and duties of the association under Section 31A-28-108 with regard to an impaired or an insolvent insurer.

Benefit Limits

§31A-28-103(8) The benefits for which the association may become liable may not exceed the lesser of: (a) the contractual obligations for which the member insurer is liable or would have been liable if it were not an impaired or insolvent insurer; (b) with respect to one life, regardless of the number of policies or contracts: (i) for a life insurance policy: (A) if the insured died before the coverage date, $500,000 of the death benefit; (B) if the insurer received a valid request for cash surrender before the coverage date but has not paid the cash surrender value before the coverage date, $200,000 of cash surrender benefits; or (C) if neither Subsection (8)(b)(i)(A) nor (B) applies, the covered portion of each benefit provided under the policy; (ii) for an annuity contract, the covered portion of each benefit provided under the contract; and (iii) for an accident and health insurance policy or contract: (A) classified as a health benefit plan, $500,000; or (B) not classified as a health benefit plan, the covered portion of each benefit provided under the policy; (c) for an individual participating in a governmental retirement plan established under Section 401, 403(b), or 457, Internal Revenue Code, covered by an unallocated annuity contract, or a beneficiary of that individual if the individual is deceased, $250,000 in present value of annuity benefits, in the aggregate, including: (i) net cash surrender; and (ii) net cash withdrawal values; or (d) for a payee of a structured settlement annuity or a beneficiary of the payee if the payee is deceased, the limits set forth in Subsection (8)(b). (9) Notwithstanding Subsection (8), the association may not be obligated to cover more than: (a) an aggregate of $500,000 in benefits for any one life under: (i) Subsection (8)(b)(i)(A); (ii) Subsection (8)(b)(i)(B); (iii) Subsection (8)(b)(ii); and (iv) Subsection (8)(b)(iii)(B); (b) $5,000,000 in benefits for one owner of multiple nongroup policies of life insurance: (i) whether the policy or contract owner is an individual, firm, corporation, or other person; (ii) whether the persons insured are officers, managers, employees, or other persons; and (iii) regardless of the number of policies and contracts held by the owner; and (c) $5,000,000 in benefits, regardless of the number of contracts held by the contract owner or plan sponsor, for: (i) one contract owner provided coverage under Subsection (2)(b)(ii); or (ii) one plan sponsor whose plans own, directly or in trust, one or more unallocated annuity contracts not included in Subsection (8)(b)(ii). (10) (a) Notwithstanding Subsection (9)(c) and except as provided in Subsection (10)(b), the association shall provide coverage if one or more unallocated annuity contracts are: (i) covered contracts under this part; (ii) owned by a trust or other entity for the benefit of two or more plan sponsors; and (iii) the largest interest in the trust or entity owning the contract or contracts is held by a plan sponsor whose principal place of business is in the state. (b) The association may not be obligated to cover more than $5,000,000 in benefits with respect to the unallocated contracts described in Subsection (10)(a).

Coverages

Covered Contracts

§31A-28-103(6) (a) Except as limited by this part, this part provides coverage to a person specified in Subsections (1) through (5) for: (i) a direct nongroup life insurance, direct accident and health insurance, or direct annuity policy or contract; (ii) a supplemental contract to a policy or contract described in Subsection (6)(a)(i); (iii) a certificate under a direct group policy or contract; and (iv) an unallocated annuity contract issued by a member insurer. (b) For purposes of Subsection (6)(a), an annuity contract and a certificate under a group annuity contract includes: (i) a guaranteed investment contract; (ii) a deposit administration contract; (iii) an unallocated funding agreement; (iv) an allocated funding agreement; (v) a structured settlement annuity; (vi) an annuity issued to or in connection with a government lottery; and (vii) an immediate or deferred annuity contract.

Non-Covered Contracts

§31A-28-103(7) This part does not provide coverage for: (a) a portion of a policy or contract: (i) not guaranteed by the member insurer; or (ii) under which the risk is borne by the policy or contract owner; (b) a policy or contract of reinsurance, unless: (i) an assumption certificate is issued before the coverage date; (ii) the assumption certificate required by Subsection (7)(b)(i) is in effect pursuant to the reinsurance policy or contract; and (iii) the reinsurance contract is approved by the appropriate regulatory authorities; (c) except as provided in Subsection (11)(e), a portion of a policy or contract to the extent that the rate of interest on which the policy or contract 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 exceeds: (i) a rate of interest determined by subtracting two percentage points from Moody’s Corporate Bond Yield Average averaged: (A) over the period of four years before the coverage date with respect to the policy or contract; or (B) for the corresponding lesser period if the policy or contract was issued less than four years before the association became obligated; or (ii) a rate of interest determined by subtracting three percentage points from Moody’s Corporate Bond Yield Average as most recently available as determined on or after the earlier of: (A) the day on which the member insurer becomes an impaired insurer; or (B) the day on which the member insurer becomes an insolvent insurer; (d) a portion of a policy or contract issued to a plan or program of an employer, association, or other person to provide life, accident and health, or annuity benefits to its employees, members, or others, to the extent that the plan or program is self-funded or uninsured, including benefits payable by an employer, association, or other person under: (i) a multiple employer welfare arrangement, as that term is defined in 29 U.S.C. Sec. 1002; (ii) a minimum premium group insurance plan; (iii) a stop-loss group insurance plan; or (iv) an administrative services only contract; (e) a portion of a policy or contract to the extent that it provides: (i) a dividend; (ii) an experience rating credit; (iii) voting rights; or (iv) payment of a fee or allowance to any person, including the policy or contract owner, in connection with the service to or administration of the policy or contract; (f) an unallocated annuity contract issued to or in connection with a benefit plan protected under the federal Pension Benefit Guaranty Corporation, regardless of whether the federal Pension Benefit Guaranty Corporation has yet become liable to make any payment with respect to the benefit plan; (g) a portion of an unallocated annuity contract that is not issued to or in connection with: (i) a specific benefit plan of: (A) employees; (B) a union; or (C) an association of natural persons; or (ii) a government lottery; (h) a portion of a policy or contract to the extent that the assessment required by Section 31A-28-109 that applies to the policy or contract is preempted by federal or state law; (i) an obligation that does not arise under the express written terms of the policy or contract issued by a member insurer to the enrollee, certificate holder, contract owner, or policy owner, including: (i) a claim based on marketing materials; (ii) a claim based on a side letter, rider, or other document that is issued by the member insurer without meeting applicable policy or contract form filing or approval requirements; (iii) a misrepresentation regarding a policy or contract benefit; (iv) an extra-contractual claim; (v) a claim for penalties; or (vi) a claim for consequential or incidental damages; (j) a contract that establishes the member insurer’s obligations to provide a book value accounting guaranty for defined contribution benefit plan participants by reference to a portfolio of assets that is owned by a person that is: (i) (A) the benefit plan; or (B) the benefit plan’s trustee; and (ii) not an affiliate of the member insurer; (k) a portion of a policy or contract to the extent it provides for interest or other changes in value: (i) to be determined by the use of an index or other external reference stated in the policy or contract; and (ii) as of the date the member insurer becomes an impaired or insolvent insurer, whichever occurs earlier: (A) that have not been credited to the policy or contract; or (B) as to which the policy or contract owner’s rights are subject to forfeiture; (l) a policy or contract providing hospital, medical, prescription drug, or other health care benefit pursuant to: (i) Part C or D of Title XVIII of the Social Security Act, 42 U.S.C. 1395 et seq.; or (ii) Title XIX of the Social Security Act, 42 U.S.C. Sec. 1396 et seq.; or (m) a structured settlement annuity benefit to which a payee or beneficiary has transferred the payee or beneficiary’s rights in a structured settlement factoring transaction, regardless of whether the transaction occurred before or after 26 U.S.C. Sec. 5891(c)(3)(A) became effective.

Non-Resident Coverage

§31A-28-103(1)(b)(ii) Yes, Non residents are covered, but only if: (A) the member insurer that issued the policy or contract is domiciled in this state; (B) the state in which the person resides has an association similar to the association created by this part; and (C) the person is not eligible for coverage by an association in any other state because the insurer was not licensed in the other states at the time specified in the other states’ guaranty association’s laws.

Definition Of Premium

§ 31A-28-105 (17) (a) Notwithstanding Section 31A-1-301, “premiums” means an amount or consideration received on covered policies or contracts, less: (i) returned: (A) premiums; (B) considerations; and (C) deposits; and (ii) dividends and experience credits. (b) (i) “Premiums” does not include an amount or consideration received for: (A) a policy or contract for which coverage is not provided under Subsections 31A-28-103(6) and (7); or (B) the portion of a policy or contract for which coverage is not provided under Subsections 31A-28-103(6) and (7). (ii) Notwithstanding Subsection (17)(b)(i), an assessable premium may not be reduced on account of: (A) Subsection 31A-28-103(7)(c) relating to interest limitations; or (B) Subsection 31A-28-103(8) relating to limitations for: (I) one individual; (II) any one participant; or (III) any one policy or contract owner. (c) “Premiums” does not include premiums in excess of $5,000,000: (i) on an unallocated annuity contract not issued under a governmental retirement plan established under Section 401, 403(b), or 457, Internal Revenue Code; or (ii) for multiple nongroup policies of life insurance owned by one owner: (A) whether the policy or contract owner is an individual, firm, corporation, or other person; (B) whether the persons insured are officers, managers, employees, or other persons; and (C) regardless of the number of policies or contracts held by the owner.

Interest Rate Adjustments

§31A-28-103(7)(c) Guaranty Association excludes from coverage: except as provided in Subsection (11)(e), a portion of a policy or contract to the extent that the rate of interest on which the policy or contract 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 exceeds: (i) a rate of interest determined by subtracting two percentage points from Moody’s Corporate Bond Yield Average averaged: (A) over the period of four years before the coverage date with respect to the policy or contract; or (B) for the corresponding lesser period if the policy or contract was issued less than four years before the association became obligated; or (ii) a rate of interest determined by subtracting three percentage points from Moody’s Corporate Bond Yield Average as most recently available as determined on or after the earlier of: (A) the day on which the member insurer becomes an impaired insurer; or (B) the day on which the member insurer becomes an insolvent insurer;

Tax Offsets

§31A-28-113(1). Yes. Member insurers may offset up to 20% of assessment amount for 5 years following year of assessment.

Triggers

Discretionary Triggers

§31A-28-108(1)(a). When a member insurer is impaired. Amended effective 4/30/01.

Mandatory Triggers

§31A-28-108(2). When a member insurer is insolvent.

Foreign Triggers

No separate provision.

“Impaired Insurer”

§31A-28-105(12) “Impaired insurer” means a member insurer that is not an insolvent insurer and: (a) is considered by the commissioner to be hazardous pursuant to this title; or (b) is placed under an order of rehabilitation or conservation by a court of competent jurisdiction.

“Insolvent Insurer”

§31A-28-105(13) “Insolvent insurer” means a member insurer that is placed under an order of liquidation by a court of competent jurisdiction with a finding of insolvency.

“Member Insurer”

§ 31A-28-105 (14) (a) “Member insurer” means an insurer that holds a certificate of authority to transact in this state any kind of insurance for which coverage is provided under Section 31A-28-103. (b) “Member insurer” includes an insurer whose license or certificate of authority in this state may have been: (i) suspended; (ii) revoked; (iii) not renewed; or (iv) voluntarily withdrawn. (c) “Member insurer” does not include: (i) a for-profit or nonprofit: (A) hospital; (B) hospital service organization; or (C) medical service organization; (ii) a fraternal benefit society; (iii) a mandatory state pooling plan; (iv) a mutual assessment company or other person that operates on an assessment basis; (v) an insurance exchange; (vi) an organization described in Subsection 31A-22-1305(2); or (vii) an entity similar to an entity described in Subsections (14)(c)(i) through (vi).

Texas

Account Structure

§463.105. For the purposes of administration and assessment, the association shall maintain: (1) an accident, health, and hospital services insurance account; (2) a life insurance account; (3) an annuity account; and (4) an administrative account.

Advertising Prohibition

§463.451. Prohibited Use of Protection Provided by Chapter. (a) A person may not make, publish, disseminate, circulate, or place before the public, or directly or indirectly cause to be made, published, disseminated, circulated, or placed before the public, a written or oral advertisement, announcement, or statement that uses the existence of the association to sell, solicit, or induce the purchase of a kind of insurance with respect to which this chapter provides coverage. (b) This section applies to an advertisement, announcement, or statement made, published, disseminated, circulated, or placed before the public: (1) in a newspaper, magazine, or other publication; (2) in a notice, circular, pamphlet, letter, or poster; (3) over a radio or television station; or (4) in any other manner. (c) Except as provided by Section 463.114, the use by a person of the protection provided by this chapter in the sale of insurance is unfair competition and an unfair practice under Chapter 541. (d) This section does not apply to the association or any other entity that does not sell or solicit insurance.

Assessments

Assessment Limits

§463.153(c) The total amount of assessments on a member insurer for each account under Section 463.105 may not in one calendar year exceed two percent of the insurer’s average annual premiums on the policies covered by the account during the three calendar years preceding the year in which the impaired or insolvent member insurer became an impaired or insolvent insurer. If two or more assessments are authorized in a calendar year with respect to member insurers that become impaired or insolvent in different calendar years, the average annual premiums for purposes of the aggregate assessment percentage limitation described by this subsection shall be equal to the higher of the three-year average annual premiums for the applicable subaccount or account as computed in accordance with this section. If the maximum assessment and the other assets of the association do not provide in a year an amount sufficient to carry out the association’s responsibilities, the association shall make necessary additional assessments as soon as this chapter permits.

Assessment Classes

§463.152. (a) Assessments are classified as Class A or Class B assessments. (b) Class A assessments are authorized and called to pay: (1) the association’s administrative costs; (2) administrative expenses that: (A) are properly incurred under this chapter; and (B) relate to an unauthorized insurer or to an entity that is not a member insurer; and (3) other general expenses not related to a particular impaired or insolvent insurer. (c) Class B assessments are authorized and called to the extent necessary for the association to carry out the association’s powers and duties under Sections 463.101, 463.103, 463.109, and 463.111(c) and Subchapter F with regard to an impaired or insolvent insurer.

Benefit Limits

§463.204. A contractual obligation does not include: (1) death benefits in an amount in excess of $300,000 or a net cash surrender or net cash withdrawal value in an amount in excess of $100,000 under one or more life insurance policies on a single life; (2) an amount in excess of: (A) $250,000 in the present value under one or more annuity contracts issued with respect to a single life under individual annuity policies or group annuity policies; or (B) $5 million in unallocated annuity contract benefits with respect to a single contract owner regardless of the number of those contracts; (3) an amount in excess of the following amounts, including any net cash surrender or cash withdrawal values, under one or more accident, health, accident and health, or long-term care insurance policies on a single life: (A) $500,000 for health benefit plans; (B) $300,000 for disability income and long-term care insurance, as those terms are defined by this code or rules adopted by the commissioner; or (C) $200,000 for coverages that are not defined as health benefit plans, disability income, or long-term care insurance; (4) an amount in excess of $250,000 in present value annuity benefits, in the aggregate, including any net cash surrender and net cash withdrawal values, with respect to each individual participating in a governmental retirement benefit plan established under Section 401, 403(b), or 457, Internal Revenue Code of 1986 (26 U.S.C. Sections 401, 403(b), and 457), covered by an unallocated annuity contract or the beneficiary or beneficiaries of the individual if the individual is deceased; (5) an amount in excess of $250,000 in present value annuity benefits, in the aggregate, including any net cash surrender and net cash withdrawal values, with respect to each payee of a structured settlement annuity or the beneficiary or beneficiaries of the payee if the payee is deceased; (6) aggregate benefits in an amount in excess of $300,000 with respect to a single life, except with respect to: (A) benefits paid under health benefit plans, described by Subdivision (3)(A), in which case the aggregate benefits are $500,000; and (B) benefits paid to one owner of multiple nongroup policies of life insurance, whether the policy owner is an individual, firm, corporation, or other person, and whether the persons insured are officers, managers, employees, or other persons, in which case the maximum benefits are $5 million regardless of the number of policies and contracts held by the owner; (7) an amount in excess of $5 million in benefits, with respect to either one plan sponsor whose plans own directly or in trust one or more unallocated annuity contracts not included in Subdivision (4) irrespective of the number of contracts with respect to the contract owner or plan sponsor or one contract owner provided coverage under Section 463.201(a)(3)(B), except that, if one or more unallocated annuity contracts are covered contracts under this chapter and are owned by a trust or other entity for the benefit of two or more plan sponsors, coverage shall be afforded by the association if the largest interest in the trust or entity owning the contract or contracts is held by a plan sponsor whose principal place of business is in this state, and in no event shall the association be obligated to cover more than $5 million in benefits with respect to all these unallocated contracts;

Coverages

Covered Contracts

§463.202. (a) Except as limited by this chapter, the coverage provided by this chapter to a person specified by Section 463.201, subject to Sections 463.201(b) and (c), applies with respect to the following policies and contracts issued by a member insurer: (1) a direct, nongroup life, health, accident, annuity, or supplemental policy or contract, including a health maintenance organization contract or certificate; (2) a certificate under a direct group policy or contract; (3) a group hospital service contract; and (4) an unallocated annuity contract. (b) The coverage provided by this chapter also applies with respect to all other insurance coverage written by the following entities authorized to engage in business in this state: (1) a mutual assessment company; (2) a local mutual aid association; (3) a statewide mutual assessment company; and (4) a stipulated premium company. (c) For the purposes of this section, an annuity contract or a certificate under a group annuity contract includes: (1) a guaranteed investment contract; (2) a deposit administration contract; (3) an allocated or unallocated funding agreement; (4) a structured settlement annuity; (5) an annuity issued to or in connection with a government lottery; and (6) an immediate or deferred annuity contract.

Non-Covered Contracts

§463.203(b) (b) This chapter does not provide coverage for: (1) any part of a policy or contract not guaranteed by the insurer or under which the risk is borne by the policy or contract owner; (2) a policy or contract of reinsurance, unless an assumption certificate has been issued; (3) any part of a policy or contract to the extent that the rate of interest on which that part is based: (A) as averaged over the period of four years before the date the member insurer becomes impaired or insolvent under this chapter, whichever is earlier, exceeds a rate of interest determined by subtracting two percentage points from Moody’s Corporate Bond Yield Average averaged for the same four-year period or for a lesser period if the policy or contract was issued less than four years before the date the member insurer becomes impaired or insolvent under this chapter, whichever is earlier; and (B) on and after the date the member insurer becomes impaired or insolvent under this chapter, whichever is earlier, exceeds the rate of interest determined by subtracting three percentage points from Moody’s Corporate Bond Yield Average as most recently available; (4) a portion of a policy or contract issued to a plan or program of an employer, association, similar entity, or other person to provide life, health, or annuity benefits to the entity’s employees, members, or others, to the extent that the plan or program is self-funded or uninsured, including benefits payable by an employer, association, or similar entity under: (A) a multiple employer welfare arrangement as defined by Section 3, Employee Retirement Income Security Act of 1974 (29 U.S.C. Section 1002); (B) a minimum premium group insurance plan; (C) a stop-loss group insurance plan; or (D) an administrative services-only contract; (5) any part of a policy or contract to the extent that the part provides dividends, experience rating credits, or voting rights, or provides that fees or allowances be paid to any person, including the policy or contract owner, in connection with the service to or administration of the policy or contract; (6) a policy or contract issued in this state by a member insurer at a time the insurer was not authorized to issue the policy or contract in this state; (7) an unallocated annuity contract issued to or in connection with a benefit plan protected under the federal Pension Benefit Guaranty Corporation, regardless of whether the Pension Benefit Guaranty Corporation has not yet become liable to make any payments with respect to the benefit plan; (8) any part of an unallocated annuity contract that is not issued to or in connection with a specific employee, a benefit plan for a union or association of individuals, or a governmental lottery; (9) any part of a financial guarantee, funding agreement, or guaranteed investment contract that: (A) does not contain a mortality guarantee; and (B) is not issued to or in connection with a specific employee, a benefit plan, or a governmental lottery; (10) a part of a policy or contract to the extent that the assessments required by Subchapter D with respect to the policy or contract are preempted by federal or state law; (11) a contractual agreement that established the member insurer’s obligations 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 the plan’s trustee in a case in which neither the benefit plan sponsor nor its trustee is an affiliate of the member insurer; (12) a part of a policy or contract to the extent the policy or contract provides for interest or other changes in value that are to be determined by the use of an index or external reference stated in the policy or contract, but that 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 this chapter, whichever date is earlier, subject to Subsection (c); (13) a policy or contract providing a hospital, medical, prescription drug, or other health care benefit under 42 U.S.C. Sections 1395w-21 et seq. and 1395w-101 et seq. (Medicare Parts C and D), 42 U.S.C. Sections 1396-1396w-5 (Medicaid), or 42 U.S.C. Sections 1397aa-1397mm (State Children’s Health Insurance Program) or a regulation adopted under those federal statutes; or (14) structured settlement annuity benefits to which a payee or beneficiary has transferred the payee’s or beneficiary’s rights in a structured settlement factoring transaction as defined by Section 5891(c)(3)(A), Internal Revenue Code of 1986 (26 U.S.C. Section 5891(c)(3)(A)), regardless of whether the factoring transaction occurred before, on, or after the date that section became effective.

Non-Resident Coverage

§463.201(a)(2)(B) Yes. Covers a person who is not a resident, but only if: (i) the member insurers that issued the policies or contracts are domiciled in this state; (ii) the state in which the person resides has an association similar to the association; and (iii) the person is not eligible for coverage by an association in any other state because the insurer or health maintenance organization was not licensed in the state at the time specified in that state’s guaranty association law;

Definition Of Premium

§ 463.003 (9) “Premium” means an amount received on a covered policy, less any premium, consideration, or deposit returned on the policy, and any dividend or experience credit on the policy. The term does not include: (A) an amount received for a policy or contract or part of a policy or contract for which coverage is not provided under Section 463.202, except that assessable premiums may not be reduced because of: (i) an interest limitation provided by Section 463.203(b)(3); or (ii) a limitation provided by Section 463.204 with respect to a single individual, participant, annuitant, or policy or contract owner; (B) premiums in excess of $5 million on an unallocated annuity contract not issued under a governmental benefit plan established under Section 401, 403(b), or 457, Internal Revenue Code of 1986; (C) premiums received from the state treasury or the United States treasury for insurance for which this state or the United States contracts to: (i) provide welfare benefits to designated welfare recipients; or (ii) implement: (a) Title 2, Health and Safety Code; (b) Title 2, Human Resources Code; or (c) the Social Security Act (42 U.S.C. Section 301 et seq.); or (D) premiums in excess of $5 million with respect to multiple nongroup policies of life insurance owned by one owner, regardless of whether the policy owner is an individual, firm, corporation, or other person and regardless of whether the persons insured are officers, managers, employees, or other persons, regardless of the number of policies or contracts held by the owner.

Interest Rate Adjustments

§463.203(b)(3). Guaranty Association excludes from coverage: any part of a policy or contract to the extent that the rate of interest on which that part is based: (A) as averaged over the period of four years before the date the member insurer becomes impaired or insolvent under this chapter, whichever is earlier, exceeds a rate of interest determined by subtracting two percentage points from Moody’s Corporate Bond Yield Average averaged for the same four-year period or for a lesser period if the policy or contract was issued less than four years before the date the member insurer becomes impaired or insolvent under this chapter, whichever is earlier; and (B) on and after the date the member insurer becomes impaired or insolvent under this chapter, whichever is earlier, exceeds the rate of interest determined by subtracting three percentage points from Moody’s Corporate Bond Yield Average as most recently available;

Tax Offsets

§463.161. Yes. Member insurers may offset up to 100% of assessments paid for an insurer that becomes an impaired or insolvent insurer on or after September 1, 2005 (20% per year for a period of 5 years beginning in the year following the issuance of the certificate of contribution). Member insurers may offset up to 100% of assessments paid for an insurer that becomes an impaired or insolvent insurer prior to September 1, 2005 (10% per year for a period of 10 years beginning in the year following the issuance of the certificate of contribution). Covers all Class B assessments. Amended effective 9/1/05. Codified effective 9/1/07.

Triggers

Discretionary Triggers

§463.251. When a member insurer is an impaired domestic insurer.

Mandatory Triggers

§463.252, 463.253. When a member insurer is impaired, not paying claims timely, and (1) if domestic, has been placed under an order of rehabilitation by a court of competent jurisdiction; or (2) if foreign, has been prohibited from soliciting or accepting new business in this state, the insurer’s certificate of authority has been suspended or revoked in this state and a petition for rehabilitation has been filed in a court of competent jurisdiction in the insurer’s domestic state. If a member insurer is insolvent. Codified effective 9/1/07.

Foreign Triggers

See Mandatory Triggers.

“Impaired Insurer”

§463.003(5). A member insurer that is designated an “impaired insurer” by the commissioner and is: (A) placed by a court in this state or another state under an order of supervision, liquidation, rehabilitation, or conservation; (B) placed under an order of liquidation or rehabilitation under the provisions of Articles 21.28 of the Texas Insurance Code; or (C) placed under an order of supervision or conservation by the commissioner under the provisions of Articles 21.28-A of the Texas Insurance Code. Amended effective 9/1/05. Codified effective 9/1/07.

“Insolvent Insurer”

§463.003(6). A member insurer that has been placed under an order of liquidation with a finding of insolvency by a court in this state or another state. Amended effective 9/1/05. Codified effective 9/1/07.

“Member Insurer”

§ 463.003(7) “Member insurer” means an insurer that is required to participate in the association under Section 463.052. §463.052 Required Participation in Association …(a) As a condition of engaging in the business of insurance in this state, an insurer, including a mutual assessment company, a local mutual aid association, a statewide mutual assessment company, a stipulated premium company, and a health maintenance organization authorized to engage in business in this state, shall participate as a member of the association if the insurer holds a certificate of authority to engage in a kind of insurance business in this state with respect to which this chapter provides coverage as determined under Subchapter E. The requirement to participate applies regardless of whether the insurer’s certificate of authority in this state is suspended, revoked, not renewed, or voluntarily withdrawn. (b) The following do not participate as member insurers: (1) a fraternal benefit society; (2) a mandatory state pooling plan; (3) a reciprocal or interinsurance exchange; (4) an organization which has a certificate of authority or license limited to the issuance of charitable gift annuities, as defined by this code or rules adopted by the commissioner; and (5) an entity similar to an entity described by Subdivision (1), (2), (3), or (4).

Tennessee

Account Structure

§56-12-205 For purposes of administration and assessment, the association shall maintain two (2) accounts: (1) The life insurance and annuity account, which includes the following subaccounts: (A) Life insurance account; and (B) Annuity account, excluding unallocated annuities; and (2) The health account.

Advertising Prohibition

§56-12-218 “Sales promotions listing association prohibited — Disclaimer notice” (a) No person, including a member insurer or 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 or television broadcast, or in any other way, any advertisement, announcement, or statement, written or oral, that uses the existence of the Tennessee life and health insurance guaranty association for the purpose of sales, solicitation, or inducement to purchase any form of insurance or other coverage covered by this part. However, this section does not apply to the Tennessee life and health insurance guaranty association or any other entity that does not sell or solicit insurance or coverage by a health maintenance organization.

Assessments

Assessment Limits

§56-12.208(e)(1)(A) Subject to subdivision (e)(1)(B), the total of all assessments authorized by the association with respect to a member insurer for each subaccount of the life insurance and annuity account and for the health account must not in one (1) calendar year exceed two percent (2%) of that member insurer’s average annual premiums received in this state on the policies and contracts covered by the subaccount or account during the three (3) calendar years preceding the year in which the member insurer became an impaired or insolvent insurer.

Assessment Classes

§56-12.208(b). There are two (2) classes of assessments, as follows: (1) Class A assessments are made for the purpose of meeting administrative and legal costs and other expenses and examinations conducted under the authority of § 56-12-211(e). Class A assessments may be made whether or not related to a particular impaired or insolvent insurer; and (2) Class B assessments are made to the extent necessary to carry out the powers and duties of the association pursuant to § 56-12-207 with regard to an impaired or an insolvent insurer.

Benefit Limits

§ 56-12-204 (c) (c) The benefits that the association may become obligated to cover must 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 one (1) life, regardless of the number of policies or contracts: (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 for life insurance; (ii) One hundred thousand dollars ($100,000) in health insurance benefits; provided, for policies or contracts issued by a member insurer that becomes insolvent after January 1, 2010, the limits for health insurance benefits are as follows: (a) One hundred thousand dollars ($100,000) for coverages that are not disability income insurance, health benefit plans, or long-term care insurance, including any net cash surrender and net cash withdrawal values; (b) Three hundred thousand dollars ($300,000) for disability income insurance and three hundred thousand dollars ($300,000) for long-term care insurance; (c) Five hundred thousand dollars ($500,000) for health benefit plans; and (iii) Two hundred fifty thousand dollars ($250,000) 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 deceased, two hundred fifty thousand dollars ($250,000) in present value annuity benefits, in the aggregate, including net cash surrender and net cash withdrawal values, if any; (C) 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) life under subdivisions (c)(2)(A) and (B) except with respect to benefits for health benefit plans under subdivision (c)(2)(A)(ii)(c), in which case the aggregate liability of the association must not exceed five hundred thousand dollars ($500,000) with respect to any one (1) individual; or (ii) With respect to one (1) 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) in benefits, regardless of the number of policies and contracts held by the owner;

Coverages

Covered Contracts

§ 56-12-204 (b)(1) This part provides coverage to the persons specified in subsection (a) for policies or contracts of direct, non-group life insurance, accident and health insurance, which, for purposes of this part, includes health maintenance organization subscriber contracts and certificates, or annuities, for certificates under direct group policies and contracts, and for supplemental contracts to any of these, in each case issued by member insurers, except as limited by this part. 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

§ 56-12-204 (b)(2) Except as otherwise provided in subdivision (b)(3), this part does not provide coverage for: (A) A portion of a policy or contract not guaranteed by the member 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: (i) Averaged over the period of four (4) years prior to the date on which the member insurer becomes an impaired or insolvent insurer under this part, whichever is earlier, exceeds the 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 member insurer becomes an impaired or insolvent insurer under this part, whichever is earlier; and (ii) On and after the date on which the member insurer becomes an impaired or insolvent insurer under this part, whichever is earlier, 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: (i) A multiple employer welfare arrangement as defined in 29 U.S.C. § 1002(40); (ii) A minimum premium group insurance plan; (iii) A stop-loss group insurance plan; or (iv) An administrative services only contract; (E) A portion of a policy or contract to the extent that it provides for: (i) Dividends or experience rating credits; (ii) Voting rights; or (iii) 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 § 56-12-208 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, contract owner, or policy owner, including without limitation: (i) Claims based on marketing materials; (ii) 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; (iii) Misrepresentations of or regarding policy or contract benefits; (iv) Extra-contractual claims; or (v) A claim for penalties or consequential or incidental damages; (I) A contractual agreement that establishes the member insurer’s obligations 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 this part, 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 subdivision (b)(2)(K), 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; (L) A policy or contract providing any hospital, medical, prescription drug, or other healthcare 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 and D, or Subchapter XIX, Chapter 7 of Title 42 of the United States Code, commonly known as Medicaid, or any regulations issued pursuant thereto; or (M) Structured settlement annuity benefits to which a payee, or beneficiary, has transferred his or her rights in a structured settlement factoring transaction as defined in 26 U.S.C. § 5891(c)(3)(A), regardless of whether the transaction occurred before or after that section became effective.

Non-Resident Coverage

§ 56-12-204 (a)(1)(B)(ii) Yes, non residents are covered, but only under all of the following conditions: The member insurer that issued the policies or contracts is domiciled in this state; (b) The states in which the persons reside have associations similar to the association created by this part; and (c) The persons are not eligible for coverage by an association in any other state due to the fact that the insurer or the health maintenance organization was not licensed in the state at the time specified in the state’s guaranty association law.

Definition Of Premium

§ 56-12-203 (16) “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 policies or contracts for which coverage is not provided under § 56-12-204(b), except that assessable premium must not be reduced on account of § 56-12-204(b)(2)(C) relating to interest limitations or § 56-12-204(c)(2) relating to limitations with respect to one (1) individual, one (1) participant, and one (1) policy or contract owner. “Premiums” does not include: (A) Premiums on an unallocated annuity contract; or (B) With respect to multiple non-group policies of life insurance owned by one (1) 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, premiums in excess of five million dollars ($5,000,000) with respect to these policies or contracts, regardless of the number of policies or contracts held by the owner;

Interest Rate Adjustments

§ 56-12-204 (b)(2)(C) Guaranty Association excludes from coverage: 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: (i) Averaged over the period of four (4) years prior to the date on which the member insurer becomes an impaired or insolvent insurer under this part, whichever is earlier, exceeds the 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 member insurer becomes an impaired or insolvent insurer under this part, whichever is earlier; and (ii) On and after the date on which the member insurer becomes an impaired or insolvent insurer under this part, whichever is earlier, exceeds the rate of interest determined by subtracting three (3) percentage points from Moody’s Corporate Bond Yield Average as most recently available;

Tax Offsets

§56-12.212(a). Yes. Member insurers may offset assessments paid up to the lesser of: (1) 10% of the amount for each of the 10 years following the year in which assessment was paid, or (2) one tenth of 1% until recovery of the assessment(s) is made. Covers all assessments but administrative expenses.

Triggers

Discretionary Triggers

§ 56-12-207 (a) If a member insurer is an impaired insurer; Amended 4/5/2010

Mandatory Triggers

§ 56-12-207 (b) If a member insurer is an insolvent insurer; Amended 4/5/2010

Foreign Triggers

No separate provision.

“Impaired Insurer”

§56-12-203 (8) “Impaired insurer” means a member insurer which, after the effective date of this part, is not an insolvent insurer, and is placed under an order of rehabilitation or conservation by a court of competent jurisdiction; Amended 4/5/2010

“Insolvent Insurer”

§56-12-203 (9) “Insolvent insurer” means a member insurer which after the effective date of this part, is placed under an order of liquidation by a court of competent jurisdiction with a finding of insolvency; Amended 4/5/2010

“Member Insurer”

§56-12-203 (12) “Member insurer” means an insurer, health maintenance organization, or nonprofit hospital and medical service 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 § 56-12-204, and includes an 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 is authorized under the law of this state to issue charitable gift annuities; or (F) An entity similar to any of the above;

SouthDakota

Account Structure

§58-29C-49A. Two accounts: (1) The life insurance and annuity account which includes the following subaccounts: (a) Life insurance account; and (b) Annuity account; and (2) The health insurance account. (Amended effective 7/1/13)

Advertising Prohibition

§58-29C-62 A. No person, including a member insurer, agent, or affiliate of a member insurer may 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, written or oral, which uses the existence of the Life and Health Insurance Guaranty Association of this state for the purpose of sales, solicitation, or inducement to purchase any form of insurance covered by the South Dakota Life and Health Insurance Guaranty Association chapter. However, this section does not apply to the South Dakota Life and Health Insurance Guaranty Association or any other entity which does not sell or solicit insurance. Effective July 1, 2013.

Assessments

Assessment Limits

§58-29C-52E(1)(a). Two percent (2%) of the average premiums in state for policies covered by the account during the three calendar years preceding the impairment or insolvency. Effective July 1, 2003 (prior statute repealed).

Assessment Classes

§58-29C-52B. Two classes of assessments: Class A assessments for the purpose of meeting administrative and legal costs and other expenses; and Class B assessments to carry out the powers and duties of the association under § 58-29C-51 with regard to an impaired or an insolvent insurer. Effective July 1, 2003 (prior statute repealed).

Benefit Limits

§ 58-29C-46 § C(2)(a) With respect to one life, regardless of the number of policies or contracts: (i) Three hundred thousand dollars in life insurance death benefits, but not more than one hundred thousand dollars in net cash surrender and net cash withdrawal values for life insurance; (ii) For health insurance benefits: (I) One hundred thousand dollars for coverages not described in clauses (II) and (III) below, including any net cash surrender and net cash withdrawal values; (II) Three hundred thousand dollars for disability income insurance as defined in § 58–17–108, and three hundred thousand dollars for long-term care insurance as defined in subdivision 58–17B–2(6); (III) Five hundred thousand dollars for health benefit plans; or (iii) Two hundred fifty thousand dollars 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 deceased), two hundred fifty thousand dollars in present value annuity benefits, in the aggregate, including net cash surrender and net cash withdrawal values , if any; (c) However, in no event may the association be obligated to cover more than (i) an aggregate of three hundred thousand dollars in benefits with respect to any one life under subsections 2(a) and 2(b) of subpart C of this section except with respect to benefits for health benefit plans under subparagraph 2(a)(ii) of this section, in which case the aggregate liability of the association may not exceed five hundred thousand dollars with respect to any one individual, or (ii) with respect to one owner of multiple nongroup 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 in benefits, regardless of the number of policies and contracts held by the owner; (d) The limitations set forth in this section are limitations on the benefits for which the association is obligated before taking into account either its subrogation and assignment rights or the extent to which those benefits could be provided out of the assets of the impaired or insolvent insurer attributable to covered policies. The costs of the association’s obligations under this chapter may be met by the use of assets attributable to covered policies or reimbursed to the association pursuant to its subrogation and assignment rights; and (e) For the purposes of this chapter, benefits provided by a long-term care rider to a life insurance policy or annuity contract are considered the same type of benefits as the base life insurance policy or annuity contract to which it relates.

Coverages

Covered Contracts

§ 58-29C-46B(1). This chapter shall provide coverage to the persons specified in subpart A for the policies or contracts of direct, nongroup life insurance, health insurance, or annuities, and for certificates under direct group policies and contracts, and for supplemental contracts to any of these, in each case except as limited by this chapter. Annuity contracts and certificates under group annuity contracts include allocated funding agreements, structured settlement annuities, and any immediate or deferred annuity contracts.(Amended effective 7/1/13) [Please note that during its 2005 session the South Dakota legislature enacted statutes which authorize the creation of a self-funded multiple employer trust to provide health benefits (see SDCL 58-18-88 through 94). The new statutes concerning MEWAs provide that a proposed MEWA must first obtain authorization from the director of the South Dakota Division of Insurance before it may provide health benefits. The statutes provide that any MEWA authorized by the director shall be a member of the South Dakota Life and Health Insurance Guaranty Association. Presumably, these statutes concerning MEWAs by implication amend the section of South Dakota’s guaranty association law that provides that MEWAs are not covered].

Non-Covered Contracts

§ 58-29C-46B(2) (a) A portion of a policy or contract not guaranteed by the member 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: (i) Averaged over the period of four years prior to the date on which the member insurer becomes an impaired or insolvent insurer under this chapter, whichever is earlier, exceeds the rate of interest determined by subtracting two 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 years before the member insurer becomes an impaired or insolvent insurer under this chapter, whichever is earlier; and (ii) On and after the date on which the member insurer becomes an impaired or insolvent insurer under this chapter, whichever is earlier, exceeds the rate of interest determined by subtracting three 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 benefits payable by an employer, association, or other person under: (i) A multiple employer welfare arrangement as defined in section 3(40) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. § 1002(40)); (ii) A minimum premium group insurance plan; (iii) A stop-loss group insurance plan; or (iv) An administrative services only contract; (e) A portion of a policy or contract to the extent that it provides for: (i) Dividends or experience rating credits; (ii) Voting rights; or (iii) 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 58-29C-52 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 certificate holder, contract owner or policy owner, including without limitation: (i) Claims based on marketing materials; (ii) 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; (iii) Misrepresentations of or regarding policy or contract benefits; (iv) Extra-contractual claims; or (v) A claim for penalties or consequential or incidental damages; (i) A contractual agreement that establishes the member insurer’s obligations 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 this chapter, whichever is earlier. If a policy’s or contract’s interest or changes in value are credited less frequently than annually, for purposes of determining the values that have been credited and are not subject to forfeiture under this subsection, the interest or change in value determined by using the procedures defined in the policy or contract shall 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; and (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 & D), or Subchapter XIX, Chapter 7 Title 42 of the United States Code (commonly known as Medicaid), or any regulations issued pursuant thereto. (3) The exclusion from coverage under subsection (2)(c) of this subdivision does not apply to any portion of a policy or contract, including a rider, that provides long-term care or any other health insurance benefits.

Non-Resident Coverage

§ 58-29C-46A(2)(b). Yes. Covers nonresidents, but only under all of the following conditions: (i) The member insurer that issued the policies or contracts is domiciled in South Dakota; (ii) The states in which the persons reside have associations similar to the association created by this chapter; and (iii) The persons are not eligible for coverage by an association in any other state due to the fact that the insurer was not licensed in the state at the time specified in the state’s guaranty association law;

Definition Of Premium

§ 58-29C-48 (16) “Premiums,” 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. The term, premiums, does not include amounts or considerations received for policies or contracts or for the portions of policies or contracts for which coverage is not provided under subpart B of § 58-29C-46 except that assessable premium may not be reduced on account of subsection 58-29C-46B(2)(c) relating to interest limitations and subdivision 58-29C-46C(2) relating to limitations with respect to one individual, one participant, and one policy or contract owner. Premiums do not include: (a) Premiums on an unallocated annuity contract; or (b) With respect to multiple nongroup 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, premiums in excess of five million dollars with respect to these policies or contracts, regardless of the number of policies or contracts held by the owner;

Interest Rate Adjustments

§58-29C-46B(2)(c). Guaranty Association excludes from coverage: 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: (i) Averaged over the period of four years prior to the date on which the member insurer becomes an impaired or insolvent insurer under this chapter, whichever is earlier, exceeds the rate of interest determined by subtracting two 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 years before the member insurer becomes an impaired or insolvent insurer under this chapter, whichever is earlier; and (ii) On and after the date on which the member insurer becomes an impaired or insolvent insurer under this chapter, whichever is earlier, exceeds the rate of interest determined by subtracting three percentage points from Moody’s Corporate Bond Yield Average as most recently available. (Amended effective 7/1/2013)

Tax Offsets

§58-29C-56A. Yes. A member insurer may offset against its premium tax liability to this state an assessment described in subpart 58-29C-52 H to the extent of twenty percent of the amount of the assessment for each of the five calendar years following the year in which the assessment was paid. If the assessment is five hundred dollars or less, the member insurer shall take the total offset in the first year following the year in which the assessment was paid. However, total assessments offset against premium taxes may not exceed two million dollars in any year. If offsets exceed the annual limitation in this section, the excess may be carried forward to a subsequent year in which the annual limitation has not been exceeded. Any excess shall be apportioned among the contributing insurers in relation to their assessment that caused the limit to be exceeded. In the event a member insurer should cease doing business, all uncredited assessments may be credited against its premium tax liability for the year it ceases doing business. Effective July 1, 2003 (prior statute repealed).

Triggers

Discretionary Triggers

§58-29C-51A. When a member insurer is an impaired insurer. Effective July 1, 2003 (prior statute repealed).

Mandatory Triggers

§58-29C-51B. When a member insurer is insolvent. Effective July 1, 2003 (prior statute repealed).

Foreign Triggers

No separate provision.

“Impaired Insurer”

§58-29C-48(10). A member insurer which, after July 1, 2003, is not an insolvent insurer, and is placed under an order of rehabilitation or conservation by a court of competent jurisdiction. Effective July 1, 2003 (prior statute repealed).

“Insolvent Insurer”

§58-29C-48(11). A member insurer which after July 1, 2003, is placed under an order of liquidation by a court of competent jurisdiction with a finding of insolvency. Effective July 1, 2003 (prior statute repealed).

“Member Insurer”

§58-29C-48(12) “Member insurer,” an insurer licensed or that holds a certificate of authority to transact in this state any kind of insurance for which coverage is provided under § 58–29C–46, and includes an insurer 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 hospital or medical service organization, whether for profit or nonprofit; (b) A health maintenance organization; (c) A fraternal benefit society; (d) A mandatory state pooling plan; (e) A mutual assessment company or other person that operates on an assessment basis; (f) An insurance exchange; (g) An organization engaged in the issuance of charitable gift annuities, which is described in § 58–1–16; or (h) An entity similar to any of the above; (Amended effective 7/1/13)

SouthCarolina

Account Structure

§38-29.50(1). Three accounts: accident and health insurance; life insurance; and annuity.

Advertising Prohibition

§ 38-29-200(1) 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 social media, or in any other way, an advertisement, announcement, or statement, written or oral, which uses the existence of the South Carolina Life and Accident and Health Insurance Guaranty Association for the purpose of sales, solicitation, or inducement to purchase any form of insurance or other coverage covered by this chapter. However, this section shall not apply to the South Carolina Life and Accident and Health Insurance Guaranty Association or any other entity which does not sell or solicit insurance or coverage by a health maintenance organization.

Assessments

Assessment Limits

§38-29.80(5). Four percent (4%) of premiums in state for policies covered by the account.

Assessment Classes

§38-29.80(2). Two classes of assessments: Class A for administrative costs, general expenses and examinations; and Class B to carry out the powers and duties of the association with regard to an insolvent or impaired insurer;

Benefit Limits

§38-29.40(3)(b)(i). (A) $300,000 in life insurance death benefits, but not more than $300,000 in net cash surrender and net cash withdrawal values for life insurance; (B) for health insurance benefits: (1) $300,000 for coverages not defined as disability income insurance or health benefit plans or long-term care insurance, including any net cash surrender and net cash withdrawal values; (2) $300,000 for disability income insurance and $300,000 for long-term care insurance; (3) $500,000 for health benefit plans; (C) $300,000 in the present value of annuity benefits, including net cash surrender and net cash withdrawal values; or (ii) with respect to each payee of a structured settlement annuity or beneficiary if the payee is deceased, $300,000 in present value annuity benefits, in the aggregate, including net cash surrender and net cash withdrawal values, if any; (iii) the association is not obligated to cover more than an aggregate of $300,000 in benefits with respect to any one life except with respect to benefits for health benefit plans, in which case the aggregate liability of the association shall not exceed $500,000 with respect to any one individual or with respect to one owner of multiple nongroup 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 $5,000,000 in benefits, regardless of the number of policies and contracts held by the owner.

Coverages

Covered Contracts

§38-29.40(2)(a). Policies or contracts of direct, nongroup life insurance, health insurance including health maintenance organization subscriber contracts and certificates, or annuities, for certificates under direct group policies and contracts, and for supplemental contracts to any of these, in each case issued by member insurers.

Non-Covered Contracts

§38-29.40(2)(b). (i) a portion of a policy or contract or part thereof not guaranteed by the member insurer, or under which the risk is borne by the policy or contract owner; (ii) a policy or contract of reinsurance, unless assumption certificates have been issued pursuant to the reinsurance policy or contract; (iii) a portion of a policy or contract, other than a portion, including a rider, that provides long-term care or any other health insurance benefits, to the extent 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: (A) averaged over the period of four years prior to the date on which the member insurer becomes an impaired or insolvent insurer under this chapter, whichever is earlier, exceeds the rate of interest determined by subtracting two 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 years before the member insurer becomes an impaired or insolvent insurer under this chapter, whichever is earlier; and (B) on and after the date on which the member insurer becomes an impaired or insolvent insurer, whichever is earlier, exceeds the rate of interest determined by subtracting three percentage points from Moody’s Corporate Bond Yield Average as most recently available; (iv) any policy or contract issued by assessment mutuals, fraternals, and nonprofit hospital and medical service plans; (v) 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; (vi) a portion of a policy or contract to the extent that it provides for: (A) dividends or experience rating credits; (B) voting rights; or (C) 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; (vii) a portion of a policy or contract to the extent that the assessments required by Section 38-29-80 with respect to the policy or contract are preempted by federal or state law; (viii) 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, contract owner, or policy owner; (ix) a contractual agreement that establishes the member insurer’s obligations 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; (x) an unallocated annuity contract; (xi) 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 this chapter, 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, 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; (xii) a policy or contract providing any hospital, medical, prescription drug, or other health care benefits pursuant to 42 U.S.C. Chapter 7, Subchapter XVIII, Part C or Part D; 42 U.S.C. Chapter 7, Subchapter XIX; or 42 U.S.C. Chapter 7; or any regulations issued pursuant thereto; or (xiii) structured settlement annuity benefits to which a payee or beneficiary has transferred his rights in a structured settlement factoring transaction as defined in 26 U.S.C. 5891(c)(3)(A), regardless of when the transaction occurred before or after such section became effective.

Non-Resident Coverage

§38-29.70(7). The association has no liability for any covered policy of a foreign or alien insurer whose domiciliary jurisdiction or state of entry provides by statute or regulation for residents of this State protection substantially similar to that provided by this chapter for residents of other states. In addition, the association has no liability under this chapter for covered policies of a domestic insurer for residents of another state unless the other state has a guaranty association that provides protection to South Carolina residents substantially similar to that provided by this chapter for residents of other states.

Definition Of Premium

§ 38-29-20 (7) “Premiums” means amounts or considerations 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 policies or contracts for which coverage is not provided pursuant to Section 38-29-40 except that assessable premiums may not be reduced on account of the provisions of Sections 38-29-40 relating to interest limitations and limitations with respect to one individual, one participant, and one policy or contract owner. ‘Premiums’ do not include premiums on an unallocated annuity contract or, with respect to multiple nongroup 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, premiums in excess of $5,000,000 with respect to these policies or contracts, regardless of the number of policies or contracts held by the owner.

Interest Rate Adjustments

§38-29.40(b)(iii). Except as otherwise provided, this chapter does not provide coverage for a portion of a policy or contract, other than a portion, including a rider, that provides long-term care or any other health insurance benefits, to the extent 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: (A) averaged over the period of four years prior to the date on which the member insurer becomes an impaired or insolvent insurer under this chapter, whichever is earlier, exceeds the rate of interest determined by subtracting two 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 years before the member insurer becomes an impaired or insolvent insurer under this chapter, whichever is earlier; and (B) on and after the date on which the member insurer becomes an impaired or insolvent insurer, whichever is earlier, exceeds the rate of interest determined by subtracting three percentage points from Moody’s Corporate Bond Yield Average as most recently available. (c) The exclusion from coverage referenced in subitem (iii) of this subsection does not apply to any portion of a policy or contract, including a rider that provides long-term care or any other health insurance benefits.

Tax Offsets

§38-29.160. Yes. Member insurers may offset up to 20% of amount for 5 years, beginning with the year after a certificate of contribution is issued.

Triggers

Discretionary Triggers

§38-29.70(1). When a member insurer is impaired

Mandatory Triggers

§38-29.70(2). When a member insurer is insolvent.

Foreign Triggers

No provision.

“Impaired Insurer”

§38-29.20(11). A member insurer which, after the effective date of this chapter, is not an insolvent insurer but has been placed under an order of rehabilitation or conservation by a court of competent jurisdiction.

“Insolvent Insurer”

§38-29.20(12) A member insurer which, after the effective date of this chapter, is placed under an order of liquidation by a court of competent jurisdiction with a finding of insolvency.

“Member Insurer”

§ 38-29-20(13) “Member insurer” means an insurer or health maintenance organization authorized to transact in this State any kind of insurance to which this chapter applies under Section 38-29-40.This includes an insurer or health maintenance organization whose authority to transact business in this State may have been suspended, revoked, not renewed, or voluntarily withdrawn but does not include: (a) a hospital or medical service organization, whether profit or nonprofit; (b) a fraternal benefit society; (c) a mandatory state pooling plan; (d) a mutual assessment company or other person that operates on an assessment basis; (e) an insurance exchange; (f) an organization that has a certificate or license limited to the issuance of charitable gift annuities under Section 38-5-20; or (g) an entity similar to any of the above.

RhodeIsland

Account Structure

§27-34.3-6(a) Two accounts: For purposes of administration and assessment, the association shall maintain two (2) accounts: (1) The life insurance and annuity account which includes the following subaccounts: (i) Life insurance account; (ii) Annuity account; which shall include annuity contracts owned by a governmental retirement plan (or its trustee) established under section 401, 403(b) or 457 of the United States Internal Revenue Code, 26 U.S.C. § 401, 403(b) or 457, but shall otherwise exclude unallocated annuities; and (iii) Unallocated annuity account which shall exclude contracts owned by a governmental retirement benefit plan (or its trustee) established under § 401, 403(b) or 457 of the United States Internal Revenue Code, 26 U.S.C. § 401, 403(b) or 457. (2) The health insurance account. (Amended effective 6/9/2004)

Advertising Prohibition

§27-34.3-19 “Prohibited advertisement of insurance guaranty association act in insurance sales” (a) No person, including an insurer, agent, producer, or affiliate of an 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 in the form of e-mail or an electronic website, or over any radio station or television station, or in any other way, any advertisement, announcement or statement, written or oral, which uses the existence of the insurance guaranty association of this state for the purpose of sales, solicitation or inducement to purchase any form of insurance covered by the Rhode Island life and health insurance guaranty association act; provided, that this section shall not apply to the association or any other entity which does not sell or solicit insurance. The use of the protection afforded by this chapter, other than as provided by this section, by any person in the sale, marketing or advertising of insurance constitutes unfair methods of competition and unfair or deceptive acts or practices under chapter 29 of this title and is subject to the sanctions imposed in that chapter. (Amended effective 1-1-05)

Assessments

Assessment Limits

§27-34.3-9(e)(1)(i) Three percent (3%) of the average premiums in state for policies covered by the account during the three calendar years preceeding the impairment or insolvency.(Amended effective 1/1/05)

Assessment Classes

§27-34.3-9(b)Two assessment classes: (1) Class A assessments shall be authorized and called 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 or insolvent insurer. (2) Class B assessments shall be authorized and called to the extent necessary to carry out the powers and duties of the association under § 27-34.3-8 with regard to an impaired or an insolvent insurer. (Amended effective 1/1/05)

Benefit Limits

§27-34.3-3(c)(2). (i) With respect to any one life, regardless of the number of policies or contracts: (A) 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 for life insurance; (B) In health insurance benefits: (I) One hundred thousand dollars ($100,000) for coverages not considered as disability insurance or basic hospital, medical and surgical insurance or major medical insurance or long-term care insurance, including any net cash surrender and net cash withdrawal values; (II) Three hundred thousand dollars ($300,000) for disability insurance and three hundred thousand dollars ($300,000) for long-term care insurance; (III) Five hundred thousand dollars ($500,000) for basic hospital, medical and surgical insurance; or (C) Two hundred fifty thousand dollars ($250,000) in the present value of annuity benefits, including net cash surrender and net cash withdrawal values; (ii) With respect to each individual participating in a governmental retirement plan established under §401, 403(b) or 457 of the U.S. Internal Revenue Code, 26 U.S.C. §?401, 403(b) or 457, covered by an unallocated annuity contract or the beneficiaries of each such individual if deceased, in the aggregate, two hundred fifty thousand dollars ($250,000) in present value annuity benefits, including net cash surrender and net cash withdrawal values; (iii) With respect to each payee of a structured settlement annuity or beneficiary or beneficiaries, of the payee if deceased, two hundred fifty thousand dollars ($250,000) in present value annuity benefits, in the aggregate, including net cash surrender and net cash withdrawal values if any; (iv) However in no event shall the association be obligated to cover more than: (A) an aggregate of three hundred thousand dollars ($300,000) in benefits with respect to any one life under this paragraph and paragraphs (i), (ii) and (iii) of this subdivision except with respect to benefits for basic hospital, medical and surgical insurance and major medical insurance under subparagraph 2(i)(B) of this subsection, in which case the aggregate liability of the association shall not exceed five hundred thousand dollars ($500,000) with respect to any one individual; or (B) with respect to one owner of multiple non-group policies of life insurance, whether the policy 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) in benefits, regardless of the number of policies and contracts held by the owner; (v) With respect to either: (A) one contract owner provided coverage under subsection (a)(3)(i); or (B) one plan sponsor whose plans own directly or in trust any one or more unallocated annuity contracts not included in paragraph (ii) of this subdivision, five million dollars ($5,000,000) in benefits, irrespective of the number of contracts with respect to the contract owner or plan sponsor. Provided, however, in the case where one or more unallocated annuity contracts that are covered contracts under this chapter and are owned by a trust or other entity for the benefit of two (2) or more plan sponsors, coverage shall be afforded by the association if the largest interest in the trust or entity owning the contract or contracts is held by a plan sponsor whose principal place of business is in this state and in no event shall the association be obligated to cover more than five million dollars ($5,000,000) in benefits with respect to all such unallocated contracts; (Amended effective 1/1/05)

Coverages

Covered Contracts

§27-34.3-3(b)(1). Direct, non-group life, health, or annuity policies or contracts and supplemental policies or contracts to any of these, for certificates under direct group policies and contracts, and for unallocated annuity contracts issued by member insurers, except as limited by this chapter. Annuity contracts and certificates under group annuity contracts include, but are not limited to, guaranteed investment contracts, deposit administration contracts, unallocated funding agreements, allocated funding agreements, structured settlement annuities, annuities issued to or in connection with government lotteries and any immediate or deferred annuity contracts. (Amended effective 1/1/05)

Non-Covered Contracts

§27-34.3-3.(b)(2)(i) 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; (ii) A policy or contract of reinsurance, unless assumption certificates have been issued pursuant to the reinsurance policy or contract; (iii) 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: (A) Averaged over the period of four (4) years prior to the date on which the member insurer becomes an impaired or insolvent insurer under this chapter, whichever is earlier, exceeds the rate of interest determined by subtracting two (2) percentage points from Moody’s corporate bond yield average averaged for that same four-year (4) period or for such lesser period if the policy or contract was issued less than four (4) years before the member insurer becomes an impaired or insolvent insurer under this chapter, whichever is earlier; and (B) On and after the date on which the member insurer becomes an impaired or insolvent insurer under this chapter, whichever is earlier, exceeds the rate of interest determined by subtracting three (3) percentage points from Moody’s corporate bond yield average as most recently available; (iv) 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: (A) A multiple employer welfare arrangement as defined in 29 U.S.C. § 1144; (B) A minimum premium group insurance plan; (C) A stop-loss group insurance plan; or (D) An administrative services only contract; (v) A portion of a policy or contract to the extent that it provides for: (A) Dividends or experience rating credits; (B) Voting rights; or (C) 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. (vi) 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; (vii) An unallocated annuity contract issued to or in connection with a benefit plan protected under the federal pension benefit guaranty corporation, regardless of whether the federal pension benefit guaranty corporation has yet become liable to make any payments with respect to the benefit plan; (viii) A portion of unallocated annuity contract that is not issued to or in connection with a specific employee, union or association of natural persons benefit plan or a government lottery; (ix) A portion of a policy or contract to the extent that the assessments required by § 27-34.3-9 with respect to the policy or contract are preempted by federal or state law; and (x) An obligation that does not arise under the express written terms of the policy or contract issued by the insurer to the contract owner or policy owner, including, without limitation: (A) Claims based on marketing materials; (B) Claims based on side letters, riders or other documents that were issued by the insurer without meeting applicable policy form filing or approval requirements; (C) Misrepresentations of or regarding policy benefits; (D) Extracontractual claims; or (E) A claim for penalties or consequential or incidental damages; (xi) A contractual agreement that establishes the member insurer’s obligations 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; (xii) 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 this chapter, 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 paragraph, 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; (xiii) Any transaction or combination of transactions between a protected cell and the general account or another protected cell of a protected cell company organized under chapter 64 of this title; or (xiv) 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 & D) or any regulations issued pursuant thereto. (Amended effective 1/1/2010)

Non-Resident Coverage

§27-34.3-3(a)(2)(ii). Yes. Covers nonresidents, but only under all of the following conditions: (A) The insurer that issued the policies or contracts is domiciled in this state; (B) The states in which the persons reside have associations similar to the association created by this chapter; and (C) The persons are not eligible for coverage by an association in any other state due to the fact that the insurer was not licensed in the state at the time specified in the state’s guaranty association law. (Amended effective 1-1-05)

Definition Of Premium

§ 27-34.3-5 (17) “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 any amounts or consideration received for any policies or contracts or for the portions of policies or contracts for which coverage is not provided under § 27-34.3-3(b) except that assessable premium shall not be reduced on account of § 27-34.3-3(b)(2)(iii) relating to interest limitations and § 27-34.3-3(c)(2) relating to limitations with respect to one individual, one participant and one owner. “Premiums” shall not include: (i) Premiums in excess of five million dollars ($5,000,000) on an unallocated annuity contract not issued under a governmental retirement benefit plan (or its trustee) established under § 401, 403(b) or 457 of the United States Internal Revenue Code, 26 U.S.C. § 401, 403(b) or 457. (ii) With respect to multiple nongroup policies of life insurance owned by one owner, whether the policy owner is an individual, firm, corporation or other person, and whether the persons insured are officers, managers, employees or other persons, premiums in excess of five million dollars ($5,000,000) with respect to these policies or contracts, regardless of the number of policies or contracts held by the owner.

Interest Rate Adjustments

§27-34.3-3(b)(2)(iii) Guaranty Association excludes from coverage: 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: (A) Averaged over the period of four (4) years prior to the date on which the member insurer becomes an impaired or insolvent insurer under this chapter, whichever is earlier, exceeds the rate of interest determined by subtracting two (2) percentage points from Moody’s corporate bond yield average averaged for that same four-year (4) period or for such lesser period if the policy or contract was issued less than four (4) years before the member insurer becomes an impaired or insolvent insurer under this chapter, whichever is earlier; and (B) On and after the date on which the member insurer becomes an impaired or insolvent insurer under this chapter, whichever is earlier, exceeds the rate of interest determined by subtracting three (3) percentage points from Moody’s corporate bond yield average as most recently available. (Amended effective 1/1/05)

Tax Offsets

§27-34.3-13.A. Yes. Member insurers may offset up to 10% of amount of an assessment, other than a Class A assessment, for each of the 5 years following the year in which the assessment was paid. (Amended effective 1/1/96)

Triggers

Discretionary Triggers

§27-34.3-8(a) If a member insurer is an impaired insurer. (Amended effective 1/1/05).

Mandatory Triggers

§27-34.3-8(b). If a member insurer is an insolvent insurer. (Amended effective 1/1/05).

Foreign Triggers

No separate provision.

“Impaired Insurer”

§27-34.3-5(10) A member insurer which is not an insolvent insurer, and (i) Is placed under an order of rehabilitation or conservation by a court of competent jurisdiction. (Amended effective 1/1/05).

“Insolvent Insurer”

§27-34.3-5(11) A member insurer which after January 1, 1996, is placed under an order of liquidation by a court of competent jurisdiction with a finding of insolvency. (Amended effective 1/1/05).

“Member Insurer”

§27-34.3-5(12) Any insurer licensed or which holds a certificate of authority to transact in Rhode Island any kind of insurance for which coverage is provided under §27-34.3-3, and includes any insurer whose license or certificate of authority in this state may have been suspended, revoked, not renewed or voluntarily withdrawn, but does not include: (i) A hospital or medical service organization, whether profit or nonprofit; or (ii) A health maintenance organization; or (iii) A fraternal benefit society; or (iv) A mandatory state pooling plan; or (v) A mutual assessment company or other person that operates on an assessment basis; or (vi) An insurance exchange; or (vii) An organization that has a certificate or license limited to the issuance of charitable gift annuities; or (viii) An entity similar to any of the above. (Amended effective 1/1/05).

PuertoRico

Account Structure

T.26 §39.060.1. Three accounts: a. life insurance account; b. disability insurance account; c. annuity account, excluding unallocated annuity contracts.

Advertising Prohibition

§9.180 “Prohibited Advertisements Of The Association’s Act For The Sale Of Insurance” No person, including an insurer, agent or affiliate of an insurer shall make, publish, disseminate, circulate or present to the public or shall cause directly or indirectly, to be made, published, disseminated, circulated or presented to the public,in any newspaper, magazine or other publication or in the form of a notice, circular, pamphlet, letter or poster, or on a television or radio station, or in any other manner, any advertisement, announcement or statement, written or oral, which uses the existence of the Puerto Rico Life and Disability Insurance Guaranty Association for the purpose of selling, soliciting or inducing for the purchase of any kind of insurance covered by said Association. This section, however, shall not be applicable to the Puerto Rico Life Miscellaneous Insurance Guaranty Association.

Assessments

Assessment Limits

T.26 §39.090.5. a. Two percent (2%) of the average premiums in state for policies covered by the account during the three calendar years preceeding the impairment or insolvency.

Assessment Classes

T.26 §39.090.2.a, b. Two types of assessments: Class A to defray administrative and legal costs, as well as other expenses and the examinations; these assessments can be made whether or not related to a particular impaired or insolvent insurer, Class B, to the extent needed to execute the powers and duties of the association with regard to an impaired or insolvent insurer.

Benefit Limits

T.26 §3903.3. The benefits of which the Association may become liable shall not, in any case, exceed the lesser of the contractual obligations for which the insurer is liable or would have been liable if he/she were not an impaired, or insolvent insurer, or, with respect to any life, regardless of the number of policies or contracts: I. three hundred thousand (300,000) dollars in life insurance death benefits, but not more than one hundred thousand (100,000) dollars in net cash surrender values and net cash withdrawal funds values; II. one hundred thousand (100,000) dollars in disability insurance benefits including any net cash surrender values and net cash withdrawal values; III. one hundred thousand (100,000) dollars in the present value of annuity benefits including any net cash surrender values and net cash withdrawal values. However, in no case shall the Association be bound to disburse more than three hundred thousand (300,000) dollars in aggregate form with respect to any one life.

Coverages

Covered Contracts

T.26 § 3903.2.a. Direct or supplemental life and disability policies or contracts, which are not group policies or contracts, and for certificates under direct group policies and contracts issued by member insurers, except for the limitations imposed in this chapter.

Non-Covered Contracts

T.26 § 3903.2.b. Any portion of a policy or contract which is not guaranteed by the insurer or under which the risk is assumed by the policy or contract holder; any reinsurance policy or contract; any portion of a policy or contract to the extent that the interest rate on which it is based exceeds a specified interest adjustment rate; any plan or program of an employer, association or similar entity to provide life, disability or annuity benefits to its employees or members, to the extent that said plan or program operates with its own funds or is not insured, including, but not limited to, benefits payable by an employer, association or similar entity under: i. A “Multiple Employer Welfare Arrangement” plan as defined in Section 514 of the “Employee Retirement Income Security Act of 1974” as amended; ii. a minimum premium group insurance plan; iii. A stop loss group insurance plan; iv. a contract exclusively for administrative services; v. any portion of a policy or contract to the extent that it provides dividends or experience rating or provides for the payment of any fees or allowances to a person, including the holder of a policy or contract, with respect to the service or administration of said policy or contract, and vi. any policy or contract issued in Puerto Rico by a member insurer when he/she did not have a license or certificate of authority to issue said policy or contract in Puerto Rico; vii. any unallocated annuity contract.

Non-Resident Coverage

T.26 § 3903.1.b.II. Yes. Covers nonresidents only if they meet all the following conditions: i. the insurers who issued said policies or contracts are domiciled in Puerto Rico; ii. said insurers never obtained a license or certificate of authority in the states where these persons reside; iii. those states have associations similar to the Association created by this chapter; and iv. said persons are not eligible for coverage by said associations.

Definition Of Premium

§ 3905 (9) Premiums.– Means the amounts received for covered policies or contracts, less premiums, considerations and deposits returned thereon, and less dividends and credits for experience thereon. ‘Premiums’ does not include sums received for any policies or contracts or portions thereof for which no coverage is provided under § 3903(b) of this title, except that assessable premiums shall not be reduced by the provisions of §§ 3903(b)(2)(C) of this title regarding limitations in their interest, and 3903(c)(2) of this title concerning limitations with respect to any one life or any one contract holder.

Interest Rate Adjustments

Title 26 §3903(b)(2)(C) Guaranty Association excludes from coverage: Any portion of a policy or contract to the extent that the interest rate on which it is based: (i) Averaged out for a period of four (4) years prior to the date in which the Association becomes obligated with respect to such policy or contract, exceeds an interest rate determined by subtracting two percentage points (2% ) from “Moody’s Corporate Bond Yield Average”, averaged out by the same four (4)-year period or for a lesser period, if the policy or contract was issued less than four (4) years prior to the date in which the Association becomes obligated, and (ii) on and after the date in which the Association becomes obligated with respect to such a policy or contract, exceeds the interest rate determined by subtracting three percentage points (3% ) from the next recently available “Moody’s Corporate Bond Yield Average”.
Tax Offsets

Tax Offsets

No provision.

Triggers

Discretionary Triggers

T.26 § 3908.(a). If a member insurer is an impaired domestic insurer.

Mandatory Triggers

T.26 § 3908.(b). When a member insurer is impaired, not paying claims timely, and (1) if domestic, has been placed under an order of rehabilitation by a court of competent jurisdiction; or (2) if foreign, has been prohibited from soliciting or accepting new business in this state, the insurer’s certificate of authority has been suspended or revoked in this state and a petition for rehabilitation has been filed in a court of competent jurisdiction in the insurer’s domestic state. T.26 § 3908.(c). If a member insurer is insolvent.

Foreign Triggers

See Mandatory Triggers.

“Impaired Insurer”

T.26 § 3905.(5). A member insurer which, after the effective date of this article, is not an insolvent insurer and: (1) is deemed by the Insurance Commissioner to be potentially unable to fulfill its contractual obligations; or (2) is placed under an order of rehabilitation or conservation by a court of competent jurisdiction.

“Insolvent Insurer”

T.26 § 3905.(6). A member insurer, which after the effective date of this article, is placed under an order of liquidation by a court of competent jurisdiction with a finding of insolvency.

“Member Insurer”

26 L.P.R.A. § 3905(7) “Member insurer” means any insurer having a license or certificate of authority to transact in Puerto Rico any of the kinds of insurance for which coverage is provided under § 3903 of this title, and includes any insurer whose license or certificate of authority in Puerto Rico may have been suspended, revoked, not renewed or voluntarily withdrawn, but does not include: (a) A nonprofit medical-hospital services organization, and any assistance or mutual aid association which operates any medical-surgical service plan in Puerto Rico; (b) a health services organization, as defined in § 1901 et seq. of this title; (c) a charitable fraternal society; (d) a mandatory state pooling association; (e) a mutual assessment company or any entity that operates on the basis of assessments; (f) an insurance exchange; or (g) any entity similar to any of those mentioned above.

Pennsylvania

Account Structure

40 PS §991.1704(1). Two accounts: For purposes of administration and assessment the association shall maintain two accounts: (1) The life insurance and annuity account which includes the following subaccounts: (i) Life insurance account. (ii) Annuity account, which shall include annuity contracts owned by a governmental retirement plan or its trustee established under section 401, 403(b) or 457 of the Internal Revenue Code of 1986, but shall otherwise exclude unallocated annuities. (iii) Unallocated annuity account which shall exclude contracts owned by a governmental retirement benefit plan or its trustee under section 401, 403(b) or 457 of the Internal Revenue Code of 1986. (2) The health insurance account.

Advertising Prohibition

40 PS § 991.1717 “Prohibited advertisement of Insurance Guaranty Association Article in Insurance and Other Coverage Sales” (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, written or oral, which uses the existence of the association for the purpose of sales, solicitation or inducement to purchase any form of insurance or other coverage covered by this article, provided, however, that this section shall not apply to the association or any other entity which does not sell or solicit insurance, or coverage by a RANLI PPO, hospital plan corporation, professional health services plan corporation or health maintenance organization.

Assessments

Assessment Limits

40 PS §991.1707(e)(1). Two percent (2%) of premiums in state for policies covered by each account.

Assessment Classes

40 PS §991.1707(b). Two classes of assessments: Class A for administrative costs, legal costs, general expenses and examinations; these assessments can be authorized and called whether or not related to a particular impaired or insolvent insurer, and Class B to carry out the powers and duties of the association with regard to an impaired or insolvent domestic insurer.

Benefit Limits

40 PS §991.1703(c). (ii) (A) With respect to any one life, regardless of the number of policies or contracts, the following shall apply: (I) Three hundred thousand ($300,000) dollars for life insurance death benefits, but not more than one hundred thousand ($100,000) dollars in net cash surrender and net cash withdrawal values for life insurance. (II) For health insurance benefits: (1) One hundred thousand ($100,000) dollars for coverages or benefits not defined as disability income insurance, health benefit plans, or long-term care insurance, including any net cash surrender and net cash withdrawal values. (2) Three hundred thousand ($300,000) dollars for disability income insurance, and long-term care insurance benefits, including any cash surrender and net cash withdrawal values. (3) Five hundred thousand ($500,000) dollars for health benefit plans. (III) Two hundred fifty thousand ($250,000) dollars in the present value of annuity benefits, including net cash surrender and net cash withdrawal values. (B) With respect to each individual participating in a governmental retirement plan established under section 401, 403(b) or 457 of the Internal Revenue Code of 1986 covered by an unallocated annuity contract or the beneficiaries of each such individual if deceased, in the aggregate, two hundred and fifty thousand ($250,000) dollars in present value annuity benefits, including net cash surrender and net cash withdrawal values. (C) With respect to each payee of a structured settlement annuity, or beneficiary or beneficiaries of the payee if deceased, two hundred fifty thousand ($250,000) dollars in present value annuity benefits, in the aggregate, including net cash surrender and net cash withdrawal values, if any. (D) With respect to either one contract owner provided coverage under subsection (a)(3)(ii) or one plan sponsor whose plans own directly or in trust one or more unallocated annuity contracts not included in clause (B), five million ($5,000,000) dollars in benefits, irrespective of the number of such contracts held by that contract owner or plan sponsor. In the case where one or more unallocated annuity contracts are covered contracts under this article and are owned by a trust or other entity for the benefit of two (2) or more plan sponsors, coverage shall be afforded by the association if the largest interest in the trust or entity owning the contract or contracts is held by a plan sponsor whose principal place of business is in this Commonwealth and in no event shall the association be obligated to cover more than five million ($5,000,000) dollars in benefits with respect to all these unallocated contracts. (E) The association shall not, however, be liable to expend more than three hundred thousand ($300,000) dollars in the aggregate with respect to any one individual under subparagraph(ii)(A), (B) or (C) of paragraph (1) except with respect to benefits for health benefit plans under subclause (II)(3) of clause (A), in which case the aggregate liability of the association shall not exceed five hundred thousand ($500,000 ) dollars with respect to any one individual, or with respect to one owner of multiple nongroup 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 ($5,000,000) dollars in benefits, regardless of the number of policies and contracts held by the owner.

Coverages

Covered Contracts

40 PS §991.1703(b)(1). Direct non group life insurance, health insurance, annuity and supplemental policies or contracts, for certificates under direct group policies and contracts, and unallocated annuity contracts issued by member insurers. Health insurance includes RANLI PPO, hospital plan corporation, professional health services plan corporation and health maintenance organization subscriber policies, contracts, and certificates. Annuity contracts and certificates under group annuity contracts include, but are not limited to, guaranteed investment contracts, deposit administration contracts, unallocated funding agreements, allocated funding agreements, structured settlement annuities, annuities issued to or in connection with government lotteries and any immediate or deferred annuity contracts.

Non-Covered Contracts

40 PS §991.1703(b)(2). Any portion of a policy or contract not guaranteed by the member insurer; part of any policy or contract under which the risk is borne by the policyholder; any policy or contract of reinsurance, unless assumption certificates have been issued; any portion of a policy or contract that provides interest in excess of a specified rate; any employer programs to the extent that they are self-funded; dividends; any policy or contract issued in this Commonwealth by a member insurer at a time when it was not licensed or did not have a certificate of authority to issue such policy or contract in this Commonwealth; any unallocated annuity contract issued to an employee benefit plan protected under the federal PBGC; any unallocated annuity contract which is not issued to or in connection with a specific employee, union or association of natural persons benefit plan or a government lottery; a portion of a policy or contract to the extent it is preempted by Federal or State law; an obligation that does not arise under the express written terms of the policy or contract issued by the member insurer; a contractual agreement that establishes the member insurer’s obligations 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; 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 as of the date the member insurer becomes an impaired or insolvent; a policy or contract providing any hospital, medical, prescription drug or other health care benefits under Part C of D of Medicare, Medicaid, or any regulations issue pursuant thereto; structured settlement annuity benefits to which a payee or beneficiary has transferred the payee’s or beneficiary’s rights in a structured settlement factoring transaction.

Non-Resident Coverage

40 PS §991.1703(a)(2)(ii). Yes. Covers nonresidents under the following conditions: (1) the member insurer that issued such policies or contracts is domiciled in the commonwealth;(2) the states in which the persons reside have associations similar to the association created by this article; and (3) (C) the persons are not eligible for coverage by associations in any other state due to the fact that such insurers, RANLI PPOs, hospital plan corporations, professional health services plan corporations or health maintenance organizations were not licensed or did not hold a certificate of authority in the states in which the persons reside at the time specified in the state’s guaranty association law.

Definition Of Premium

§ 991.1702 “Premiums.” The amounts received on covered policies or contracts less premiums, considerations and deposits returned thereon and less dividends and experience credits thereon. The term does not include any amounts received for any policies or contracts or for the portions of any policies or contracts for which coverage is not provided under section 1703(b) except that assessable premium shall not be reduced on account of sections 1703(b)(2)(iii) relating to interest limitations and 1703(c)(1)(ii) relating to limitations with respect to any one individual, any one participant and any one policy or contract holder. The term does not include any premiums in excess of five million ($5,000,000) dollars on any unallocated annuity contract not issued under a governmental retirement plan established under section 401, 403(b) or 457 of the Internal Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. § 1 et seq.). The term does not include, with respect to multiple nongroup 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, premiums in excess of five million ($5,000,000) dollars with respect to these policies or contracts, regardless of the number of policies or contracts held by the owner.

Interest Rate Adjustments

40 PS §991.1703(b)(2)(iii). Guaranty Association excludes from coverage: Any 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: (A) averaged over the period of four (4) years prior to the date on which the member insurer becomes an impaired or insolvent insurer under this article, whichever is earlier, exceeds a rate of interest determined by subtracting two (2) percentage points from Moody’s Corporate Bond Yield Average averaged for the same four- year period or for such lesser period if the policy or contract was issued less than four (4) years before the member insurer becomes an impaired or insolvent insurer under this article, whichever is earlier;; and (B) on and after the date on which the member insurer becomes an impaired or insolvent insurer under this article, whichever is earlier, exceeds the rate of interest determined by subtracting three (3) percentage points from Moody’s Corporate Bond Yield Average as most recently available.

Tax Offsets

40 PS § 991.1711 (a) A member insurer may offset against its premium or income tax liability to this Commonwealth a proportionate part of the assessments described in section 1707 to the extent of twenty per centum (20%) of the amount of such assessment for each of the five (5) calendar years following the year in which such assessment was paid. In the event a member insurer should cease doing business, all uncredited assessments may be credited against its premium or income tax liability for the year it ceases doing business. (b) The proportionate part of an assessment which may be offset against a member insurer’s premium or income tax liability to the Commonwealth shall be determined according to a fraction of which the denominator is the total premiums (in the category assessed) received by the member insurer during the calendar year immediately preceding the year in which the assessment is paid and the numerator is that portion of the premiums received during such year on account of policies or contracts of life insurance (including or limited to annuities and unallocated annuities per account or subaccount, as applicable per the assessment), or health and accident insurance (including RANLI PPP, hospital plan corporation, professional health services plan corporation and health maintenance organization subscriber policies, contracts and certificates), in which the premium rates are guaranteed during the continuance of the respective policies or contracts without a right exercisable by the member insurer to increase said premium rates. (c) A member insurer that is exempt from taxes referenced in subsection (a) may recoup its assessments by assigning available offsets (as calculated under subsection (b)) to a taxable member or members of its controlled group, as the term is defined under section 1563(a) of the Internal Revenue Code of 1986. Such assigned offsets may be utilized by the taxable member or members in the manner provided under subsection (a). (d) A member insurer that is exempt from taxes referenced in subsection (a) and has no taxable members of a controlled group as referenced in subsection (c) may recoup its assessments by a surcharge on its premiums in a sum reasonably calculated to recoup the assessments over a reasonable period of time, as approved by the commissioner. Amounts recouped shall not be considered premiums for any other purpose, including the computation of gross premium tax, the medical loss ratio or agent commission. If a member insurer collects excess surcharges, the member insurer shall remit the excess amount to the association, and the excess amount shall be applied to reduce future assessments in the appropriate account. (e) Any sums which are acquired by refund, pursuant to section 1707(f), from the association by member insurers, and which have theretofore been offset against premium or income taxes as provided in this section and are not then needed for the purposes of this article, shall be paid by such member insurers to this Commonwealth in such manner as the tax authorities may require. The association shall notify the commissioner that such refunds have been made. (f) No offset against premium or income tax liability shall be permitted to the extent that a member insurer’s rates or policyholder dividends have been adjusted as permitted in section 1707.

Triggers

Discretionary Triggers

40 PS §991.1706(a). When a member insurer is impaired.

Mandatory Triggers

40 PS §991.1706(b). If a member insurer is insolvent.

Foreign Triggers

No separate provision.

“Impaired Insurer”

40 PS §991.1702. A member insurer which, after the effective date of this article, is not an insolvent insurer and: (1) is deemed by the Insurance Commissioner to be potentially unable to fulfill its contractual obligations; or (2) is placed under an order of rehabilitation or conservation by a court of competent jurisdiction.

“Insolvent Insurer”

40 PS §991.1702. A member insurer, which after the effective date of this article, is placed under an order of liquidation by a court of competent jurisdiction with a finding of insolvency.

“Member Insurer”

40 PS §991.1702. Any insurer, RANLI PPO, hospital plan corporation, professional health services plan corporation or health maintenance organization licensed or which holds a certificate of authority to transact in this Commonwealth any kind of insurance, RANLI PPO business, hospital plan corporation business, professional health services plan corporation business or health maintenance organization business for which coverage is provided under section 1703 and includes any insurer, RANLI PPO, hospital plan corporation, professional health services plan corporation or health maintenance organization whose license or certificate of authority in this Commonwealth may have been suspended, revoked, not renewed or voluntarily withdrawn. The term does not include any of the following: (1) A fraternal benefit society. (2) A mandatory State pooling plan. (3) A mutual assessment company or any entity that operates on an assessment basis. (4) An insurance exchange. (5) An organization that is a qualified charity issuing only qualified charitable gift annuities exempt from regulation under the act of October 16, 1996 (P.L. 712), known as the Charitable Gift Annuity Exemption Act. (6) Any entity similar to any of the above.

Oregon

Account Structure

§734.800(1) (a) The health insurance account, composed of the following subaccounts: (A) The disability insurance subaccount; (B) The long term care insurance subaccount; and (C) The major medical and all other health insurance subaccount; (b) The life insurance account; and (c) The annuity account. Amended effective 5/27/2011.

Advertising Prohibition

734.890 “Association not to be used in sales or solicitation” No insurer or insurance producer 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 Oregon Life and Health Insurance Guaranty Association for the purpose of sales, solicitation or inducement to purchase any form of insurance covered by the Oregon Life and Health Insurance Guaranty Association Act. This § shall not apply however to the Oregon Life and Health Insurance Guaranty Association or any other entity which does not sell or solicit insurance or to public service institutional advertisements by individual insurers.

Assessments

Assessment Limits

§734.815(5). Two percent (2%) of premiums in state for policies covered by each account.

Assessment Classes

§734.815(2). Two classes of assessments: Class A for administrative costs, legal costs and other general expenses whether or not related to a particular impaired or insolvent insurer; and Class B to carry out the powers and duties of the association with regard to an impaired or insolvent insurer.

Benefit Limits

§ 734.810(11)(b) With respect to any one life, regardless of the number of policies or contracts: (A) $300,000 in life insurance death benefits, but not more than $100,000 in net cash surrender and net cash withdrawal values for life insurance. (B) $100,000 in health insurance benefits other than basic hospital, medical and surgical insurance, major medical insurance, disability insurance or long term care insurance, including any net cash surrender and net cash withdrawal values. (C) $300,000 in disability insurance benefits. (D) $300,000 in long term care insurance benefits. (E) $500,000 in basic hospital, medical and surgical insurance or major medical insurance. (F) $250,000 in the present value of annuity benefits, including any net cash surrender and net cash withdrawal values; (c) With respect to each payee of a structured settlement annuity or the beneficiary of the payee if deceased, $250,000 in the present value of annuity benefits, in the aggregate, including any net cash surrender and net cash withdrawal values; or (d) $250,000 in the present value of annuity benefits, in the aggregate, including any net cash surrender and net cash withdrawal values, with respect to each individual participating in a governmental retirement plan established under section 401, 403(b) or 457 of the United States Internal Revenue Code covered by an unallocated annuity contract or the beneficiaries of each such individual if deceased. (12) The association may not be liable for more than: (a) $300,000 in benefits, in the aggregate, with respect to any one life under subsection (11)(b), (c) and (d) of this section, with the exception of benefits under subsection (11)(b)(E) of this section, in which case the aggregate liability of the association may not exceed $500,000 with respect to any one life. (b) With respect to one policyholder of multiple nongroup policies of life insurance, regardless of whether the policyholder is an individual, firm, corporation or other person, and whether the persons insured are officers, managers, employees or other persons, $5 million in benefits, regardless of the number of policies and contracts held by the policyholder. Amended effective 5/27/2011.

Coverages

Covered Contracts

§734.790(2) Except as limited by ORS 734.750 to 734.890 , the association shall provide coverage to the persons specified in subsection (1) of this section for direct nongroup life or health insurance policies or annuity contracts, for certificates under direct group policies or contracts, and for supplemental contracts to any of these, in each case issued by member insurers. Amended effective 5/27/2011.

Non-Covered Contracts

§734.790(3)(a) That portion of any policy or contract not guaranteed by the member insurer or under which the risk is borne by the policyholder or contract owner. (b) Any policy or contract or part thereof assumed by the impaired or insolvent insurer under a contract of reinsurance, other than reinsurance for which assumption certificates have been issued. (c) Any policy or contract issued by a health care service contractor complying with ORS 750.005 to 750.095. (d) Any policy or contract issued by a fraternal benefit society. (e) Any portion of a policy or contract to the extent that the interest rate on which the policy or contract is based , or to the extent that the interest rate, crediting rate or similar factor determined by use of an index or other external reference stated in the policy or contract for the purpose of calculating returns or changes in value: (A) Exceeds, when averaged over the period of four years prior to the date on which the member insurer becomes either an impaired or insolvent insurer under ORS 734.750 to 734.890, whichever occurs first, a rate of interest determined by subtracting four percentage points from Moody’s Corporate Bond Yield Average averaged for that same four-year period or for a lesser period if the policy or contract was issued less than four years before the member insurer becomes either an impaired or insolvent insurer under ORS 734.750 to 734.890, whichever occurred first; and (B) Exceeds, on and after the date on which the member insurer becomes either an impaired or insolvent insurer under ORS 734.750 to 734.890, whichever occurs first, the rate of interest determined by subtracting three percentage points from Moody’s Corporate Bond Yield Average as most recently available. (f) Any portion of a policy or contract issued to a plan or program of an employer, association or similar entity to provide life insurance health insurance or annuity benefits to its employees or members to the extent that the plan or program is self-funded or uninsured, including benefits payable by an employer, association or similar entity under any of the following: (A) A multiple employer welfare arrangement as defined in section 3(40)(29 U.S.C. 1002(40)) of the Employee Retirement Income Security Act of 1974, as amended. (B) A minimum premium group insurance plan. (C) A stop-loss group insurance plan. (D) An administrative services only contract. (g) Any portion of a policy or contract to the extent that it provides dividends or experience rating credits or voting rights, or provides that any fees or allowances be paid to any person, including the policyholder or contract owner, in connection with the service to or administration of the policy or contract. (h) Any policy or contract issued in this state by a member insurer at a time that it the insurer did not have a certificate of authority to issue the policy or contract in this state. (i) Any unallocated annuity contract issued to or in connection with an employee benefit plan protected under the federal Pension Benefit Guaranty Corporation , regardless of whether the federal Pension Benefit Guaranty Corporation has yet become liable to make any payments with respect to the benefit plan. (j) Any portion of any unallocated annuity contract that is not issued to or in connection with a government retirement plan referred to in subsection (1) of this section, or a government lottery. (k) Any coverage issued by the Oregon Medical Insurance Pool. (l) Any portion of a policy or contract to the extent that the assessments required by ORS 734.815 with respect to the policy or contract are preempted by federal or state law. (m) An obligation that does not arise under the express written terms of the policy or contract issued by the insurer to the policyholder or contract owner, including but not limited to: (A) Claims based on marketing materials; (B) Claims based on side letters, riders or other documents that were issued by the insurer without meeting applicable policy or contract form filing or approval requirements; (C) Misrepresentations of, or regarding, policy or contract benefits; (D) Extracontractual claims, including but not limited to claims related to bad faith in the payment of claims, punitive or exemplary damages or attorney fees or costs; or (E) A claim for penalties or consequential or incidental damages. (n) A contractual agreement that establishes the member insurer’s obligations 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 that in either case is not an affiliate of the member insurer. (o) Any portion of a policy or contract to the extent that portion 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 the changes in value have not been credited to the policy or contract, or as to which the policyholder’s or contract owner’s rights are subject to forfeiture, as of the date on which the member insurer becomes either an impaired or insolvent insurer, whichever occurs first. If the interest or changes in value in a policy or contract are credited less frequently than annually, for purposes of determining the values that have been credited and are not subject to forfeiture under this paragraph, the interest or change in value that is determined by using the procedures specified in the policy or contract shall be credited as if the contractual date of crediting interest or changing value was the date of the impairment or insolvency, whichever is earlier, and may not be subject to forfeiture. (p) Any policy or contract providing any hospital, medical, prescription drug or other health care benefits under Part C or Part D of subchapter XVIII, chapter 7, Title 42 of the United States Code, or any regulations issued under those provisions. Amended effective 5/27/2011.

Non-Resident Coverage

§734.790(1)(b). Yes. Covers nonresidents only if the following conditions are met: (A) The insurer that issued the policy or contract must be a member insurer. (B) The state in which the person resides must have an association similar to the Oregon Life and Health Insurance Guaranty Association. (C) The person must not be eligible for coverage by an association in the state in which the person resides, as described in subparagraph (B) of this paragraph , due to the fact that the insurer was not authorized to transact insurance or licensed in that state at the time specified in the state’s guaranty association law. Amended effective 5/27/2011.

Definition Of Premium

§ 734.760(10) “Premiums” means direct gross insurance, including annuity, premiums written on covered policies, less return premiums thereon and dividends paid or credited to policyholders on such direct business. “Premiums” does not include premiums on contracts between insurers and reinsurers or any premiums on policies or contracts excluded under ORS 734.790.

Interest Rate Adjustments

§734.790(3)(e) Guaranty Association excludes from coverage: Any portion of a policy or contract to the extent that the interest rate on which the policy or contract is based , or to the extent that the interest rate, crediting rate or similar factor determined by use of an index or other external reference stated in the policy or contract for the purpose of calculating returns or changes in value: (A) Exceeds, when averaged over the period of four years prior to the date on which the member insurer becomes either an impaired or insolvent insurer under ORS 734.750 to 734.890, whichever occurs first, a rate of interest determined by subtracting four percentage points from Moody’s Corporate Bond Yield Average averaged for that same four-year period or for a lesser period if the policy or contract was issued less than four years before the member insurer becomes either an impaired or insolvent insurer under ORS 734.750 to 734.890, whichever occurred first; and (B) Exceeds, on and after the date on which the member insurer becomes either an impaired or insolvent insurer under ORS 734.750 to 734.890, whichever occurs first, the rate of interest determined by subtracting three percentage points from Moody’s Corporate Bond Yield Average as most recently available. Amended effective 5/27/2011.

Tax Offsets

§734.835(1). Yes. Up to 20% of assessment amount may be offset for next 5 years; covers all but administrative expenses. **NOTE** In 2015, Oregon legislature passed bill extending sunset provision for the tax offset to 1.1.2022.

Triggers

Discretionary Triggers

§734.810(1) If a domestic member insurer is an impaired insurer. Amended effective 5/27/2011.

Mandatory Triggers

§734.810(2) If a member insurer is an insolvent insurer.

Foreign Triggers

No separate provision.

“Impaired Insurer”

§734.760(6) “Impaired insurer” means a member insurer that is subject to an order of rehabilitation under ORS 734.063 or an order of conservation under ORS 734.200 after September 13, 1975. “Impaired insurer” does not include an insolvent insurer. Amended effective 5/27/2011.

“Insolvent Insurer”

§734.760(7) “Insolvent insurer” means a member insurer that, after September 13, 1975, is placed under an order of liquidation by a court of competent jurisdiction with a finding of insolvency. Amended effective 5/27/2011.

“Member Insurer”

§ 734.760(9)(a) “Member insurer” means any insurer currently authorized to transact in this state any kind of insurance to which ORS 734.750 to 734.890 apply , regardless of whether the insurer’s authorization to transact insurance was, in the past, suspended, revoked, not renewed or voluntarily withdrawn. (b) “Member insurer” does not include: (A) A hospital or medical service organization, whether for-profit or nonprofit; (B) A health maintenance organization; (C) A fraternal benefit society; (D) A mandatory state pooling plan; (E) A mutual assessment company or other person that operates on an assessment basis; (F) An insurance exchange; or (G) An organization that has a certificate of authority limited to the issuance of charitable gift annuities under ORS 731.038. Amended effective 5/27/2011.

Oklahoma

Account Structure

§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.

Advertising Prohibition

§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.

Assessments

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.

Benefit Limits

§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

Coverages

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;

Definition Of Premium

§ 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;

Interest Rate Adjustments

§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,

Tax Offsets

§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.

Triggers

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;

Ohio

Account Structure

§3956.06(A). Two accounts: (1)life insurance and annuity which includes sub accounts: (a)life insurance (b)annuity (c)unallocated annuity (includes I.R.C. § 403(b) annuities); and (2) health account.

Advertising Prohibition

§3956.18 “Use of existence of association to sell insurance prohibited…” (A)(1) No person shall make, publish, disseminate, circulate, or place before the public, or cause 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 or television station, or in any other manner, any advertisement, announcement, or statement, written or oral, that uses the existence of the Ohio life and health insurance guaranty association for the purposes of sales, solicitation, or inducement to purchase any form of insurance covered by this chapter. (2) As used in division (A)(1) of this §, “person” includes but is not limited to any insurer or any agent or affiliate of any insurer. (3) Division (A)(1) of this § does not apply to the association or any other entity that does not sell or solicit insurance.

Assessments

Assessment Limits

§3956.09(E)(1). Two percent (2%) of the average premiums in state for policies covered by the account during the three calendar years preceeding the impairment or insolvency.

Assessment Classes

§3956.09(B). Two classes of assessments: Class A for administrative and legal costs, other expenses and examinations; and Class B to carry out the powers and duties of the association with regard to an impaired or insolvent insurer. The amount of any class A assessment shall be determined by the board and may be authorized and called on a pro rata or non-pro rata basis. If pro rata, the board may provide that it be credited against future class B assessments. The amount of any class B assessment, except for assessments related to long-term care insurance, shall be allocated for assessment purposes between the accounts and among the subaccounts of the life insurance and annuity account pursuant to an allocation formula which may be based on the premiums or reserves of the impaired or insolvent insurer or on any other standard considered by the board in its sole discretion as being fair and reasonable under the circumstances. The amount of the class B assessments for long-term care insurance written by the impaired or insolvent insurer shall be allocated according to a methodology included in the plan of operation and approved by the superintendent of insurance. The methodology shall provide for fifty percent of the assessment to be allocated to sickness and accident and health member insurers and fifty percent to be allocated to life and annuity member insurers.

Benefit Limits

§3956.04(D) The benefits for which the association may become liable shall not exceed the lesser of either of the following: (1) The contractual obligations for which the insurer is liable or would have been liable if it were not an impaired or insolvent insurer; (2) (a) With respect to any one life, regardless of the number of policies or contracts: (i) Three hundred thousand dollars in life insurance death benefits, but not more than one hundred thousand dollars in net cash surrender and net cash withdrawal values for life insurance; (ii) One hundred thousand dollars in health insurance benefits other than basic hospital, medical, and surgical insurance, major medical insurance, disability insurance, or long-term care insurance, including any net cash surrender and net cash withdrawal values; (iii) Three hundred thousand dollars in disability insurance; (iv) Three hundred thousand dollars in long-term care insurance; (v) Five hundred thousand dollars for health benefit plan coverage; (vi) Two hundred fifty thousand dollars in the present value of annuity benefits, including net cash surrender and net cash withdrawal values. (b) With respect to each individual participating in a governmental retirement plan established under section 401, 403(b), or 457 of the “Internal Revenue Code of 1986,” 100 Stat. 2085, 26 U.S.C.A. 1, as amended, and covered by an unallocated annuity contract, or the beneficiaries of each such individual if deceased, in the aggregate, two hundred fifty thousand dollars in present value annuity benefits, including net cash surrender and net cash withdrawal values. The association is not liable to expend more than three hundred thousand dollars in the aggregate with respect to any one individual under divisions (C)(2)(a), (b), and (d) of this section combined, except with respect to benefits for basic hospital, medical, and surgical insurance and major medical insurance under division (C)(2)(a)(v) of this section, in which case the aggregate liability of the association shall not exceed five hundred thousand dollars with respect to any one individual. (c) With respect to any one contract holder, covered by any unallocated annuity contract not included in division (C)(2)(b) of this section, one million dollars in benefits, irrespective of the number of those contracts held by that contract holder. (d) With respect to each payee of a structured settlement annuity, or the beneficiary or beneficiaries of the payee if the payee is deceased, two hundred fifty thousand dollars in present value of annuity benefits, in the aggregate, including net cash surrender and net cash withdrawal values, if any. (Amended effective 12.22.2015)

Coverages

Covered Contracts

§3956.04.(B)(1). This chapter provides coverage, by the Ohio life and health insurance guaranty association, for the policies and contracts specified in division (C) of this section to all of the following persons: (1) Persons, regardless of where they reside, except for nonresident certificate holders or enrollees under group policies or contracts, who are the beneficiaries, assignees, or payees, including health care providers rendering services covered under health insurance policies or certificates, of the persons covered under division (A)(2) of this section; (2) Persons who are owners of or certificate holders or enrollees under the policies or contracts other than structured settlement annuities and unallocated annuity contracts if either of the following applies: (a) The persons are residents of this state. (b) The persons are not residents of this state and all of the following conditions apply: (i) The member insurer that issued the policies or contracts is domiciled in this state;. (ii) The persons are not eligible for coverage by an association in any other state due to the fact that the insurer or health insuring corporation did not hold a license or certificate of authority in the states in which the persons reside at the time specified in the state’s guaranty association laws. (iii) The states have associations similar to the association created by section 3956.06 of the Revised Code. (3) Persons who are the owners of unallocated annuity contracts specified in division (C) of this section when those contracts meet either of the following criteria: (a) The contracts are issued to or in connection with a specific benefit plan whose plan sponsor has its principal place of business in this state. (b) The contracts are issued to or in connection with government lotteries if the owners are residents of this state. (4) Persons who are payees, or the beneficiary of a payee if the payee is deceased, under a structured settlement annuity if the payee is a resident of this state, regardless of where the contract owner resides; (5) Persons who are payees, or the beneficiary of a payee if the payee is deceased, under a structured settlement annuity if the payee is not a resident of this state, but both of the following are true: (a) The contract owner of the structured settlement annuity is a resident of this state or, if the contract owner of the structured settlement annuity is not a resident of this state, the insurer that issued the structured settlement annuity is domiciled in this state and the state in which the contract owner resides has an association similar to the association created by this chapter. (b) The payee, the beneficiary, and the contract owner are not eligible for coverage by the association of the state in which the payee or contract owner resides. This chapter is intended to provide coverage to a person who is a resident of this state and, in special circumstances, to a nonresident. To avoid duplicate coverage, if a person who would otherwise receive coverage under this chapter receives coverage under the laws of another state, the person shall not be provided coverage under this chapter. In determining the application of the provisions of this chapter in situations in which a person could be covered by the association of more than one state, whether as an owner, payee, enrollee, beneficiary, or assignee, this chapter shall be construed in conjunction with other state laws to result in coverage by only one association.

Non-Covered Contracts

§3956.04.(B) and (C). This chapter shall not provide coverage to any of the following: (1) A person who is a payee, or beneficiary, of a contract owner resident of this state, if the payee or beneficiary is afforded any coverage by the association of another state; (2) A person covered under division (A)(3) of this section, if any coverage is provided by the association of another state to the person; (3) A person who acquires rights to receive payments through a structured settlement factoring transaction as defined in 26 U.S.C. 5891(c)(3)(A), regardless of whether the transaction occurred before or after such section became effective. (C) (1) This chapter provides coverage to the persons specified in division (A) of this section for direct, nongroup life insurance, health insurance, which for the purposes of this chapter includes sickness and accident insurance policies and contracts, and health insuring corporation subscriber policies, contracts, certificates, and agreements, or annuities, for certificates under direct group policies and contracts, for supplemental contracts to any of the preceding, and for unallocated annuity contracts, in each case issued by member insurers, except as otherwise limited in this chapter. Annuity contracts and certificates under group annuity contracts include, but are not limited to, guaranteed investment contracts, deposit administration contracts, unallocated funding agreements, allocated funding agreements, structured settlement annuities, annuities issued to or in connection with government lotteries, and any immediate or deferred annuity contracts. (2) Except as provided in division (C)(3) of this section, this chapter does not provide coverage for any of the following: (a) Any portion of a policy or contract not guaranteed by the member insurer, or under which the risk is borne by the policy or contract holder; (b) Any policy or contract of reinsurance, unless assumption certificates have been issued pursuant to the reinsurance policy or contract; (c) Any 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: (i) Averaged over the period of four years prior to the date on which the association becomes obligated with respect to the policy or contract or if the policy or contract has been issued for a lesser period averaged over that period, exceeds the rate of interest determined by subtracting two percentage points from the monthly average-corporates as published by Moody’s investors service, inc., or any successor to that service, averaged for the same period; (ii) 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 percentage points from the monthly average-corporates as published by Moody’s investors service, inc., or any successor to that service, as most recently available. If the monthly average-corporates is no longer published, the superintendent, by rule, shall establish a substantially similar average. (d) Any plan or program of an employer, association, or similar entity to provide life, health, or annuity benefits to its employees or members 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 similar entity under any of the following: (i) A multiple employer welfare arrangement as defined in section 3(40) of the “Employee Retirement Income Security Act of 1974,” 88 Stat. 833, 29 U.S.C.A. 1002(40), as amended; (ii) A minimum premium group insurance plan; (iii) A stop-loss group insurance plan; (iv) An administrative services only contract. (e) Any portion of a policy or contract to the extent that it provides dividends, voting rights, or experience rating credits, or provides that any fees or allowances be paid to any person, including the policy or contract holder, in connection with the service to or administration of the policy or contract; (f) Any 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) Any unallocated annuity contract issued to an employee benefit plan protected under the federal pension benefit guaranty corporation, regardless of whether the federal pension benefit guaranty corporation has yet become liable to make any payments with respect to the benefit plan; (h) Any portion of any unallocated annuity contract that is not issued to or in connection with a governmental lottery or a benefit plan of a specific employee, union, or association of natural persons; (i) Any portion of a policy or contract to the extent that the assessments required by section 3956.09 of the Revised Code with respect to the policy or contract are preempted by federal or state law; (j) Any 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, contract owner, or policy owner, including all of the following: (i) Claims based on marketing materials; (ii) 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; (iii) Misrepresentations of or regarding policy or contract benefits; (iv) Extra-contractual claims; (v) A claim for penalties or consequential or incidental damages. (k) A contractual agreement that establishes the member insurer’s obligations 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; (l) Any policy or contract providing hospital, medical, prescription drug, or other health care benefits pursuant to 42 U.S.C. Chapter 7, Title XVIII, Parts C and D or 42 U.S.C. Chapter 7, Title XIX and any corresponding regulations; (m) Structured settlement annuity benefits to which a payee or the beneficiary of a payee, if the payee is deceased, has transferred his or her rights in a structured settlement factoring transaction as defined in 26 U.S.C. 5891(c)(3)(A), regardless of whether the transaction occurred before or after such section became effective; (n) (i) 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 this chapter, whichever is earlier. (ii) 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 division (C)(2)(n) of this section, 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. (3) The exclusion from coverage referenced in division (C)(2)(c) of this section shall not apply to any portion of a policy or contract, including a rider, that provides long-term care or any other health insurance benefits.

Non-Resident Coverage

§3956.04.(A)(2)(b). Yes. Covers nonresidents if all of the following conditions apply: (i) The insurers that issued the policies or contracts are domiciled in this state; (ii) At the time the policies or contracts were issued, the insurers did not hold a license or certificate of authority in the states in which the persons reside; (iii) The states have associations similar to the association created by section 3956.06 of the Revised Code;

Definition Of Premium

§ 3956.01 (K) “Premiums” means amounts received on covered policies or contracts, less premiums, considerations, and deposits returned on the policies or contracts, and less dividends and experience credits on the policies and contracts. “Premiums” does not include either of the following: (1) Any amounts in excess of one million dollars received on any unallocated annuity contract not issued under a governmental retirement plan established under Section 401, 403(b), or 457 of the “Internal Revenue Code of 1986,” 100 Stat. 2085, 26 U.S.C.A. 1, as amended; (2) Any amounts received for any policies or contracts or for the portions of any policies or contracts for which coverage is not provided under section 3956.04 of the Revised Code. Division (G)(2) of this section shall not be construed to require the exclusion, from assessable premiums, of premiums paid for coverages in excess of the interest limitations specified in division (B)(2)(c) of section 3956.04 of the Revised Code or of premiums paid for coverages in excess of the limitations with respect to any one individual, any one participant, or any one contract holder specified in division (C)(2) of section 3956.04 of the Revised Code.

Interest Rate Adjustments

§3956.04(C) Any 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: (i) Averaged over the period of four years prior to the date on which the association becomes obligated with respect to the policy or contract or if the policy or contract has been issued for a lesser period averaged over that period, exceeds the rate of interest determined by subtracting two percentage points from the monthly average-corporates as published by Moody’s investors service, inc., or any successor to that service, averaged for the same period; (ii) 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 percentage points from the monthly average-corporates as published by Moody’s investors service, inc., or any successor to that service, as most recently available. If the monthly average-corporates is no longer published, the superintendent, by rule, shall establish a substantially similar average.

Tax Offsets

§3956.20. Yes. A member insurer may offset against its premium or franchise tax liability twenty percent of the assessment in each of the five calendar years following the fiscal biennium in which the assessment was paid. The offsets shall be allowed on a year-per-year basis commencing with the first tax payment due after the fiscal biennium in which the assessment was paid. If the aggregate total of the assessments eligible for offset in a particular year exceeds a member insurer’s tax liability to this state for such year, the aggregate total of the remaining eligible assessments, notwithstanding the five-year limitation may be offset against such tax liability in future years. If a member insurer ceases doing business, all uncredited assessments may be credited against its premium or franchise tax liability for the year it ceases doing business. The Ohio life and health insurance guaranty association may require a member insurer to report any offset to the association. A member insurer that is exempt from taxes may recoup its assessments by a surcharge on its premiums in a sum reasonably calculated to recoup the assessments over a reasonable period of time, as approved by the superintendent. Amounts recouped shall not be considered premiums for any other purpose, including the computation of gross premium tax, the medical loss ratio, or agent commission. If a member insurer collects excess surcharges, the member insurer shall remit the excess amount to the association, and the excess amount shall be applied to reduce future assessments in the appropriate account.

Triggers

Discretionary Triggers

§3956.08(A). When a domestic insurer is impaired.

Mandatory Triggers

§3956.08(B). When a member insurer is insolvent.

Foreign Triggers

No provision.

“Impaired Insurer”

§3956.01(G). “Impaired insurer” means a member insurer that, after November 20, 1989, is not an insolvent insurer and is placed under an order of rehabilitation or conservation by a court of competent jurisdiction. (Amended effective 12.22.2015)

“Insolvent Insurer”

§3956.01(H). “Insolvent insurer” means a member insurer that, after November 20, 1989, is placed under an order of liquidation by a court of competent jurisdiction with a finding of insolvency.

“Member Insurer”

§3956.01(I) (1) “Member insurer” means any insurer or health insuring corporation that holds a certificate of authority or is licensed to transact in this state any kind of insurance or health insuring corporation business for which coverage is provided under section 3956.04 of the Revised Code, and includes any insurer or health insuring corporation whose certificate of authority or license in this state may have been suspended, revoked, not renewed, or voluntarily withdrawn after November 20, 1989. (2) “Member insurer” does not include any of the following: (a) A fraternal benefit society; (b) A self-insurance or joint self-insurance pool or plan of the state or any political subdivision of the state; (c) A mutual protective association; (d) An insurance exchange; (e) Any person who qualifies as a “member insurer” under section 3955.01 of the Revised Code and who does not receive premiums on covered policies or contracts; (f) Any entity similar to any of those described in divisions (I)(2)(a) to (e) of this section. (3) “Member insurer” includes any insurer or health insuring corporation that operates any of the entities described in division (I)(2) of this section as a line of business, and not as a separate, affiliated legal entity, and otherwise qualifies as a member insurer.

NorthDakota

Account Structure

§26.1-38.1-03.1. For purposes of administration and assessment, the association shall maintain two accounts: a. The life insurance and annuity account that includes the following subaccounts: (1) Life insurance account; (2) Annuity account, which includes annuity contracts owned by a governmental retirement plan or its trustee established under section 401, 403(b), or 457 of the United States Internal Revenue Code, but otherwise excludes unallocated annuities; and (3) Unallocated annuity account that excludes contracts owned by a governmental retirement benefit plan or its trustee established under section 401, 403(b), or 457 of the United States Internal Revenue Code. b. The health account.

Advertising Prohibition

§26.1-38.1-16 “Prohibited advertisement of Insurance Guaranty Association Act in insurance sales — Notice to policy owners” 1. No person, including a member insurer, insurance producer, or affiliate of a member insurer, may 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, written or oral, which uses the existence of the 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 chapter 26.1-38.1. However, this section does not apply to the North Dakota life and health insurance guaranty association or any other entity that does not sell or solicit insurance or coverage by a health maintenance organization.

Assessments

Assessment Limits

§26.1-38.1-06.9.a. Subject to subdivision b, the total of all assessments authorized by the association with respect to a member insurer for each subaccount of the life insurance and annuity account and for the health account may not in any one calendar year exceed two percent of that member insurer’s average annual premiums received in this state on the policies and contracts covered by the subaccount or account during the three calendar years preceding the year in which the member insurer became an impaired or insolvent insurer.

Assessment Classes

§26.1-38.1-06.2. There must be two classes of assessment, as follows: a. Class A assessments must be authorized and called 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 or insolvent insurer. b. Class B assessments must be authorized and called to the extent necessary to carry out the powers and duties of the association under section 26.1-38.1-05 with regard to an impaired or insolvent insurer.

Benefit Limits

§26.1-38.1-01.4. The benefits that the association may become obligated to cover may in no event exceed the lesser of: a. 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 b. (1) With any respect to one life, regardless of the number of policies, or contracts: (a) Three hundred thousand dollars in life insurance death benefits, but not more than one hundred thousand dollars in net cash surrender and net cash withdrawal values for life insurance; (b) For health insurance benefits: [1] One hundred thousand dollars for coverages not defined as disability income insurance or health benefit plans or long-term care insurance, including any net cash surrender and net cash withdrawal values. [2] Three hundred thousand dollars for disability income insurance, and three hundred thousand dollars for long-term care insurance. [3] Five hundred thousand dollars for health benefit plans. (c) Two hundred fifty thousand dollars in the present value of annuity benefits, including net cash surrender and net cash withdrawal values. (2) With respect to each individual participating in a government retirement benefit plan established under section 401(k), 403(b), or 457 of the United States Internal Revenue Code covered by an unallocated annuity contract or the beneficiaries of each such individual if deceased, in the aggregate, two hundred fifty thousand dollars in present value annuity benefits, including net cash surrender and net cash withdrawal values. (3) With respect to each payee of a structured settlement annuity or beneficiary, or beneficiaries of the payee if deceased, two hundred fifty thousand dollars in present value annuity benefits, in the aggregate, including net cash surrender and net cash withdrawal values, if any. (4) However, in no event shall the association be obligated to cover more than: (a) An aggregate of three hundred thousand dollars in benefits with respect to any one life under paragraphs 1, 2, and 3 of subdivision b except with respect to the benefits for health benefit plans under subparagraph b of paragraph 1 of subdivision b, in which case the aggregate liability of the association shall not exceed five hundred thousand dollars with respect to any one individual; or (b) With respect to one owner of multiple nongroup policies of life insurance, whether the persons insured are officers, managers, employees, or other persons, more than five million dollars in benefits, regardless of the number of policies and contracts held by the owner. (5) With respect to either one contract owner provided coverage under paragraph 2 of subdivision c of subsection 1; or one plan sponsor whose plans own directly or in trust one or more unallocated annuity contracts not included in paragraph 2 of subdivision b, five million dollars in benefits, irrespective of the number of contracts with respect to the contract owner or plan sponsor. However, in the case in which one or more unallocated annuity contracts are covered contracts under this chapter and are owned by a trust or other entity for the benefit of two or more plan sponsors, coverage must be afforded by the association if the largest interest in the trust or entity owning the contract or contracts is held by a plan sponsor whose principal place of business is in this state and in no event is the association obligated to cover more than five million dollars in benefits with respect to all these unallocated contracts.

Coverages

Covered Contracts

§26.1-38.1-01.2. This chapter provides coverage to the persons specified in subsection 1 for policies or contracts of direct, nongroup life insurance, health insurance, which for the purposes of this chapter includes health maintenance organization subscriber contracts and certificates, or annuities, and supplemental contracts to any of these, for certificates under direct group policies and contracts, and supplemental contracts to any of these and for unallocated annuity contracts issued by member insurers, except as limited by this chapter. Annuity contracts and certificates under group annuity contracts include guaranteed investment contracts, deposit administration contracts, unallocated funding agreements, allocated funding agreements, structured settlement annuities, annuities issued to or in connection with government lotteries, and any immediate or deferred annuity contracts.

Non-Covered Contracts

§26.1-38.1-01.3. Except for the portion of a policy or contract, including a rider, which provides long-term care or any other health insurance benefits, this chapter does not provide coverage for: a. Any portion of a policy or contract not guaranteed by the member insurer, or under which the risk is borne by the policy owner or contract owner; b. Any policy or contract of reinsurance, unless assumption certificates have been issued pursuant to the reinsurance policy or contract; c. Any portion of a policy or contract to the extent that the rate of interest on which the portion of the policy or contract is based or to the extent that the rate of interest, crediting of a rate of interest, or similar factor determined by using an index or other external reference stated in the policy or contract which is employed in calculating returns or changes in value: (1) Averaged over the period of four years prior to the date on which the member insurer becomes an impaired or insolvent insurer under this chapter, whichever is earlier, exceeds a rate of interest determined by subtracting two 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 years prior to the date on which the member insurer becomes an impaired or insolvent insurer under this chapter, whichever is earlier; and (2) On and after the date on which the member insurer becomes an impaired or insolvent insurer under this chapter, whichever is earlier, exceeds the rate of interest determined by subtracting three 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 such plan or program is self-funded or uninsured, including benefits payable by an employer, association, or other person under: (1) A multiple employer welfare arrangement as defined in section 1144 of title 29 of the United States Code; (2) A minimum premium group insurance plan; (3) A stop-loss group insurance plan; or (4) An administrative services only contract; e. Any portion of a policy or contract to the extent that it provides for dividends or experience rating credits, voting rights, or payment of any fees or allowances to any person, including the policy owner or contract owner, in connection with the service to or administration of the policy or contract; f. Any 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. Any unallocated annuity contract issued to or in connection with a benefit plan protected under the federal pension benefit guaranty corporation regardless of whether the federal pension benefit guaranty corporation has yet become liable to make any payments with respect to the benefit plan; h. Any portion of any unallocated annuity contract which is not issued to, or in connection with, a specific employee, union, or association of natural persons benefit plan or a government lottery; i. A portion of a policy or contract to the extent that the assessments required by section 26.1-38.1-06 with respect to the policy or contract are preempted or otherwise not permitted by federal or state law; j. 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, contract owner or policy owner, including: (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) Extracontractual claims; or (5) A claim for penalties or consequential or incidental damages; k. A contractual agreement that establishes the member insurer’s obligations 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; l. 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 has not been credited to the policy or contract, or as to which the policy owner’s or contract owner’s rights are subject to forfeiture, as of the date the member insurer becomes an impaired or insolvent insurer under this chapter, 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 subdivision, the interest or changes 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 is not subject to forfeiture; m. 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 of chapter 7 of title 42 of the United States Code, commonly known as Medicare part C and part D, or subchapter XIX of chapter 7 of title 42 of the United States Code; commonly known as Medicaid, or any regulations issued pursuant thereto; and n. Structured settlement annuity benefits to which a payee or beneficiary has transferred the payee’s or beneficiary’s rights in a structured settlement factoring transactions, as defined in section 5891(c)(3)(A) of title 26 of the United States Code, regardless of whether the transaction occurred before or after this federal law became effective.

Non-Resident Coverage

§26.1-38.1-01.1.b(2). Yes. Covers nonresidents, but only under all of the following conditions: (a) The member insurer that issued such policies or contracts is domiciled in this state; (b) The states in which the persons reside have associations similar to the association created under this chapter; and (c) The persons are not eligible for coverage by an association in any other state because the insurer or the health maintenance organization was not licensed in the state at the time specified in the state’s guaranty association law.

Definition Of Premium

§ 26.1-38.1-02 18. “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” do not include any amounts or considerations received for any policies or contracts or for the portions of any policies or contracts for which coverage is not provided under subsections 2 and 3 of section 26.1-38.1-01 and except that assessable premium shall not be reduced on account of subdivision c of subsection 3 of section 26.1-38.1-01, relating to interest limitations, and subsection 3 of section 26.1-38.1-01, relating to limitations with respect to any one individual, any one participant, and any one policy or contract owner. “Premiums” do not include: a. Premiums in excess of five million dollars on any unallocated annuity contract not issued under a governmental retirement plan established under section 401(k), 403(b), or 457 of the United States Internal Revenue Code; or b. With respect to multiple nongroup 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, premiums in excess of five million dollars with respect to these policies or contracts, regardless of the number of policies or contracts held by the owner.

Interest Rate Adjustments

§26.1-38.1-01.3.c. Guaranty Association excludes from coverage: Any portion of a policy or contract to the extent that the rate of interest on which the portion of the policy or contract is based or to the extent that the rate of interest, crediting of a rate of interest, or similar factor determined by using an index or other external reference stated in the policy or contract which is employed in calculating returns or changes in value: (1) Averaged over the period of four years prior to the date on which the member insurer becomes an impaired or insolvent insurer under this chapter, whichever is earlier, exceeds a rate of interest determined by subtracting two 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 years prior to the date on which the member insurer becomes an impaired or insolvent insurer under this chapter, whichever is earlier; and (2) On and after the date on which the member insurer becomes an impaired or insolvent insurer under this chapter, whichever is earlier, exceeds the rate of interest determined by subtracting three percentage points from Moody’s corporate bond yield average as most recently available;

Tax Offsets

§26.1-38.1-10. Yes. Up to 20% of assessment amount may be offset for next 5 years.

Triggers

Discretionary Triggers

§26.1-38.1-05.1. When a member insurer is impaired.

Mandatory Triggers

§26.1-38.1-05.2. When a member insurer is insolvent. Amended effective 8/1/99.

Foreign Triggers

No separate provision.

“Impaired Insurer”

§26.1-38.1-02.11. “Impaired insurer” means a member insurer that, after July 1, 1989, is not an insolvent insurer, and is placed under an order of rehabilitation or conservation by a court of competent jurisdiction.

“Insolvent Insurer”

§26.1-38.1-02.12. “Insolvent insurer” means a member insurer which, after July 1, 1989, is placed under an order of liquidation by a court of competent jurisdiction with a finding of insolvency.

“Member Insurer”

§26.1-38.1-02.13. “Member insurer” means any insurer or health maintenance organization licensed or which 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 26.1-38.1-01. The term 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 26.1-34.1-01 through 26.1-34.1-07; or f. Any entity similar to any of the above.

NorthCarolina

Account Structure

§58-62-26(a). For purposes of administration and assessment, the Association shall maintain two accounts: (1) The life insurance and annuity account, which includes the following subaccounts: a. Life insurance account. b. Annuity account, which shall include annuity contracts owned by a governmental retirement plan or its trustee established under Section 401, 403(b), or 457 of the United States Internal Revenue Code 1954, but shall otherwise exclude unallocated annuities. c. Unallocated annuity account, which shall exclude contracts owned by a governmental retirement benefit plan or its trustee established under Section 401, 403(b), or 457 of the United States Internal Revenue Code 1954. (2) The health account.

Advertising Prohibition

§58-62-86 “Prohibited advertisement of Article in insurance sales; notice to policyholders” (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 oral or written advertisement, announcement, or statement that uses the existence of the Association or this Article for the purpose of sale or solicitation of or inducement to purchase any kind of insurance or other coverage covered by this Article. However, this subsection does not apply to the Association or any other person who does not sell or solicit insurance or coverage by a health maintenance organization.

Assessments

Assessment Limits

§58-62-41(g). The total of all assessments authorized by the Association upon a member insurer for each subaccount of the life insurance and annuity account and for the health account shall not in any one calendar year exceed two percent (2%) of the member insurer’s average annual premiums received in this State on the policies and contracts covered by the subaccount or account during the three calendar years preceding the year in which the member insurer became a delinquent insurer. If two or more assessments are authorized in one calendar year with respect to member insurers that become impaired or insolvent in different calendar years, the average annual premiums for purposes of the aggregate assessment percentage limitation shall be equal and limited to the higher of the three-year average annual premiums for the applicable subaccount or account as calculated pursuant to this subsection. If the maximum assessment, together with the other assets of the Association in any account, does not provide in any one year in either account an amount sufficient to carry out the Association’s responsibilities, the necessary additional funds shall be assessed as soon thereafter as permitted by this Article.

Assessment Classes

§58-62-41(b). There shall be two classes of assessments, as follows: (1) Class A assessments shall be authorized and called 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 delinquent insurer. (2) Class B assessments shall be authorized and called to the extent necessary to carry out the powers and duties of the Association under G.S. 58-62-36 with regard to a delinquent insurer.

Benefit Limits

§58-62-21(d). The benefits for which the Association is liable do not, in any 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 a delinquent insurer. (2) With respect to any one life, regardless of the number of policies or contracts, three hundred thousand dollars ($ 300,000) for all benefits, including cash values. (2a) With respect to health insurance benefits for any one life, regardless of the number of policies: a. Three hundred thousand dollars ($ 300,000) for coverages not defined as health benefit plans. b. Five hundred thousand dollars ($ 500,000) for health benefit plans. (3) With respect to each individual participating in a governmental retirement plan established under section 401, 403(b), or 457 of the Internal Revenue Code covered by an unallocated annuity contract, or the beneficiaries of each individual if deceased, in the aggregate, three hundred thousand dollars ($ 300,000) in present value annuity benefits, including net cash surrender and net cash withdrawal values; or (4) With respect to any one contract holder covered by any unallocated annuity contract not included in subdivision (3) of this subsection, five million dollars ($ 5,000,000) in benefits, regardless of the number of such contracts held by that contract holder; or (5) With respect to any one payee (or beneficiaries of one payee if the payee is deceased) of a structured settlement annuity, one million dollars ($ 1,000,000) for all benefits, including cash values. (6) However, in no event shall the Association be obligated to cover more than (i) an aggregate of three hundred thousand dollars ($ 300,000) in benefits with respect to any one life under subdivisions (2) and (3) and sub-subdivision (2a)a. except with respect to benefits for health benefit plans under sub-subdivision (2a)b. of this subsection, in which case the aggregate liability of the Association shall not exceed five hundred thousand dollars ($ 500,000) with respect to any one life.

Coverages

Covered Contracts

§58-62-21(b). This Article provides coverage to the persons specified in subsection (a) of this section for policies or contracts of direct, nongroup life insurance, health insurance, or annuities, and supplemental contracts to any of these, for certificates under direct group policies and contracts, and for unallocated annuity contracts issued by member insurers, except as limited by this Article. Annuity contracts and certificates under group annuity contracts include, but are not limited to, guaranteed investment contracts, deposit administration contracts, unallocated funding agreements, allocated funding agreements, structured settlement annuities, annuities issued in connection with government lotteries, and any immediate or deferred annuity contracts.

Non-Covered Contracts

§58-62-21(c)Except as provided for in subsection (c1) of this section, this Article does not provide coverage for any of the following: (1) Any part of a policy or contract not guaranteed by the member insurer, or under which the risk is borne by the policy or contract owner. (2) Any policy or contract of reinsurance, unless assumption certificates have been issued pursuant to the reinsurance policy or contract. (3) Any part 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 the use of an index or other external reference stated in the policy or contract employed in calculating returns or changes in value: a. Averaged over the period of four years before the date on which the member insurer becomes an impaired or insolvent insurer under this Article, whichever is earlier, exceeds the rate of interest determined by subtracting two percentage points from Moody’s Corporate Bond Yield Average averaged for that same four-year period or for a lesser period if the policy or contract was issued less than four years before the member insurer becomes an impaired or insolvent insurer under this Article, whichever is earlier; and b. On and after the date on which the member insurer becomes an impaired or insolvent insurer under this Article, whichever is earlier, exceeds the rate of interest determined by subtracting three percentage points from Moody’s Corporate Bond Yield Average as most recently available. (4) Any 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 entity under any of the following: a. A multiple employer welfare arrangement as defined in 29 U.S.C. § 1002(40). b. A minimum premium group insurance plan. c. A stop-loss group insurance plan. d. An administrative services only contract. (5) Any part of a policy or contract to the extent that it provides dividends or experience-rating credits, voting rights, or provides that any fees or allowances be paid to any person, including the policy or contract owner, in connection with the service to or administration of the policy or contract. (6) Any policy or contract issued in this State by a member insurer at a time when it was not licensed to issue the policy or contract in this State. (7) Any unallocated annuity contract issued to, or in connection with, a benefit plan protected under the federal Pension Benefit Guaranty Corporation, regardless of whether the federal Pension Benefit Guaranty Corporation has yet become liable to make any payments with respect to the benefit plan. (8) Any part of any unallocated annuity contract that is not issued to or in connection with a specific employee, union, or association of natural persons benefit plan or a government lottery. (8a) Any part of a policy or contract to the extent that the assessments required by G.S. 58-62-41 with respect to the policy or contract are preempted by federal or state law. (8b) 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, contract owner, or policy owner, including, without limitation: a. Claims based on marketing materials. b. 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. c. Misrepresentations of or regarding policy or contract benefits. d. Extra-contractual claims. e. A claim for penalties or consequential or incidental damages. (8c) A contractual agreement that establishes the member insurer’s obligations 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. (9) 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 Parts C & D, Subchapter XIX, Chapter 7 of Title 42 of the United States Code, commonly referred to as Medicaid, or any regulations issued pursuant thereto. (10) 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 this Article, 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 subdivision, 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. (11) A policy or contract providing any hospital, medical, prescription drug, or other health care benefits under the State’s Medicaid program or NC Health Choice program. (12) Structured settlement annuity benefits to which a payee or beneficiary has transferred his or her rights in a structured settlement factoring transaction as defined in 26 U.S.C. § 5891(c)(3)(A), regardless of whether the transaction occurred before or after such section became effective.

Non-Resident Coverage

§58-62-21(a)(2). Yes. Covers persons who are not residents of North Carolina, but only under all of the following conditions: (i) the member insurer that issued the policies or contracts is domiciled in this State; (ii) the states in which the persons reside have associations similar to the association created by this Article; and (iii) the persons are not eligible for coverage by an association in any other state due to the fact that the insurer or the health maintenance organization was not licensed in the state at the time specified in the state’s guaranty association law.

Definition Of Premium

§ 58-62-16 (16) “Premiums” means amounts or considerations received on covered policies or contracts less returned premiums, considerations, and deposits, and less dividends and experience credits. “Premiums” does not include any amounts or considerations received for any policies, contracts, or portions of policies or contracts for which coverage is not provided under G.S. 58-62-21(b); except that assessable premium shall not be reduced on account of G.S. 58-62-21(c)(3) relating to interest limitations and G.S. 58-62-21(d)(2) relating to limitations with respect to any one individual, any one participant, and any one policy or contract owner. Premiums shall not include premiums in excess of five million dollars ($ 5,000,000) on an unallocated annuity contract not issued under a governmental retirement benefit plan or its trustee established under Section 401, 403(b), or 457 of the United States Internal Revenue Code of 1954, or with respect to multiple nongroup 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, premiums in excess of five million dollars ($ 5,000,000) with respect to these policies or contracts, regardless of the number of policies or contracts held by the owner.

Interest Rate Adjustments

§58-62-21(c)(3). Guaranty Association excludes from coverage: Any part of a policy to the extent that the rate of interest on which it is based, or the interest rate, crediting rate, or similar factor determined by the use of an index or other external reference stated in the policy or contract and employed in calculating returns or changes in value: a. Averaged over the period of four years before the date on which the Association becomes obligated with respect to the policy, exceeds a rate of interest determined by subtracting two percentage points from Moody’s Corporate Bond Yield Average averaged for that same four-year period or for a lesser period if the policy was issued less than four years before the Association became obligated; and b. On and after the date on which the Association becomes obligated with respect to the policy, exceeds the rate of interest determined by subtracting three percentage points from Moody’s Corporate Bond Yield Average as most recently available. (Amended effective 7/1/2013)

Tax Offsets

§105-228.5A. Yes. Up to 20% of assessment amount may be offset for next 5 years; covers all but administrative expenses.

Triggers

Discretionary Triggers

§58-62-36(a). If a member insurer is an impaired insurer

Mandatory Triggers

§58-62-36(d). If a member insurer is an insolvent insurer

Foreign Triggers

No Separate provision

“Impaired Insurer”

§58-62-16(8). A member insurer which is not an insolvent insurer, and (i) is deemed by the commissioner to be potentially unable to fulfill its contractual obligations or (ii) is placed under an order of rehabilitation or conservation by a court of competent jurisdiction.

“Insolvent Insurer”

§58-62-16(9). A member insurer which is placed under an order of liquidation with a finding of insolvency by a court of competent jurisdication.

“Member Insurer”

§58-62-16(11). “Member insurer” means any insurer, health maintenance organization that is governed by Article 67 of this Chapter, and any hospital or medical service corporation that is governed by Article 65 of this Chapter and that is licensed or that holds a license to transact in this State any kind of insurance or health maintenance organization business for which coverage is provided under G.S. 58-62-21; and includes any insurer or health maintenance organization whose license in this State may have been suspended, revoked, not renewed or voluntarily withdrawn, but does not include a fraternal order or fraternal benefit society; mandatory State pooling plan; mutual assessment company or any entity that operates on an assessment basis; insurance exchange; or any entity similar to any of the foregoing.

NewYork

Account Structure

§7706(a). Two accounts: (1) health, and (2) life, annuity and funding agreements.

Advertising Prohibition

§ 7718 “Prohibited advertisement of the corporation in sale of insurance” No person, including an insurer, agent or affiliate of an insurer and no broker 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 corporation for the purpose of sales, solicitation or inducement to purchase any form of insurance covered by this article, provided, however, that this § shall not apply to the corporation or any other entity which does not sell or solicit insurance, or to prohibit the furnishing of written information in a form prepared by the corporation and approved by the superintendent by a member insurer directly to a policyholder in response to a written request therefore.

Assessments

Assessment Limits

§7709(e)(2) The total of all assessments upon a member insurer for each account shall not in any one calendar year exceed two percent of such insurer’s premiums received in this state during the calendar year preceding the assessment on the policies covered by the account. If the maximum assessment, together with the other assets of the corporation in either account, does not provide in any one year in either account an amount sufficient to carry out the responsibilities of the corporation, the necessary additional funds shall be assessed as soon thereafter as permitted by this article.

Assessment Classes

§7709(b). Three classes of assessments: Class A for administrative costs, general expenses and examinations; Class B to carry out the powers and duties of the association with regard to an impaired/insolvent domestic insurer; and Class C to carry out the powers and duties of the association with regard to an impaired/insolvent foreign or alien insurer.

Benefit Limits

§7708(b)(3). The corporation’s aggregate liability shall not exceed $500,000 for all benefits, including cash values, with respect to any one life, or to the extent benefits are not allocated pursuant to a covered policy to any one life, to any one covered policy; provided, however, (i) aggregate liability does not apply to any group, or blanket accident, or health insurance, or accident and health insurance policy and (ii)that the corporation shall be liable in an amount not to exceed $1,000,000 for all benefits, including cash values, with respect to any group annuity contract (or portion thereof) that does not guaranty benefits with respect to any specific individual identified in the contract and with respect to any funding agreement issued to fund benefits under any employee benefit plan.

Coverages

Covered Contracts

§7703(a)(1) Direct life and health insurance policies, annuity contracts, funding agreements, and supplemental contracts issued by a life insurance company, health insurance company, or property/casualty insurance company licensed to transact life or health insurance or annuities in this state.

Non-Covered Contracts

§7703(b) This article shall not apply to: (1) That portion or part of a variable life insurance policy, variable annuity contract or variable funding agreement not guaranteed by an insurer; (2) That portion or part of any policy, contract or agreement under which the risk is borne by the holder thereof; (3) Any policy, contract, or agreement, or part thereof, assumed by the impaired or insolvent insurer under a contract of reinsurance, other than reinsurance for which assumption certificates have been issued; (4) Any policy, contract, or agreement issued by or through the facilities of the New York Insurance Exchange, Inc., or any similar entity, or pursuant to article sixty-three of this chapter; (5) Any policy, contract, or agreement issued or issued for delivery outside the United States, to the extent it covers persons not citizens or permanent residents of the United States; and (6) Any policy, contract, or agreement payable other than in United States dollars. (Amended effective 11/21/2014)

Non-Resident Coverage

§7703(a)(2)(A)(II). Yes, the Article covers nonresidents under all the following conditions: (I) the insurer that issued the policy, contract or agreement is domiciled in this state; (II) the state or states in which the person resides has or have a guaranty entity similar to the corporation created by this Article; and (III) the person is not eligible for coverage by a guaranty entity in any other state because the insurer was not licensed or authorized in that state at the time specified in that state’s guaranty entity law. (

Definition Of Premium

§ 7705 (i) “Premiums” means direct gross insurance premiums and annuity and funding agreement considerations received on covered policies, less return premiums and considerations thereon and dividends paid or credited to policyholders or contract holders on such direct business, subject to such modifications as the superintendent may establish by regulation or order as necessary to facilitate the equitable administration of this article. Premiums do not include premiums and considerations on contracts between insurers and reinsurers. For the purposes of determining the assessment for an insurer under this article, the term “premiums”, with respect to a group annuity contract (or portion of any such contract) that does not guarantee annuity benefits to any specific individual identified in the contract and with respect to any funding agreement issued to fund benefits under any employee benefit plan, means the lesser of one million dollars or the premium attributable to that portion of such group contract that does not guarantee benefits to any specific individuals or such agreements that fund benefits under any employee benefit plan.

Interest Rate Adjustments

§7708(c)(3). If the superintendent or the corporation shall find that at the time a covered annuity contract or funding agreement or a class thereof, other than an annuity contract, funding agreement or class thereof which funds a compromise or settlement contained in a judgment or order entered pursuant to the provisions of section twelve hundred seven of the civil practice law and rules, was issued by the impaired or insolvent insurer the interest rate guaranteed under such contract or agreement or class thereof was clearly excessive, the superintendent may petition the court having juris-diction in this state, upon appropriate notice to and opportunity for submission of comments from the corporation and owners of contracts and agreements proposed to be affected, to limit the corporation’s obligations under this article with respect to payment of interest to an interest rate which the court finds would have been appropriate and rea-sonable at the time the contract or agreement or class thereof was issued. Nothing in this subsection shall limit the rights of a holder of a contract or agreement so affected as against the impaired or insolvent insurer.

Tax Offsets

§7712(b)(2)(A)(B). Yes. In any given year, if the net assessment for all NY companies exceeds $100M over the previous 15 year period, then each company can take a credit in the current year for an amount based on a formula involving a factor of 80% and the amount of assessments in excess of $100M.

Triggers

Discretionary Triggers

No separate provision.

Mandatory Triggers

§7708(a). When a domestic insurer is an impaired or insolvent insurer.

Foreign Triggers

§7708(b). When a foreign or alien insurer is impaired or insolvent.

“Impaired Insurer”

§7705(f). Actual impairment, as defined in Sections 1310 and 1311, and placement under a court order of liquidation, rehabilitation, or conservation.

“Insolvent Insurer”

§7705(g). A member insurer which after the effective date of this article becomes insolvent for the purposes of §1309 of this chapter and is placed under a final order of liquidation, rehabilitation or conservation by a court of competent jurisdiction.

“Member Insurer”

§ 7705(h) “Member insurer” means: “Member insurer” means: (A) any life insurance company licensed to transact in this state any kind of insurance to which this article applies under section seven thousand seven hundred three of this article; provided, however, that the term “member insurer” also means any life insurance company formerly licensed to transact in this state any kind of insurance to which this article applies under section seven thousand seven hundred three of this article; and (B) an insurer licensed or formerly licensed to write accident and health insurance or salary protection insurance in this state, corporation organized pursuant to article forty-three of this chapter, reciprocal insurer organized pursuant to article sixty-one of this chapter, cooperative property/casualty insurance company operating under or subject to article sixty-six of this chapter, nonprofit property/casualty insurance company organized pursuant to article sixty-seven of this chapter, and health maintenance organization certified pursuant to article forty-four of the public health law.

NewMexico

Account Structure

§59A-42-5A …For purposes of assessment and administration, the association shall maintain two accounts: (1) the life insurance and annuity account, which includes the following subaccounts: (a) a life insurance account; (b) an annuity account, which includes annuity contracts owned by a governmental retirement benefit plan, or its trustee, established pursuant to Section 401, 403(b) or 457 of the federal Internal Revenue Code of 1986, but otherwise excludes unallocated annuities; and (c) an unallocated annuity account, which excludes contracts owned by a governmental retirement benefit plan, or its trustee, established pursuant to Section 401, 403(b) or 457 of the federal Internal Revenue Code of 1986; and (2) the health insurance account. Amended effective 7/1/12)

Advertising Prohibition

No person, including an insurer, agent or affiliate of an 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 a newspaper, magazine or other publication, or in the form of a notice, circular, pamphlet, letter or poster, or over a radio station or television station, or in any other way, an advertisement, announcement or statement, written or oral, that uses the existence of the association for the purpose of sales, solicitation or inducement to purchase insurance covered by the Life and Health Insurance Guaranty Association Act. However, this subsection shall not apply to the association or any other entity that does not sell or solicit insurance. (Amended effective 7/1/12)

Assessments

Assessment Limits

§59A-42-8.G. Subject to the provisions of Subsection H of this section, the total of all assessments authorized by the association with respect to a member insurer for each subaccount of the life insurance and annuity account and for the health insurance account shall not in one calendar year exceed two percent of that member insurer’s average annual premiums received in this state on the policies and contracts covered by the subaccount or account during the three calendar years preceding the year in which the insurer became an impaired or insolvent insurer. (Amended effective 7/1/12)

Assessment Classes

§59A-42-8.B. There shall be two classes of assessments as follows: (1) class A assessments shall be authorized and called 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 or insolvent insurer; and (2) class B assessments shall be authorized and called to the extent necessary to carry out the powers and duties of the association with regard to an impaired or an insolvent insurer. (Amended effective 7/1/12)

Benefit Limits

§59A-42-4.F. 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 insurer is liable or would have been liable if it were not an impaired or insolvent insurer; or (2) with respect to one person’s life, regardless of the number of policies or contracts: (a) for life insurance death benefits, three hundred thousand dollars ($300,000) but not more than one hundred thousand dollars ($100,000) in net cash surrender and net cash withdrawal values; (b) for health insurance benefits: 1) one hundred thousand dollars ($100,000) for coverages not constituting disability insurance or basic hospital, medical and surgical insurance or major medical insurance or long-term care insurance, including net cash surrender and net cash withdrawal values; 2) three hundred thousand dollars ($300,000) for disability insurance; 3) three hundred thousand dollars ($300,000) for long-term care insurance as defined in Section 59A–23A–4 NMSA 1978; and 4) five hundred thousand dollars ($500,000) for basic hospital, medical and surgical insurance or major medical insurance; or (c) for annuity benefits, two hundred fifty thousand dollars ($250,000) in present value, including net cash surrender and net cash withdrawal values; (3) with respect to each individual participating in a governmental retirement benefit plan established pursuant to Section 401, 403(b) or 457 of the federal Internal Revenue Code of 1986 covered by an unallocated annuity contract or the beneficiaries of each such individual if deceased, in the aggregate, two hundred fifty thousand dollars ($250,000) in present value annuity benefits, including net cash surrender and net cash withdrawal values; or (4) with respect to each payee of a structured settlement annuity, or beneficiary or beneficiaries of the payee if the payee is deceased, two hundred fifty thousand dollars ($250,000) in present value annuity benefits, in the aggregate, including net cash surrender and net cash withdrawal values, if any. G. In no event shall the association be obligated to cover: (1) more than an aggregate of three hundred thousand dollars ($300,000) in benefits with respect to one person’s life pursuant to Paragraphs (2), (3) and (4) of Subsection F of this section, except with respect to benefits for basic hospital, medical and surgical insurance and major medical insurance pursuant to Subparagraph (b) of Paragraph (2) of Subsection F of this section, in which case the aggregate liability of the association shall not exceed five hundred thousand dollars ($500,000) with respect to one person’s life; or (2) with respect to one owner of multiple non-group policies of life insurance, whether the policy 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) in benefits, regardless of the number of policies and con-tracts held by the owner. H. With respect to either one contract owner provided coverage pursuant to Subparagraph (b) of Paragraph (3) of Subsection A of this section or one plan sponsor whose plans own directly or in trust one or more unallocated annuity contracts not included in Paragraph (3) of Subsection F of this section, the benefits the association may become obligated to cover shall not exceed five million dollars ($5,000,000) irrespective of the number of contracts with respect to the contract owner or plan sponsor. However, in the case where one or more unallocated annuity contracts are covered contracts pursuant to the Life and Health Insurance Guaranty Association Act and are owned by a trust or other entity for the benefit of two or more plan sponsors, coverage shall be afforded by the association if the largest interest in the trust or entity owning the contract or contracts is held by a plan sponsor whose principal place of business is in this state. In no event shall the association be obligated to cover more than five million dollars ($5,000,000) in benefits with respect to all of these unallocated contracts. I. The limitations set forth in Subsections F, G and H of this section are limitations on the benefits for which the association is obligated before taking into account either its subrogation and assignment rights or the extent to which those benefits could be provided out of the assets of the impaired or insolvent insurer attributable to covered policies. The costs of the association’s obligations may be met by the use of assets attributable to covered policies or reimbursed to the association pursuant to its subrogation and assignment rights. (Amended effective 7/1/12)

Coverages

Covered Contracts

§59A-42-4.D. Coverage shall be provided to the persons specified in Subsection A of this section for direct, non-group life, health or annuity policies or contracts and supplemental contracts to any of these, for certificates under direct group policies and contracts and supplemental contracts to these and for unallocated annuity contracts Issued by member insurers, except as limited by the Life and Health Insurance Guaranty Association Act. Annuity contracts and certificates under group annuity contracts include guaranteed investment contracts, deposit administration contracts, unallocated funding agreements, allocated funding agreements, structured settlement annuities, annuities issued to or in connec-tion with government lotteries and immediate or deferred annuity contracts. (Amended effective 7/1/12)

Non-Covered Contracts

§59A-42-4.E. Coverage shall not be provided for: (1) 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; (2) a policy or contract of reinsurance, unless assumption certificates have been issued pursuant to the reinsurance policy or contract; (3) 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: (a) averaged over the period of four years prior to the date on which the member insurer becomes an impaired or insolvent insurer pursuant to the Life and Health Insurance Guaranty Association Act, whichever is earlier, exceeds the rate of interest determined by subtracting two 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 years before the member insurer becomes an impaired or insolvent insurer under the Life and Health Insurance Guaranty Association Act, whichever is earlier; and (b) on and after the date on which the member insurer becomes an impaired or insolvent insurer pursuant to the Life and Health Insurance Guaranty Association Act, whichever is earlier, exceeds the rate of interest determined by subtracting three percentage points from Moody’s corporate bond yield average as most recently available; (4) 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: (a) a multiple employer welfare arrangement; (b) a minimum premium group insurance plan; (c) a stop-loss group insurance plan; or (d) an administrative services only contract; (5) a portion of a policy or contract to the extent that it provides for: (a) dividends or experience rating credits; (b) voting rights; or (c) payment of fees or allowances to a person, including the policy or contract owner, in connection with the service to or administration of the policy or contract; (6) 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; (7) an unallocated annuity contract issued to or in connection with a benefit plan protected under the federal pension benefit guaranty corporation, regardless of whether that corporation has yet become liable to make payments with respect to the benefit plan; (8) a portion of an unallocated annuity contract that is not issued to or in connection with a specific employee, union or association of natural persons benefit plan or a government lottery; (9) a portion of a policy or contract to the extent that the assessments required by Section 59–42–8 NMSA 1978 with respect to the policy or contract are preempted by federal or state law; (10) an obligation that does not arise under the express written terms of the policy or contract issued by the insurer to the contract owner or policy owner, including without limitation: (a) claims based on marketing materials; (b) claims based on side letters, riders or other documents that were issued by the insurer without meeting applicable policy form filing or approval requirements; (c) misrepresentations of or regarding policy benefits; (d) extra–contractual claims; or (e) a claim for penalties or consequential or incidental damages; (11) a contractual agreement that establishes the member insurer’s obligations 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; (12) a portion of a policy or contract to the extent that 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 pursuant to the Life and Health Insurance Guaranty Association Act, whichever is earlier. If a policy 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 that are not subject to forfeiture pursuant to this paragraph, 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 were the date of impairment or insolvency, whichever is earlier, and will not be subject to forfeiture; or (13) a policy or contract providing hospital, medical, prescription drug or other health care benefits pursuant to Part C or Part D of Subchapter 18 of Chapter 7 of Title 42 of the United States Code or regulations promulgated pursuant to Part C or Part D. (Amended effective 7/1/12)

Non-Resident Coverage

§59A-42-4(2)(b) Yes, non residents covered, but only under the following conditions: 1) the insurer that issued the policies or contracts is domiciled in this state; 2) the states in which the persons reside have associations similar to this state’s association; and 3) the persons are not eligible for coverage by an association in another state due to the fact that the insurer was not licensed in that state at the time specified in that state’s guaranty association law. (Amended effective 7/1/12)

Definition Of Premium

§59A-42-3.Q. “premiums” means amounts or considerations, by whatever name used, received on covered policies or contracts less returned premiums, considerations and deposits and less dividends and experience credits. “Premiums” does not include: (1) amounts or considerations received for policies or contracts or for the portions of policies or contracts for which coverage is not provided pursuant to Subsection E of Section 59A–42–4 NMSA 1978, except that assessable premiums shall not be reduced on account of Paragraph (3) of Subsection E of Section 59A–42–4 NMSA 1978, relating to interest limitations, or Paragraph (2) of Subsection F of Section 59A–42–4 NMSA 1978, relating to limitations, with respect to one individual, one participant or one contract owner; (2) premiums in excess of five million dollars ($5,000,000) on an unallocated annuity contract not issued under a governmental retirement benefit plan, or its trustee, established pursuant to Section 401, 403(b) or 457 of the federal Internal Revenue Code of 1986; or (3) with respect to multiple non-group policies of life insurance owned by one owner, whether the policy owner is an individual, firm, corporation or other person, and whether the persons insured are officers, managers, employees or other persons, premiums in excess of five million dollars ($5,000,000) with respect to these policies or contracts, regardless of the number of policies or contracts held by the owner;

Interest Rate Adjustments

§59A-42-4.E.3 Guaranty Association excludes from coverage: 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: (a) averaged over the period of four years prior to the date on which the member insurer becomes an impaired or insolvent insurer pursuant to the Life and Health Insurance Guaranty Association Act, whichever is earlier, exceeds the rate of interest determined by subtracting two 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 years before the member insurer becomes an impaired or insolvent insurer under the Life and Health Insurance Guaranty Association Act, whichever is earlier; and (b) on and after the date on which the member insurer becomes an impaired or insolvent insurer pursuant to the Life and Health Insurance Guaranty Association Act, whichever is earlier, exceeds the rate of interest determined by subtracting three percentage points from Moody’s corporate bond yield average as most recently available. (Amended effecive 7/1/12)

Tax Offsets

No provision.

Triggers

Discretionary Triggers

§59A-42-7.A. If a member insurer is an impaired insurer. (Amended effective 7/1/12)

Mandatory Triggers

§59A-42-7.B. If a member insurer is an impaired insurer. (Amended effective 7/1/12)

Foreign Triggers

No separate provision.

“Impaired Insurer”

§59A-42-3.K. “impaired insurer” means a member insurer that, after the effective date of the Life and Health Insurance Guaranty Association Act, is not an insolvent insurer and is placed under an order of rehabilitation or conservation by a court of competent jurisdiction; (Amended effective 7/1/12)

“Insolvent Insurer”

§59A-42-3.L. “insolvent insurer” means a member insurer that after the effective date of the Life and Health Insurance Guaranty Association Act, is placed under an order of liquidation by a court of competent jurisdiction with a finding of insolvency; (Amended effective 7/1/12)

“Member Insurer”

§ 59A-42-3.M. “member insurer” means an insurer that is licensed or that holds a certificate of authority to transact in this state insurance for which coverage is provided pursuant to Section 59A-42-4 NMSA 1978 and includes an insurer whose license or certificate of authority in this state may have been suspended, revoked, not renewed or voluntarily withdrawn, but does not include: (1) a health care plan, whether profit or nonprofit; (2) a health maintenance organization; (3) a prepaid dental plan; (4) a fraternal benefit society; (5) a mandatory state pooling plan; (6) a mutual assessment company or other person that operates on an assessment basis; (7) an insurance exchange; (8) a charitable organization that is in good standing with the superintendent pursuant to Section 59A-1-16.1 NMSA 1978; (9) any insurer that was insolvent or unable to fulfill its contractual obligations as of April 9, 1975; or (10) an entity similar to any of the above. (Amended effective 7.1.2014).

NewJersey

Account Structure

§17B:32A-5.b. Two accounts: (1) life insurance and annuity account, includes sub accounts: (a) life insurance,( b) annuity, (c) unallocated annuity; and (2) health account.

Advertising Prohibition

§17B:32A-17 No person, including a member insurer, agent or affiliate of a member insurer or insurance producer 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, written or oral, which uses the existence of the association for the purpose of sales, solicitation, or inducement to purchase any form of insurance or other coverage covered by P.L.1991, c.208 (C.17B:32A-1 et seq.). This subsection shall not apply to the department or the association or to any other entity which does not sell or solicit insurance or coverage by a health service corporation, hospital service corporation, medical service corporation, or health maintenance organization.

Assessments

Assessment Limits

§17B:32A-8.e. Two percent (2%) of the insurers average premiums received in the state during the three calendar years preceding the year of impairment or insolvency.

Assessment Classes

§17B:32A-8.b. Two classes of assessments: Class A for the purpose of meeting administrative and legal costs of the association along with other expenses and examinations conducted under this act. Class A assessments shall also be made, upon the request of the commissioner, for the purpose of meeting costs incurred by or on behalf of the department in the administration of an insolvent insurer to the extent those costs exceed assets of the insolvent insurer available for that purpose; and Class B to carry out the powers and duties of the association with respect to an impaired or an insolvent insurer. The amount of Class B assessments for long-term care insurance written by the impaired or insolvent insurer shall be allocated according to a methodology included in the plan of operation and approved by the commissioner. The methodology shall provide for 50 percent of the assessment to be allocated to accident and health member insurers and 50 percent to be allocated to life and annuity member insurers.

Benefit Limits

§17B:32A-3.e. (2) with respect to any one insured individual, regardless of the number of policies or contracts: (a) $500,000 in life insurance death benefits, but not more than $100,000 in net cash surrender and net cash withdrawal values for life insurance; (b) $500,000 in present value annuity benefits, including net cash surrender and net cash withdrawal values, but not more than $100,000 in net cash surrender and net cash withdrawal values for annuity benefits; provided, however, that in no event shall the association be liable to expend more than $500,000 in the aggregate with respect to any one individual under this paragraph (2); or (3) with respect to any one unallocated annuity contract, $2,000,000 in benefits; or (4) with respect to any one group, blanket, or individual accident or health insurance or group, blanket or individual accident or health insurance policy, unlimited benefits. (5) with respect to each individual participating in a governmental retirement benefit plan established under sections 401, 403(b), or 457 of the U.S. Internal Revenue Code, 26 U.S.C. ss.401, 403(b), and 457, covered by an unallocated annuity contract or the beneficiaries of each such individual if deceased, in the aggregate, $500,000 in present value annuity benefits, including net cash surrender and net cash withdrawal values; and (6) with respect to each payee of a structured settlement annuity (or beneficiary or beneficiaries of the payee if deceased), $500,000 in present value annuity benefits, in the aggregate, including net cash surrender and net cash withdrawal values, if any. (7) The limitations set forth in this subsection are limitations on the benefits for which the association is obligated before taking into account either its subrogation and assignment rights or the extent to which those benefits could be provided out of the assets of the impaired or insolvent insurer attributable to covered policies. The costs of the obligation of the association under P.L.1991, c.208 (C.17B:32A-1 et seq.) may be met by the use of assets attributable to covered policies or reimbursed to the association pursuant to its subrogation and assignment rights. f. A provider of health care services, in order to receive payment directly from the association upon a claim of the provider against an insured or enrollee, shall agree to forgive the insured of 20% of the obligation which would otherwise be paid by the member insurer had it not been insolvent. The obligations of solvent member insurers to pay all or part of the covered claim are not diminished by the forgiveness provided in this subsection. The association is not bound by an assignment of benefits executed with respect to the coverage provided by the insolvent insurer. The association may aggregate all claims owed health care providers when negotiating direct payment of claims of all covered individuals.

Coverages

Covered Contracts

§17B:32A-3.b. Direct, non-group life insurance, health insurance (which includes health service corporation contracts, hospital service corporation contracts, medical service corporation contracts, and health maintenance organization subscriber contracts and certificates), or annuities and supplemental policies or contracts, for certificates under direct group life insurance, health insurance, annuities and supplemental policies and contracts, for individual and group long-term care insurance policies and contracts, and for unallocated annuity contracts, issued by member insurers, except as limited by 17B:32A-1 et seq.; and policies or contracts issued by medical service corporations declared to be insolvent or impaired by a court of competent jurisdiction on or after September 1, 1987, but prior to the effective date of the act.

Non-Covered Contracts

§17B:32A-3.c. (1) any portion of a policy or contract not guaranteed by the member insurer, or under which the risk is borne by the policy or contract owner; (2) any policy or contract of reinsurance, unless assumption certificates have been issued; (3) any portion of a policy or contract to the extent that the rate of interest on which it is based: (a) averaged over the four-year period prior to the date on which the association becomes obligated with respect to that policy or contract, exceeds the lesser of: (i) the rate of interest determined by subtracting three 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 years before the association became obligated, or (ii) the rate of interest specified in the standard valuation law, or the rules of this State for determining the minimum standard for the valuation of policies or contracts issued during the year of insolvency; and (b) on and after the date on which the association becomes obligated with respect to that policy or contract, exceeds the rate of interest determined by subtracting four percentage points from Moody’s Corporate Bond Yield Average as most recently available; except that the limitation of this paragraph shall not preclude the association from providing more extensive coverage if it is proceeding under the authority of section 7 of P.L.1991, c.208 (C.17B:32A-7); (4) any plan or program of an employer, association or similar entity to provide life, health, or annuity benefits to its employees or members to the extent that such plan or program is self-funded or uninsured, including, but not limited to, benefits payable by an employer, association or similar entity under: (a) a Multiple Employer Welfare Arrangement as defined in the Employee Retirement Income Security Act of 1974 (29 U.S.C. § 1002); (b) a minimum premium group insurance plan; (c) a stop-loss group insurance plan; or (d) an administrative services only contract; (5) any portion of a policy or contract to the extent that it provides dividends or experience rating credits, or provides that any fees or allowances be paid to any person, including the owner of the policy or contract, in connection with the service to or administration of that policy or contract; (6) any 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 that policy or contract in this State; (7) any unallocated annuity contract issued to an employee benefit plan covered by the Pension Benefit Guaranty Corporation and whose benefits will be paid under such system; (8) any portion of any unallocated annuity contract which is not issued to or in connection with a specific plan providing benefits to employees or an association of natural persons; (9) 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 has 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 P.L.1991, c.208 (C.17B:32A-1 et seq.), whichever is earlier. If a policy 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 paragraph, the interest or change in value determined by using the procedures defined in the policy or contract shall be credited as if the contractual date of crediting interest or changing values was the date of impairment or insolvency, whichever is earlier, and shall not be subject to forfeiture; (10) a policy or contract providing any hospital, medical, prescription drug, or other health care benefits pursuant to Medicare Parts C or D or the Medicaid program, 42 U.S.C. ss.1396 et seq., including the Children’s Health Insurance Program (CHIP) which provides health coverage to eligible children, either through Medicaid or separate CHIP programs, or any regulations issued pursuant thereto, or the “Family Health Care Coverage Act,” P.L.2005, c.156 (C.30:4J-8 et seq.), or (11) structured settlement annuity benefits to which a payee (or beneficiary) has transferred rights in a structured settlement factoring transaction as defined pursuant to section 5891 of the federal Internal Revenue Code, 26 U.S.C. § 5891(c)(3)(A), regardless of whether the transaction occurred before or after that section became effective.

Non-Resident Coverage

§17B:32A-3.a(2)(b). Yes. Covers nonresidents, but only if: (i) the insurers which issued the policies or contracts are domiciled in New Jersey; (ii) those insurers never held a license or certificate of authority in the states in which those persons reside; (iii) those states have associations and coverage provisions with respect to residency similar to the association created by this act; and (iv) those persons are not eligible for coverage by those associations.

Definition Of Premium

§ 17B:32A-4 “Premiums” means amounts or considerations received in any calendar year on covered policies or contracts less premiums, considerations and deposits returned thereon, and less dividends and experience credits thereon. “Premiums” shall not include any amounts or considerations received for any policies or contracts or for the portions of any policies or contracts for which coverage is not provided under subsection b. of section 3 of this act except that assessable premium shall not be reduced as the result of the application of: paragraph (3) of subsection c. of section 3 relating to interest limitations; or paragraph (2) of subsection d. of section 3 relating to limitations with respect to any one insured individual. “Premiums” shall not include any premiums in excess of $2,000,000 per contract on any unallocated annuity contract.

Interest Rate Adjustments

§17B:32A-3.c(3). Guaranty Association excludes from coverage: any portion of a policy or contract to the extent that the rate of interest on which it is based: (a) averaged over the four-year period prior to the date on which the association becomes obligated with respect to that policy or contract, exceeds the lesser of: (i) the rate of interest determined by subtracting three 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 years before the association became obligated, or (ii) the rate of interest specified in the standard valuation law, or the rules of this State for determining the minimum standard for the valuation of policies or contracts issued during the year of insolvency; and (b) on and after the date on which the association becomes obligated with respect to that policy or contract, exceeds the rate of interest determined by subtracting four percentage points from Moody’s Corporate Bond Yield Average as most recently available; except that the limitation of this paragraph shall not preclude the association from providing more extensive coverage if it is proceeding under the authority of section 7 of this act.

Tax Offsets

§17B:32A-18.a. Yes, a member insurer may offset against its premium tax liability, attributable to premiums written in that year, any assessments for which a certificate of contribution has been issued, to the extent of 10% of the amount of those assessments for each of the five calendar years following the second year after the year in which those assessments were paid, except that no member insurer may offset its premium tax liability by more than 20% of its premium tax liability in any one year. If a member insurer should cease doing business in the state, any uncredited assessments may be offset against its premium tax liability for the year in which it ceases to do business. b. A member insurer that is exempt from taxes referenced in subsection a. of this section may recoup its assessments by a surcharge on its premiums or by a surcharge on its membership fees (as applicable) in a sum reasonably calculated to recoup the assessments over a reasonable period of time, as approved by the commissioner. Amounts recouped shall not be considered premiums for any other purpose, including the computation of gross premium tax, the medical loss ratio, or insurance producer commission. If a member insurer collects excess surcharges, the member insurer shall remit the excess amount to the association, and the excess amount shall be applied to reduce future assessments in the appropriate account. c. Any sums which are acquired by member insurers as the result of a refund from the association pursuant to subsection f. of section 8 of P.L.1991, c.208 (C.17B:32A-8), and which have theretofore been offset against premium taxes as provided in subsection a. of this section, shall be paid by those member insurers to the State as the Director of the Division of Taxation may require. The association shall notify the commissioner and the Director of the Division of Taxation of any refunds made. d. This section shall not apply in any way to the imposition or collection of, and no offset shall be permitted against, the surtax on premiums authorized pursuant to section 76 of P.L.1990, c.8 (C.17:33B-49).

Triggers

Discretionary Triggers

§17B:32A-7.a. When a domestic insurer is impaired.

Mandatory Triggers

§17B:32A-7.c. If a member insurer is insolvent.

Foreign Triggers

See Mandatory Triggers.

“Impaired Insurer”

§17B:32A-4. A member insurer which is (1) determined by the commissioner to be potentially unable to fulfill its contractual obligations; or (2) placed under an order of receivership, rehabilitation or conservation by a court of competent jurisdiction.

“Insolvent Insurer”

§17B:32A-4. A member insurer which, after the effective date of the act, is placed under an order of liquidation by a court of competent jurisdiction with a finding of insolvency.

“Member Insurer”

§17B:32A-4. “Member insurer” means any insurer, health service corporation, hospital service corporation, medical service corporation, or health maintenance organization licensed in this State or which holds a certificate of authority to transact any kind of insurance, health service corporation business, hospital service corporation business, medical service corporation business, or health maintenance organization business in this State for which coverage is provided under section 3 of P.L.1991, c.208 (C.17B:32A-3), and includes any insurer, health service corporation, hospital service corporation, medical service corporation, 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: (1) A dental service corporation established pursuant to the provisions of P.L.1968, c.305 (C.17:48C-1 et seq.); (2) A dental plan organization established pursuant to the provisions of P.L.1979, c.478 (C.17:48D-1 et seq.); (3) (Deleted by amendment, P.L.2022, c.98); (4) A fraternal benefit society established pursuant to the provisions of P.L.1959, c.167 (C.17:44A-1 et seq.); (5) A mandatory state pooling plan; (6) A mutual assessment company or any entity that operates on an assessment basis to the extent of the assessment liability of its members; (7) An insurance exchange; (8) A licensed organized delivery system licensed pursuant to P.L.1999, c.409 (C.17:48H-1 et seq.); (9) A captive insurer, established pursuant to P.L.2011, c.25 (C.17:47B-1 et seq.); or (10) An entity similar to any of the above.

NewHampshire

Account Structure

§408-F:6.I. For purposes of administration and assessment, the association shall maintain 2 accounts: (a) The life insurance and annuity account which includes the following subaccounts: (1) Life insurance account; (2) Annuity account, which shall include annuity contracts owned by a governmental retirement plan (or its trustee) established under section 401, 403(b) or 457 of the United States Internal Revenue Code, but shall otherwise excluded unallocated annuities; and (3) Unallocated annuity account which shall exclude contracts owned by a governmental retirement benefit plan, or its trustee established under section 401, 403(b), or 457 of the United States Internal Revenue Code. (b) The health account.

Advertising Prohibition

§408-F:19 “Prohibited Advertisement of Insurance Guaranty Association Act in Insurance Sales; Notice to Policyholders” I. 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, written or oral, which uses the existence of the 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 New Hampshire life and health insurance guaranty association act. Provided, however, that this paragraph shall not apply to the New Hampshire life and health insurance guaranty association or any other entity which does not sell or solicit insurance or coverage by a health maintenance organization. The use of the protection afforded by this chapter, other than as provided by this paragraph, by any person in the sale, marketing, or advertising of insurance constitutes unfair competition and unfair practices under the New Hampshire unfair trade practices act, and is subject to sanctions imposed in that chapter.

Assessments

Assessment Limits

§408-F:9.V.(a). Subject to the provisions of subparagraph (b), the total of all assessments authorized by the association with respect to a member insurer for each subaccount of the life insurance and annuity account and for the health account shall not in any one calendar year exceed 2 percent of that member insurer’s average annual premiums received in this state on the policies and contracts covered by the subaccount or account during the 3 calendar years preceding the year 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 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 this chapter.

Assessment Classes

§408-F:9.II There shall be 2 assessments, as follows: (a) Class A assessments shall be made for the purpose of meeting administrative and legal costs and other expenses and examinations conducted under the authority of RSA 408-F:12, V. Class A assessments may be made whether or not related to a particular impaired or insolvent insurer. (b) Class B assessments shall be made to the extent necessary to carry out the powers and duties of the association under RSA 408-F:8 with regard to an impaired or an insolvent insurer.

Benefit Limits

§408-F:5.III. The benefits for which the association may become liable shall in no event exceed the lesser of: (a) The contractual obligations for which the insurer is liable or would have been liable if it were not an impaired or insolvent insurer; or (b) (1) With respect to any one life, regardless of the number of policies or contracts: (A) $300,000 in life insurance death benefits, but not more than $100,000 in net cash surrender and net cash withdrawal values for life insurance; (B) For health insurance benefits: (i) $100,000 for coverages not defined as disability income insurance or health benefit plans or long-term care insurance, as defined in RSA 415-D, including any net cash surrender and net cash withdrawal values; (ii) $300,000 for disability income insurance, and $300,000 for long-term care insurance, as defined in RSA 415-D; or (iii) $500,000 for health benefit plans; (C) $250,000 in the present value of annuity benefits, including net cash surrender and net cash withdrawal values; or (2) With respect to each individual participating in a governmental retirement plan established under Section 401, 403(b) or 457 of the United States Internal Revenue Code covered by an unallocated annuity contract or the beneficiaries of each such individual if deceased, in the aggregate, $250,000 in present value annuity benefits, including net cash surrender and net cash withdrawal values; or (3) With respect to each payee of a structured settlement annuity or beneficiary or beneficiaries of the payee if deceased, $250,000 in present value annuity benefits, in the aggregate, including net cash surrender and net cash withdrawal value, if any. (4) However, in no event shall the association be obligated to cover more than: (A) An aggregate of $300,000 in benefits with respect to any one life under subparagraphs (b)(1), (2) and (3) except with respect to benefits for health benefit plans under subparagraph (b)(1)(B)(iii), in which case the aggregate liability of the association shall not exceed $500,000 with respect to any one individual; or (B) 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 $5,000,000 in benefits, regardless of the number of policies and contracts held by the owner. (5) With respect to either one contract owner provided coverage under subparagraph I(c)(2); or one plan sponsor whose plans own directly or in trust one or more unallocated annuity contracts not included in subparagraph (b)(2) of this paragraph, $5,000,000 in benefits, irrespective of the number of contracts with respect to the contract owner or plan sponsor. However, in the case where one or more unallocated annuity contracts are covered contracts under this chapter and are owned by a trust or other entity for the benefit of 2 or more plan sponsors, coverage shall be afforded by the association if the largest interest in the trust or entity owning the contract or contracts is held by a plan sponsor whose principal place of business is in this state and in no event shall the association be obligated to cover more than $5,000,000 in benefits with respect to all these unallocated contracts.

Coverages

Covered Contracts

§408-F:5.II(a). This chapter shall provide coverage to the persons specified in paragraph I for policies and contracts of direct, non-group life insurance, health insurance, including health maintenance organization subscriber contracts and certificates, or annuities, and supplemental contracts to any of these, for certificates under direct group policies and contracts, and for supplemental contracts to any of these, and for unallocated annuity contracts issued by member insurers, except as limited by this chapter. Annuity contracts and certificates under group annuity contracts include, but are not limited to, guaranteed investment contracts, deposit administration contracts, unallocated funding agreements, allocated funding agreements, structured settlement annuities, annuities issued to or in connection with government lotteries and any immediate or deferred annuity contracts.

Non-Covered Contracts

§408-F:5.II(b) Except as otherwise provided in subparagraph (c), this chapter shall not provide coverage for: (1) A portion of a policy or contract not guaranteed by the member insurer, or under which the risk is borne by the policy or contract owner; (2) Any policy or contract of reinsurance, unless assumption certificates have been issued; (3) 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 change in value: (A) Averaged over the period of 4 years prior to the date on which the member insurer becomes an impaired or insolvent insurer under this chapter, whichever is earlier, exceeds a rate of interest determined by subtracting 2 percentage points from Moody’s Corporate Bond Yield Average averaged for that same 4-year period or for such lesser period if the policy or contract was issued less than 4 years before the member insurer becomes an impaired or insolvent insurer under this chapter, whichever is earlier; and (B) On and after the date on which the member insurer becomes an impaired or insolvent insurer under this chapter, whichever is earlier, exceeds the rate of interest determined by subtracting 3 percentage points from Moody’s Corporate Bond Yield Average as most recently available; (4) Any plan or program of an employer, association, or similar entity to provide life, health, or annuity benefits to its employees or members 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 similar entity under: (A) A multiple-employer welfare arrangement as defined in 29 U.S.C. section 1002(40); (B) A minimum premium group insurance plan; (C) A stop-loss group insurance plan; or (D) An administrative services only contract; (5) Any portion of a policy or contract to the extent that it provides dividends or experience rating credits, or provides that any fees or allowances be paid to any person, including the policy or contract holder, in connection with the service to or administration of the policy or contract; (6) Any 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; (7) Any unallocated annuity contract issued to an employee benefit plan protected under the federal Pension Benefit Guaranty Corporation; (8) Any portion of any unallocated annuity contract which is not issued to or in connection with a specific employee, union, or association of natural persons benefit plan or a government lottery; (9) Any portion of a policy or contract to the extent that the assessments required by RSA 408-F:9 with respect to the policy or contract are preempted by federal or state law; (10) 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 this chapter, 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 shall be credited as if the contractual date of the crediting interest or changing values was the date of impairment or insolvency, whichever is earlier, and shall not be subject to forfeiture; (11) 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 and D, or subchapter XIX, chapter 7 of Title 42 of the United States Code (commonly known as Medicaid), or any regulations issued pursuant thereto; and (12) Structured settlement annuity benefits to which a payee or beneficiary has transferred his or her rights in a structured settlement factoring transaction as defined in 26 U.S.C. section 5891(c)(3)(A), regardless of whether the transaction occurred before or after such section became effective.

Non-Resident Coverage

§408-F:5.I. Yes. Covers nonresidents, but only under all of the following conditions: (A) The member insurers that issued the policies or contracts are domiciled in this state; (B) The states in which the persons reside have associations similar to the association created by this chapter; and (C) The persons are not eligible for coverage by an association in any other state because the insurer or health maintenance organization was not licensed in the state at the time specified in the state’s guaranty association law.

Definition Of Premium

§ 408-F:4 XII. “Premiums” means amounts received on covered policies or contracts less premiums, considerations, and deposits returned on such policies or contracts and less dividends and experience credits on such policies or contracts. “Premiums” does not include any amounts received for any policies or contracts or for the portions of any policies or contracts for which coverage is not provided under RSA 408-F:5, II, except that assessable premium shall not be reduced on account of RSA 408-F:5, II(b)(3) relating to interest limitations and RSA 408-F:5, III(b) relating to limitations with respect to any one individual, any one participant and any one policy or contract holder; provided that “premiums” shall not include: (a) Any premiums in excess of $5,000,000 on any unallocated annuity contract not issued under a governmental retirement plan established under section 401, 403(b) or 457 of the United States Internal Revenue Code; or (b) With respect to 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, premiums in excess of $5,000,000 with respect to these policies or contracts, regardless of the number of policies or contracts held by the owner.

Interest Rate Adjustments

§408-F:5.II(b)(3) Guaranty Association excludes from coverage: 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 change in value: (A) Averaged over the period of 4 years prior to the date on which the member insurer becomes an impaired or insolvent insurer under this chapter, whichever is earlier, exceeds a rate of interest determined by subtracting 2 percentage points from Moody’s Corporate Bond Yield Average averaged for that same 4-year period or for such lesser period if the policy or contract was issued less than 4 years before the member insurer becomes an impaired or insolvent insurer under this chapter, whichever is earlier; and (B) On and after the date on which the member insurer becomes an impaired or insolvent insurer under this chapter, whichever is earlier, exceeds the rate of interest determined by subtracting 3 percentage points from Moody’s Corporate Bond Yield Average as most recently available;

Tax Offsets

§408-F:13.I. Yes. A member insurer may offset against its tax liability assessments for the life insurance and annuity account, and for the health account for guaranteeing the performance of contractual obligations of an impaired or insolvent insurer in regard to disability income coverages only, to the extent of 20% of the amount of the assessment for each of the 5 calendar year s following the year in which the assessment was paid. If a member insurer ceases doing business, all uncredited assessments may be credited against it tax liability for the year it ceases doing business. (Amended effective 1/1/97).

Triggers

Discretionary Triggers

§408-F:8.I. If a member insurer is an impaired domestic insurer.

Mandatory Triggers

§404-F:8.II. When a member insurer is impaired, not paying claims timely, and (1) if domestic, has been placed under an order of rehabilitation by a court of competent jurisdiction; or (2) if foreign, has been prohibited from soliciting or accepting new business in this state, the insurer’s certificate of authority has been suspended or revoked in this state and a petition for rehabilitation has been filed in a court of competent jurisdiction in the insurer’s domestic state. §404-B:8.III. If a member insurer is insolvent. Amended effective 1/1/96.

Foreign Triggers

See Mandatory Triggers.

“Impaired Insurer”

§408-F:4.VII. “Impaired insurer” means a member insurer which, on or after January 1, 2020, is not an insolvent insurer; and (a) Is deemed by the commissioner to be potentially unable to fulfill its contractual obligations; or (b) Is placed under an order of rehabilitation or conservation by a court of competent jurisdiction.

“Insolvent Insurer”

§408-F:4.VIII. “Insolvent insurer” means a member insurer which on or after January 1, 2020, is placed under an order of liquidation by a court of competent jurisdiction with a finding of insolvency.

“Member Insurer”

§408-F:4.IX. “Member insurer” means any insurer or health maintenance organization licensed or which holds a certificate of authority to transact in this state any kind of insurance or health insurance organization business for which coverage is provided under RSA 408-F:5, 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 nonprofit hospital or medical service organization. (b) A fraternal benefit society. (c) A mandatory state pooling plan. (d) A mutual assessment company or any entity that operates on an assessment basis. (e) An insurance exchange. (f) An organization that has a certificate or license limited to the issuance of charitable gift annuities under RSA 403-E. (g) Any entity similar to any of the above.

Nevada

Account Structure

§686C.130.2. For purposes of administration and assessment, the Association shall maintain two accounts: (a) The Health Account; and (b) The Life and Annuity Account, which consists of: (1) The Subaccount for Life Insurance; and (2) The Subaccount for Annuities, including annuities owned by a governmental retirement plan, or its trustees, established under section 401, 403(b) or 457 of the Internal Revenue Code, 26 U.S.C. §§ 401, 403(b) and 457.

Advertising Prohibition

§686C.390 Unlawful advertisement using existence of Association for sale, solicitation or inducement to purchase; exception. It is unlawful for a member insurer, agent or affiliate of a member insurer, or other person to make, publish, circulate or place before the public, or cause any other person to do so, in any publication, notice, circular, letter or poster, or over any radio or television station, any advertisement or statement, written or oral, which uses the existence of the Association for the sale, solicitation or inducement to purchase any form of insurance or coverage offered by a health maintenance organization that is covered by the Association. This section does not apply to the association or any other person that does not sell or solicit insurance or coverage offered by a health maintenance organization.

Assessments

Assessment Limits

§686C.250.2. Except as otherwise provided in subsection 3, the total of all assessments authorized by the Association with respect to a member insurer for: (a) The Life and Annuity Account and each of its subaccounts; and (b) The Health Account, respectively must not in any 1 calendar year exceed 2 percent of the member insurer’s average annual premiums received in this state on the policies and contracts covered by the subaccount or account during the 3 calendar years preceding the year in which the member insurer became impaired or insolvent.

Assessment Classes

§686C.230. 2. There are two classes of assessments, as follows: (a) Assessments in Class A must be authorized and called for the purpose of meeting administrative and legal costs and other expenses. An assessment in Class A need not be related to a particular impaired or insolvent insurer. (b) Assessments in Class B must be authorized and called to the extent necessary to carry out the powers and duties of the Association under NRS 686C.150 to 686C.220, inclusive, with regard to an impaired or insolvent insurer.

Benefit Limits

§686C.210(1) 1. The benefits that the Association may become obligated to cover may not exceed the lesser of: (a) The contractual obligations for which the member insurer is liable or would have been liable if it were not an impaired or insolvent insurer; (b) With respect to one life, regardless of the number of policies or contracts: (1) Three hundred thousand dollars in death benefits from life insurance, but not more than $100,000 in net cash for surrender and withdrawal for life insurance; or (2) Two hundred fifty thousand dollars in the present value of benefits from annuities, including net cash for surrender and withdrawal; (c) With respect to health insurance for any one life: (1) One hundred thousand dollars for coverages other than disability income insurance, health benefit plans or long-term care insurance, including any net cash for surrender or withdrawal; (2) Three hundred thousand dollars for disability income insurance or long-term care insurance; or (3) Five hundred thousand dollars for health benefit plans; (d) With respect to each payee of a structured settlement annuity, or beneficiary or beneficiaries of the payee if deceased, $250,000 in present value of benefits from the annuity in the aggregate, including any net cash for surrender or withdrawal; or (e) With respect to each participant in a governmental retirement plan covered by an unallocated annuity contract which is owned by a governmental retirement plan established under section 401, 403(b) or 457 of the Internal Revenue Code, 26 U.S.C. §§ 401, 403(b) and 457, respectively, or the trustees of such a plan, and which is approved by the Commissioner, an aggregate of $250,000 in present-value annuity benefits, including the value of net cash for surrender and net cash for withdrawal, regardless of the number of contracts. 2. In no event is the Association obligated to cover more than: (a) With respect to any one life or person under paragraphs (b) to (e), inclusive, of subsection 1: (1) An aggregate of $300,000 in benefits, excluding benefits for health benefit plans; or (2) An aggregate of $500,000 in benefits, including benefits for health benefit plans. (b) With respect to one owner of several nongroup policies of life insurance, whether the owner is a natural person or an organization and whether the persons insured are officers, managers, employees or other persons, more than $5,000,000 in benefits, regardless of the number of policies and contracts held by the owner.

Coverages

Covered Contracts

§686C.030.4. This chapter provides coverage to the persons described in subsections 1 and 2 for policies or contracts of direct, nongroup life insurance, health insurance and annuities, for certificates under direct group policies and contracts, and for supplemental contracts to any of these, in each case issued by member insurers, except as limited by this chapter.

Non-Covered Contracts

§686C.035. 1. This chapter does not provide coverage for: (a) A portion of a policy or contract not guaranteed by the member insurer, or under which the risk is borne by the owner of the policy or contract. (b) A policy or contract of reinsurance unless assumption certificates have been issued pursuant to that policy or contract. (c) A portion of a policy or contract, other than a portion of a policy or contract of health insurance or that provides benefits for long-term care, including, without limitation, a rider that provides such benefits, to the extent that the rate of interest on which it is based, or the interest rate, crediting rate or similar factor determined by the 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 4 years before the date on which the association becomes obligated with respect to the policy or contract, exceeds the rate of interest determined by subtracting 2 percentage points from Moody’s Corporate Bond Yield Average averaged for the same period, or for the period between the date of issuance of the policy or contract and the date the association became obligated, whichever period is less; and (2) On or after the date on which the association becomes obligated with respect to the policy or contract, exceeds the rate of interest determined by subtracting 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 other persons 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 described in 29 U.S.C. § 1002(40); (2) A minimum-premium group insurance plan; (3) A stop-loss group insurance plan; or (4) A contract for administrative services only. (e) A portion of a policy or contract to the extent that it provides for dividends, credits for experience, voting rights or the payment of any fee or allowance to any person, including the owner of a policy or contract, for services or administration connected with the policy or contract. (f) A policy or contract issued in this state by a member insurer at a time when the member insurer was not authorized 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 NRS 686C.230 with respect to the policy or contract are preempted by federal law. (h) An obligation that does not arise under the express written terms of the policy or contract issued by the member insurer, including: (1) Claims based on marketing materials; (2) Claims based on side letters or other documents that were issued by the member insurer without satisfying applicable requirements for filing or approval of policy or contract forms; (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 member insurer’s obligation to provide a guarantee based on accounting at book value for participants in a defined-contribution benefit plan by reference to a portfolio of assets owned by the benefit plan or its trustee, which in each case is not an affiliate of the member insurer. (j) A portion of a policy or contract to the extent that it provides for interest or other changes in value which are 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 rights of the owner of the policy or contract are subject to forfeiture, determined on the date the member insurer becomes an impaired or insolvent insurer, whichever occurs first. If the interest or changes in value of a policy or contract are credited less frequently than annually, for the purpose of determining the values that have been credited and are not subject to forfeiture, the interest or change in value determined by using procedures stated in the policy or contract must be credited as if the contractual date for crediting interest or changing values was the date of the impairment or insolvency of the insured member, whichever occurs first and is not subject to forfeiture. (k) An unallocated annuity contract other than an annuity owned by a governmental retirement plan established under section 401, 403(b) or 457 of the Internal Revenue Code, 26 U.S.C. §§ 401, 403(b) and 457, respectively, or the trustees of such a plan. (l) A policy or contract providing any hospital, medical, prescription drug or other health care benefits pursuant to 42 U.S.C. §§ 1395w-21 et seq. and 1395w-101 et seq. or 42 U.S.C. §§ 1396 et seq., and any regulations adopted pursuant thereto.

Non-Resident Coverage

§686C.030.1(a)(2). Yes. Covers nonresidents but only if: (I) The member insurer that issued the policies or contracts is domiciled in this state; (II) The states in which the persons reside have associations similar to the Association created by this chapter; and (III) The persons are not eligible for coverage by an association in another state because the member insurer was not authorized in the other state at the time specified in that state’s law governing guaranty associations;

Definition Of Premium

§686C.110 “Premiums” means amounts received in any calendar year on covered policies or contracts less premiums, considerations and deposits returned thereon, and less dividends and credits for experience thereon. The term does not include: 1. Any amounts received for policies or contracts or for the portions of policies or contracts for which coverage is not provided under NRS 686C.030 except that the assessable premium is not reduced on account of paragraph (c) of subsection 1 of NRS 686C.035 relating to limitations on interest and subsection 2 or paragraph (b) of subsection 1 of NRS 686C.210 relating to limitations with respect to any one life. 2. Premiums for an unallocated annuity contract, except those issued in accordance with the provisions of a governmental retirement plan, established under section 401, 403(b) or 457 of the Internal Revenue Code, 26 U.S.C. §§ 401, 403(b) and 457, respectively, or the trustees of such a plan. 3. Premiums that exceed $5,000,000 for several nongroup policies of life insurance owned by one owner, regardless of: (a) Whether the owner is a natural person, firm, corporation or other person; (b) Whether any person insured under the policies is an officer, manager, employee or other person; or (c) The number of policies or contracts held by the owner.

Interest Rate Adjustments

§686C.035.1(c) A portion of a policy or contract, other than a portion of a policy or contract of health insurance or that provides benefits for long-term care, including, without limitation, a rider that provides such benefits, to the extent that the rate of interest on which it is based, or the interest rate, crediting rate or similar factor determined by the 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 4 years before the date on which the association becomes obligated with respect to the policy or contract, exceeds the rate of interest determined by subtracting 2 percentage points from Moody’s Corporate Bond Yield Average averaged for the same period, or for the period between the date of issuance of the policy or contract and the date the association became obligated, whichever period is less; and (2) On or after the date on which the association becomes obligated with respect to the policy or contract, exceeds the rate of interest determined by subtracting 3 percentage points from Moody’s Corporate Bond Yield Average as most recently available.

Tax Offsets

§686C.280.2. Yes. Up to 20% of assessment amount may be offset for next 5 years, beginning with calendar year after the year the certificate of contribution is issued.

Triggers

Discretionary Triggers

§686C.150. When a member insurer is impaired. Amended effective 1/1/02.

Mandatory Triggers

§686C.152. When a member insurer is insolvent.

Foreign Triggers

No separate provision.

“Impaired Insurer”

§686C.090. “Impaired insurer” means a member insurer which is not an insolvent insurer and is placed under an order of rehabilitation or conservation by a court of competent jurisdiction. (Amended effective 7/1/15).

“Insolvent Insurer”

§686C.095. “Insolvent insurer” means a member insurer which is ordered to liquidate by a court of competent jurisdiction after a finding of insolvency. (Amended effective 7/1/15)

“Member Insurer”

§686C.100. “Member insurer” means an insurer which is licensed or holds a certificate of authority to transact in this state any kind of insurance for which coverage is provided in this chapter or a health maintenance organization which holds a certificate of authority to operate in this State. The term includes an insurer or health maintenance organization whose license or certificate of authority in this state has been suspended, revoked, not renewed or voluntarily withdrawn. The term does not include: 1. A fraternal benefit society; 2. A mandatory state pooling plan; 3. A mutual assessment company or other person that operates on the basis of assessments; 4. An insurance exchange; 5. An organization that is authorized only to issue charitable gift annuities under NRS 688A.281 to 688A.285, inclusive; 6. A reinsurance program operated by the State Government; or 7. An organization similar to any of those listed in subsections 1 to 6, inclusive.

Nebraska

Account Structure

§44-2705(1). For purposes of administration and assessment, the association shall maintain three accounts: (a) A health insurance account; (b) a life insurance account; and (c) an annuity account.

Advertising Prohibition

§ 44-2719.01 “Using name of association; when prohibited” No person, including an insurer, agent, or affiliate of an insurer, shall make, publish, disseminate, circulate, or place before the public, or cause directly to be made, published, disseminated, circulated, or placed before the public, in any newspaper, magazine, or other publication, in the form of a notice, circular, pamphlet, letter, or poster, over any radio station or television station, or in any other way any advertisement, announcement, or statement, written or oral, which uses the existence of the Nebraska Life and Health Insurance Guaranty Association for the purpose of sales, solicitation, or inducement to purchase any form of insurance covered by the Nebraska Life and Health Insurance Guaranty Association Act, except that this section shall not apply to the Nebraska Life and Health Insurance Guaranty Association or any other entity which does not sell or solicit insurance or coverage by a health maintenance organization.

Assessments

Assessment Limits

§44-2708(5)(a) Subject to the provisions of subdivision (b) of this subsection, the total of all assessments authorized by the association with respect to a member insurer for the life insurance account, the annuity account, and the health account shall not in one calendar year exceed two percent of that member insurer’s average annual premiums received in this state on the policies and contracts covered by the account during the three calendar years preceding the year in which the insurer became an impaired or insolvent insurer.

Assessment Classes

§44-2708(2). There shall be two classes of assessments as follows: (a) Class A assessments shall be authorized and called for the purpose of meeting administrative costs and other general expenses, including expenses for examinations conducted under the authority of subdivision (3) of section 44-2711. Class A assessments may be made whether or not related to a particular impaired or insolvent insurer; and (b) Class B assessments shall be authorized and called to the extent necessary to carry out the powers and duties of the association under section 44-2707 with regard to an impaired or insolvent domestic insurer.

Benefit Limits

§44-2703(3) The benefits that the association may become obligated to cover shall in no event exceed the lesser of: (a) The contractual obligations for which the insurer is liable or would have been liable if it were not an impaired or insolvent insurer; or (b) (i) With respect to one life, regardless of the number of policies or contracts: (A) Three hundred thousand dollars in life insurance death benefits, but not more than one hundred thousand dollars in net cash surrender and net cash withdrawal values for life insurance; (B) In health insurance benefits: (I) Five hundred thousand dollars for health benefit plans; (II) three hundred thousand dollars for disability insurance or long-term care insurance as defined in section 44-4509. For purposes of this subdivision, disability insurance means the type of policy which pays a monthly or weekly amount if an individual is disabled and cannot work; and (III) one hundred thousand dollars for coverages not defined as disability insurance, long-term care insurance, or health benefit plans, including any net cash surrender and net cash withdrawal values; or (C) Two hundred fifty thousand dollars in the present value of annuity benefits, including net cash surrender and net cash withdrawal values; (ii) With respect to each payee of a structured settlement annuity or beneficiary or beneficiaries of the payee if deceased, two hundred fifty thousand dollars in the present value of annuity benefits, in the aggregate, including net cash surrender and net cash withdrawal values, if any; (iii) The association shall not be obligated to cover more than: (A) An aggregate of three hundred thousand dollars in benefits with respect to any one life under subdivisions (3)(b)(i) and (ii) of this section, except that with respect to benefits for health benefit plans under subdivision (3)(b)(i)(B)(I) of this section, in which case the aggregate liability of the association shall not exceed five hundred thousand dollars with respect to any one individual; or (B) With respect to one owner of multiple nongroup policies of life insurance, whether the policy 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 in benefits regardless of the number of policies and contracts held by the owner;

Coverages

Covered Contracts

§44-2703(2)(a). The act shall provide coverage to the persons specified in subsection (1) of this section for direct nongroup life insurance, health insurance, which for purposes of the act includes health maintenance organization subscriber contracts and certificates, or annuity policies or contracts and supplemental contracts to any of these and for certificates under direct group policies and contracts, except as limited by the 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

§44-2703(2) (b) The act shall not apply to: (i) Any portion of any policy or contract not guaranteed by the insurer or under which the risk is borne by the policy or contract holder; (ii) A policy or contract of reinsurance, unless assumption certificates have been issued pursuant to the reinsurance policy or contract; (iii) A portion of a policy or contract, except any portion of a policy or contract, including a rider, that provides long-term care or any other health insurance benefits, 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: (A) Averaged over the period of four years prior to the date on which the association becomes obligated with respect to the policy or contract, exceeds the rate of interest determined by subtracting two 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 years before the association became obligated; and (B) 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 percentage points from Moody’s corporate bond yield average as most recently available; (iv) 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: (A) A multiple employer welfare arrangement as described in 29 U.S.C. 1002(40); (B) A minimum premium group insurance plan; (C) A stop-loss group insurance plan; or (D) An administrative services only contract; (v) A portion of a policy or contract to the extent that it provides for: (A) Dividends or experience rating credits; (B) Voting rights; or (C) 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; (vi) 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; (vii) A portion of a policy or contract to the extent that the assessments required by section 44-2708 with respect to the policy or contract are preempted by federal or state law; (viii) An obligation that does not arise under the express written terms of the policy or contract issued by the member insurer to the enrollee, contract holder, contract owner, or policy owner, including, without limitation: (A) Claims based on marketing materials; (B) 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; (C) Misrepresentations of or regarding policy or contract benefits; (D) Extra-contractual claims; or (E) A claim for penalties or consequential or incidental damages; (ix) A contractual agreement that establishes the member insurer’s obligations 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; (x) 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 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 subdivision, 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; (xi) An unallocated annuity contract, a funding agreement, a guaranteed interest contract, a guaranteed investment contract, a synthetic guaranteed investment contract, or a deposit administration contract; (xii) Any such policy or contract issued by: (A) A hospital or medical service organization, whether profit or nonprofit; (B) A fraternal benefit society; (C) A mandatory state pooling plan; (D) An unincorporated mutual association; (E) An assessment association operating under Chapter 44 which issues only policies or contracts subject to assessment; (F) An insurance exchange; or (G) An organization that has a certificate or license limited to the issuance of charitable gift annuities; (xiii) Any policy or contract issued by any person, corporation, or organization which is not licensed by the Department of Insurance under Chapter 44; (xiv) A policy or contract providing any hospital, medical, prescription drug, or other health care benefits pursuant to Title 42, Chapter 7, Subchapter XVIII, Part C or D, commonly known as Medicare Part C and D, or Title 42, Chapter 7, Subchapter XIX, commonly known as Medicaid, of the United States Code, any regulations issued pursuant thereto, or any other policy or contract issued pursuant to the Medical Assistance Act; or (xv) A viatical settlement contract as defined in section 44-1102 or a viaticated policy as defined in section 44-1102.

Non-Resident Coverage

§44-2707(a)(ii)(B). Yes. Non residents are covered if all of the following conditions apply: (I) The member insurer that issued the policies or contracts is domiciled in this state; (II) The states in which the persons reside have associations similar to the association created by the act; and (III) 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 state’s guaranty association law.

Definition Of Premium

§44-2702(18) 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 policies or contracts for which coverage is not provided under subsection (2) of section 44-2703, except that assessable premiums shall not be reduced on account of subdivision (2)(b)(iii) of section 44-2703 relating to interest limitations and subdivision (3)(b) of section 44-2703 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) With respect to multiple nongroup life insurance policies 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, premiums exceeding five million dollars with respect to these policies or contracts, regardless of the number of policies or contracts held by the owner;

Interest Rate Adjustments

§44-2703(2)(b)(iii). Guaranty Association excludes from coverage: (iii) A portion of a policy or contract, except any portion of a policy or contract, including a rider, that provides long-term care or any other health insurance benefits, 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: (A) Averaged over the period of four years prior to the date on which the association becomes obligated with respect to the policy or contract, exceeds the rate of interest determined by subtracting two 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 years before the association became obligated; and (B) 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 percentage points from Moody’s corporate bond yield average as most recently available;

Tax Offsets

§44-2716(1). Yes. Up to 20% of assessment amount may be offset for next 5 years, beginning with the calendar year after the year the certificate of contribution is issued.

Triggers

Discretionary Triggers

§44-2707(1). When an insurer is impaired.

Mandatory Triggers

§44-2707(2). When a member insurer is insolvent.

Foreign Triggers

No separate provision.

“Impaired Insurer”

§44-2702(11) Impaired insurer means a member insurer which, after August 24, 1975, (a) is deemed by the director to be potentially unable to fulfill its contractual obligations and is not an insolvent insurer and (b) is placed under an order of rehabilitation or conservation by a court of competent jurisdiction;

“Insolvent Insurer”

§44-2702(12) Insolvent insurer means a member insurer which, after August 24, 1975, is placed under an order of liquidation by a court of competent jurisdiction with a finding of insolvency;

“Member Insurer”

§44-2702(13) Member insurer means an 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 for under section 44-2703. Member insurer includes any insurer or health maintenance organization whose license or certificate of authority may have been suspended, revoked, not renewed, or voluntarily withdrawn. Member insurer does not include: (a) A hospital or medical service organization, whether profit or nonprofit; (b) A fraternal benefit society; (c) A mandatory state pooling plan; (d) A mutual assessment company or other person that operates on an assessment basis; (e) An assessment association operating under Chapter 44 which issues only policies or contracts subject to assessment; (f) An insurance exchange; (g) An organization that has a certificate or license limited to the issuance of charitable gift annuities; (h) A viatical settlement provider, a viatical settlement broker, or a financing entity under the Viatical Settlements Act; or (i) An entity similar to any entity listed in subdivisions (13)(a) through (h) of this section;

Montana

Account Structure

§33-10-203(2). (2) For purposes of administration and assessment, the association shall maintain two accounts: (a) the health insurance account; and (b) the life insurance and annuity account that includes the following subaccounts: (i) the life insurance account; (ii) the annuity account that includes contracts owned by a governmental retirement plan or the plan’s trustee established under section 401, 403(b), or 457 of the Internal Revenue Code, but does not otherwise include unallocated annuities; and (iii) the unallocated annuity account that must exclude unallocated annuity contracts owned by a governmental retirement benefit plan or the plan’s trustee established under section 401, 403(b), or 457 of the Internal Revenue Code. (iii) the unallocated annuity account that must exclude unallocated annuity contracts owned by a governmental retirement benefit plan or the plan’s trustee established under section 401, 403(b), or 457 of the Internal Revenue Code. Amended effective July 1, 2003; corrected effective January 1, 2005.

Advertising Prohibition

§33-10-210. “Unfair trade practice — notice to policyowners” (1) It is a prohibited unfair trade practice for any person to make use in any manner of the protection afforded by this part in the sale of insurance.

Assessments

Assessment Limits

§33-10-227(6)(a)(i) Subject to the provisions of subsection (6)(a)(ii), the total of all assessments authorized by the association with respect to a member insurer for each subaccount of the life insurance and annuity account and for the health account may not in 1 calendar year exceed 2% of that member insurer’s average annual premiums received in this state on the policies and contracts covered by the subaccount or account during the 3 calendar years preceding the year in which the insurer became an impaired or insolvent insurer.

Assessment Classes

§33-10-227(3). There are two classes of assessments: (a) Class A assessments must be authorized and called 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 or insolvent insurer. (b) Class B assessments must be authorized and called to the extent necessary to carry out the powers and duties of the association under 33-10-205 with regard to an impaired or insolvent insurer.

Benefit Limits

§33-10-224(3)The benefits for which the association may become liable may not exceed the lesser of: (a) the contractual obligations for which the insurer is liable or would have become liable if it were not an impaired or insolvent insurer; or (b) (i) with respect to any one life, regardless of the number of policies or contracts: (A) $300,000 in life insurance death benefits, but not more than $100,000 in net cash surrender and net cash withdrawal values for life insurance; (B) in health insurance benefits: (I) $500,000 for health insurance coverage; (II) $300,000 for disability income insurance; (III) $300,000 for long-term care insurance; (IV) $100,000, including any net cash surrender and net cash withdrawal values, for coverages not included in subsections (3)(b)(i)(B)(I) through (3)(b)(i)(B)(III); (C) $250,000 in the present value of annuity benefits, including net cash surrender and net cash withdrawal values; (ii) with respect to each individual participating in a governmental retirement plan established under section 401, 403(b), or 457 of the Internal Revenue Code and covered by an unallocated annuity contract or with respect to the beneficiaries of each individual, if deceased, in the aggregate, $250,000 in present value annuity benefits, including net cash surrender and net cash withdrawal values; (iii) with respect to each payee of a structured settlement annuity or beneficiary of the payee if the payee is deceased, $250,000 in present value annuity benefits, in the aggregate, including net cash surrender and net cash withdrawal values, if any; (iv) with respect to either one contract owner provided coverage under subsection (1)(b) or one plan sponsor whose plan owns directly or in trust one or more unallocated annuity contracts not included in subsection (3)(b)(ii), $5 million in benefits, irrespective of the number of contracts held by the contract owner or plan sponsor. If one or more unallocated annuity contracts are covered contracts under this part and are owned by a trust or other entity for the benefit of two or more plan sponsors, coverage must be afforded by the association if the largest interest in the trust or entity owning the contract or contracts is held by a plan sponsor whose principal place of business is in this state. In no event is the association obligated to cover more than $5 million in benefits with respect to all these unallocated contracts. (4) In no event is the association obligated to cover more than: (a) an aggregate of $300,000 in benefits with respect to any one life under subsections (3)(b)(i) through (3)(b)(iii), except with respect to benefits for health insurance coverage under subsection (3)(b)(i), in which case the aggregate liability of the association may not exceed $500,000 with respect to any one individual; and (b) with respect to one owner of multiple nongroup policies of life insurance, whether the policyowner is an individual, firm, corporation, or other person and whether the persons insured are officers, managers, employees, or other persons, $5 million in benefits, regardless of the number of policies and contracts held by the owner.

Coverages

Covered Contracts

§33-10-224(2)(a)(i) Except as otherwise provided in this part, this part provides coverage to the persons specified in subsection (1) for: (A) direct, nongroup life and health policies, direct, nongroup annuity contracts, and supplemental contracts to any of these; (B) certificates under direct group policies and contracts and supplemental contracts to any of these; and (C) unallocated annuity contracts issued by member insurers. (ii) Annuity contracts and certificates under group annuity contracts include but are not limited to guaranteed investment contracts, deposit administration contracts, unallocated funding agreements, allocated funding agreements, structured settlement annuities, annuities issued in connection with government lotteries, and any immediate or deferred annuity contracts.

Non-Covered Contracts

§33-10-224(b). This part does not provide coverage for any of the following: (i) a portion of a policy or contract not guaranteed by the member insurer or under which the risk is borne by the policy or contract owner; (ii) a policy or contract of reinsurance, unless assumption certificates have been issued pursuant to the reinsurance policy or contract; (iii) except for the portion of the policy, including a rider, that provides long-term care or any other health insurance benefits, a portion of a policy or contract to the extent that the rate of interest on which the portion 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: (A) when averaged over the period of 4 years prior to the date on which the member insurer becomes an impaired or insolvent insurer under this part exceeds the rate of interest determined by subtracting 2 percentage points from Moody’s corporate bond yield average that is averaged for that same period or for a lesser period if the policy or contract was issued less than 4 years before the member insurer became an impaired or insolvent insurer under this part; and (B) when the returns or changes in value exceed the rate of interest determined by subtracting 3 percentage points from the Moody’s corporate bond yield average most recently available on or after the date on which the member insurer becomes an impaired or insolvent insurer under this part. (iv) 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: (A) a multiple employer welfare arrangement as defined in 29 U.S.C. 1002; (B) a minimum premium group insurance plan; (C) a stop-loss group insurance plan; or (D) an administrative services-only contract; (v) a portion of a policy or contract to the extent that it contains provisions for dividends, experience rating credits, or voting rights or for payment of any fees or allowances to any person, including the policyowner or contract owner, in connection with the service to or administration of the policy or contract; (vi) a policy or contract issued in this state by a member insurer at any time when it was not licensed or did not have a certificate of authority to issue the policy or contract in this state; (vii) any unallocated annuity contract issued to or in connection with a benefit plan that is protected under the federal pension benefit guaranty corporation, regardless of whether the federal pension benefit guaranty corporation has yet become liable to make any payments with respect to the benefit plan; (viii) a portion of any unallocated annuity contract that is not issued to or in connection with a specific employee, union, or association of natural persons’ benefit plan or a government lottery; (ix) a portion of a policy or contract to the extent that federal or state law preempts or otherwise does not permit the assessments required by 33-10-227 with respect to the policy or contract; (x) an obligation that does not arise under the express written terms of the policy or contract issued by the insurer to the contract owner or policyowner, including without limitation: (A) claims based on marketing materials; (B) claims based on side letters, riders, or other documents that were issued by the insurer without meeting applicable requirements for filing policy forms or for policy approval; (C) misrepresentation of or regarding policy benefits; (D) extracontractual claims; or (E) a claim for penalties or consequential or incidental damages; (xi) a contractual agreement that establishes the member insurer’s 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 benefit plan or its trustee, which in each case may not be an affiliate of the member insurer; (xii) a portion of a policy or contract to the extent that 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 policyowner’s or contract owner’s rights are subject to forfeiture as of the date the member insurer becomes an impaired or insolvent insurer under this part. 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 section, 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 the impairment or insolvency of the member insurer and the interest or changes in value are not subject to forfeiture. (xiii) a policy or contract providing any hospital, medical, prescription drug, or other health care benefits pursuant to either 42 U.S.C. 1395w-21 through 1395w-152, commonly known as medicare parts C and D, or 42 U.S.C. 1396 to 1396w-5, commonly known as medicaid, or any regulations issued pursuant to those federal statutes; or (xiv) structured settlement annuity benefits to which a payee or beneficiary has transferred his or her rights in a structured settlement factoring transaction as defined in 26 U.S.C. 5891(c)(3)(A), regardless of whether the transaction occurred before or after 26 U.S.C. 5891(c)(3)(A) became effective.

Non-Resident Coverage

§33-10-201(5)(a)(ii). Yes. Covers nonresidents, but only under all of the following conditions: (I) the member insurer that issued the policies is domiciled in this state; (II) the state in which the person resides has an association similar to the association created under this part; and (III) the person is not eligible for coverage by an association in any other state because the insurer, health service corporation, or health maintenance organization was not licensed in the state at the time specified in the state’s guaranty association law.

Definition Of Premium

§ 33-10-202 (18) (a) “Premiums” means the amount or consideration received on covered policies or contracts less return premiums, considerations, and deposits, and less dividends and experience credits. (b) The term does not include: (i) amounts or considerations received for policies or contracts or for the portions of policies or contracts for which coverage is not provided pursuant to this part, except that an assessable premium may not be reduced based on 33-10-224(2)(b) relating to interest limitations and 33-10-224(3)(b) relating to one individual, one participant, and one contract owner; (ii) premiums in excess of $5 million on an unallocated annuity contract not issued under a governmental retirement benefit plan or the plan’s trustee established under section 401, 403(b), or 457 of the Internal Revenue Code; or (iii) premiums in excess of $5 million with respect to multiple nongroup policies of life insurance owned by one owner, whether the policyowner 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.

Interest Rate Adjustments

§33-10-224(2)(b)(iii) Guaranty Association excludes from coverage: except for the portion of the policy, including a rider, that provides long-term care or any other health insurance benefits, a portion of a policy or contract to the extent that the rate of interest on which the portion 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: (A) when averaged over the period of 4 years prior to the date on which the member insurer becomes an impaired or insolvent insurer under this part exceeds the rate of interest determined by subtracting 2 percentage points from Moody’s corporate bond yield average that is averaged for that same period or for a lesser period if the policy or contract was issued less than 4 years before the member insurer became an impaired or insolvent insurer under this part; and (B) when the returns or changes in value exceed the rate of interest determined by subtracting 3 percentage points from the Moody’s corporate bond yield average most recently available on or after the date on which the member insurer becomes an impaired or insolvent insurer under this part.

Tax Offsets

§33-10-230. Yes. Up to 20% of assessment amount may be offset beginning the first year after assessment.

Triggers

Discretionary Triggers

§33-10-219. If a member insurer is an impaired insurer. (Amended effective July 1, 2003)

Mandatory Triggers

§33-10-220. (2) If a member insurer is an insolvent insurer. (Amended effective 3/18/2011)

Foreign Triggers

No separate provision.

“Impaired Insurer”

§33-10-202(10) “Impaired insurer” means a member insurer that is not an insolvent insurer and that is placed under an order of rehabilitation or supervision by a court of competent jurisdiction.

“Insolvent Insurer”

§33-10-202(11) “Insolvent insurer” means a member insurer that is placed under an order of liquidation by a court of competent jurisdiction upon a finding of insolvency.

“Member Insurer”

§33-10-202(13) (a) “Member insurer” means an insurer, health service corporation, or health maintenance organization that is licensed or that holds a certificate of authority to transact any kind of insurance in this state for which coverage is provided under this part and includes any insurer, health service corporation, or health maintenance organization whose license or certificate of authority in this state may have been suspended, revoked, not renewed, or voluntarily withdrawn. (b) The term does not include: (i) a hospital or medical service organization, whether for profit or not for profit; (ii) a fraternal benefit society; (iii) a mandatory state pooling plan; (iv) a mutual assessment company or any other person that operates on an assessment basis; (v) an insurance exchange; (vi) a multiple employer welfare arrangement as defined in 29 U.S.C. 1002; (vii) an organization that has a certificate or license limited to the issuance of charitable gift annuities; or (viii) an entity similar to any of the entities listed in subsections (13)(b)(i) through (13)(b)(vii).

Missouri

Account Structure

§376.720.1. For purposes of administration and assessment the association shall maintain three accounts: (1) The health account; (2) The life insurance account; (3) The annuity account, excluding unallocated annuity contracts.

Advertising Prohibition

§376.755 “Advertising, use of guaranty association prohibited” No person, including a member insurer, agent or affiliate of an 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, written or oral, which uses the existence of the 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 sections 376.715 to 376.758. If a policy exceeds the limitations of coverage under sections 376.715 to 376.758, the insurer shall prominently inscribe on an endorsement to the insurance contract the limitations of coverage provided by the guaranty association. This section shall not apply to the Missouri Life and Health Insurance Guaranty Association or any other entity which does not sell or solicit insurance or coverage by a health maintenance organization.

Assessments

Assessment Limits

§376.737.2. (1) Subject to the provisions of subdivision (2) of this subsection, the total of all assessments upon a member insurer for each account shall not in any one calendar year exceed two percent of such insurer’s average annual premiums received in this state on the policies and contracts covered by the account during the three calendar years preceding the year 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 year in the 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 sections 376.715 to 376.758.

Assessment Classes

§376.735.2. There shall be two assessments, as follows: (1) Class A assessments may be made for the purpose of meeting administrative and legal costs and other expenses. Class A assessments may be made whether or not related to a particular impaired or insolvent insurer; (2) Class B assessments may be made to the extent necessary to carry out the powers and duties of the association under sections 376.715 to 376.758 with regard to an impaired or an insolvent insurer.

Benefit Limits

§376.717.5. Except as otherwise provided in subdivision (2) of this subsection, the benefits for which the association may become liable with regard to a member insurer that was first placed under an order of rehabilitation or under an order of liquidation if no order of rehabilitation was entered on or after August 28, 2013, shall in no event exceed the lesser of: (1) The contractual obligations for which the 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: a. Three hundred thousand dollars in life insurance death benefits, but not more than one hundred thousand dollars in net cash surrender and net cash withdrawal values for life insurance; b. For health insurance benefits: (i) One hundred thousand dollars of coverages other than disability income insurance, health benefit plans, or long-term care insurance, including any net cash surrender and net cash withdrawal values; (ii) Three hundred thousand dollars for disability income insurance and three hundred thousand dollars for long-term care insurance; (iii) Five hundred thousand dollars for health benefit plans; c. Two hundred fifty thousand dollars 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 deceased, two hundred fifty thousand dollars in present value annuity benefits, in the aggregate, including net cash surrender and net cash withdrawal values, if any; (c) Except that, in no event shall the association be obligated to cover more than: a. An aggregate of three hundred thousand dollars in benefits with respect to any one life under paragraphs (a) and (b) of this subdivision, except with respect to benefits for health benefit plans under item (iii) of subparagraph b. of paragraph (a) of this subdivision, in which case the aggregate liability of the association shall not exceed five hundred thousand dollars with respect to any one individual; or b. With respect to one owner of multiple nongroup policies of life insurance, whether the policy 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 in benefits, regardless of the number of policies and contracts held by the owner.

Coverages

Covered Contracts

§376.717.2. Sections 376.715 to 376.758 shall provide coverage to the persons specified in subsection 1 of this section for policies or contracts of direct, nongroup life insurance, health insurance, which for the purposes of sections 376.715 to 376.758 includes health maintenance organizations’ subscriber contracts and certificates, or annuities and supplemental contracts to any such policies or contracts, and for certificates under direct group policies and contracts, except as limited by the provisions of sections 376.715 to 376.758. 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

§376.717.3. Except as otherwise provided in paragraph (c) of subdivision (3) of this subsection, sections 376.715 to 376.758 shall not provide coverage for: (1) Any portion of a policy or contract not guaranteed by the member insurer, or under which the risk is borne by the policy or contract holder; (2) Any policy or contract of reinsurance, unless assumption certificates have been issued; (3) Any 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: (a) Averaged over the period of four years prior to the date on which the association becomes obligated with respect to such policy or contract, exceeds the rate of interest determined by subtracting three 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 years before the association became obligated; (b) On and after the date on which the association becomes obligated with respect to such policy or contract exceeds the rate of interest determined by subtracting three percentage points from Moody’s Corporate Bond Yield Average as most recently available; and (c) The exclusion from coverage referenced in this subdivision shall not apply to any portion of a policy or contract, including a rider, that provides long-term care or any other health insurance benefits; (4) Any 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 or members to the extent that such plan or program is self-funded or uninsured, including but not limited to benefits payable by an employer, association or other person under: (a) A multiple employer welfare arrangement as defined in 29 U.S.C. Section 1144, as amended; (b) A minimum premium group insurance plan; (c) A stop-loss group insurance plan; or (d) An administrative services only contract; (5) Any portion of a policy or contract to the extent that it provides dividends or experience rating credits, voting rights, or provides that any fees or allowances be paid to any person, including the policy or contract holder, in connection with the service to or administration of such policy or contract; (6) Any 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 such policy or contract in this state; (7) A portion of a policy or contract to the extent that the assessments required by section 376.735 with respect to the policy or contract are preempted by federal or state law; (8) 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, contract owner, or policy owner, including without limitation: (a) Claims based on marketing materials; (b) 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; (c) Misrepresentations of or regarding policy or contract benefits; (d) Extra-contractual claims; (e) A claim for penalties or consequential or incidental damages; (9) A contractual agreement that establishes the member insurer’s obligations 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; (10) An unallocated annuity contract; (11) 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 sections 376.715 to 376.758, whichever is earlier. If a policy’s or contract’s interest or changes in value are credited less frequently than annually, for purposes of determining the value that have been credited and are not subject to forfeiture under this subdivision, 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; (12) A policy or contract providing any hospital, medical, prescription drug or other health care benefit under Part C or Part D of Subchapter XVIII, Chapter 7 of Title 42 of the United States Code, Medicare Parts C & D, Subchapter XIX, Chapter 7 of Title 42 of the United States Code, Medicaid, or any regulations issued thereunder.

Non-Resident Coverage

§376.717.1(2)(b). Yes. Covers nonresidents under the following conditions: a. The member insurers which issued such policies or contracts are domiciled in this state; b. 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 such state at the time specified in such state’s guaranty association law; and c. The states in which the persons reside have associations similar to the association created by sections 376.715 to 376.758;

Definition Of Premium

§ 376.718 (15) “Premiums”, amounts received on covered policies or contracts, less premiums, considerations and deposits returned thereon, and less dividends and experience credits thereon. The term does not include any amounts received for any policies or contracts or for the portions of any policies or contracts for which coverage is not provided under subsection 3 of section 376.717, except that assessable premium shall not be reduced on account of subdivision (3) of subsection 3 of section 376.717 relating to interest limitations and subdivision (2) of subsection 4 of section 376.717 relating to limitations with respect to any one life, any one participant, and any one policy or contract holder. Premiums shall not include: (a) Premiums on an unallocated annuity contract; or (b) With respect to multiple nongroup 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, premiums in excess of five million dollars with respect to such policies or contracts, regardless of the number of policies or contracts held by the owner;

Interest Rate Adjustments

§376.717.3(3). Any 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: (a) Averaged over the period of four years prior to the date on which the association becomes obligated with respect to such policy or contract, exceeds the rate of interest determined by subtracting three 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 years before the association became obligated; (b) On and after the date on which the association becomes obligated with respect to such policy or contract exceeds the rate of interest determined by subtracting three percentage points from Moody’s Corporate Bond Yield Average as most recently available; and (c) The exclusion from coverage referenced in this subdivision shall not apply to any portion of a policy or contract, including a rider, that provides long-term care or any other health insurance benefits;

Tax Offsets

§376.745. Yes. Up to 20% of assessment amount may be offset for next 5 years after payment; covers all but administrative expenses.

Triggers

Discretionary Triggers

§376.724.1. If a member insurer is an impaired insurer. Amended 7.13.2010.

Mandatory Triggers

§376.724.2. If a member insurer is an insolvent insurer. Amended 7.13.2010.

Foreign Triggers

No separate provision under Act. Amended 7.13.2010.

“Impaired Insurer”

§376.718(9) “Impaired insurer”, a member insurer which, after August 13, 1988, is not an insolvent insurer, and is placed under an order of rehabilitation or conservation by a court of competent jurisdiction;

“Insolvent Insurer”

§376.718(10) “Insolvent insurer”, a member insurer which, after August 13, 1988, is placed under an order of liquidation by a court of competent jurisdiction with a finding of insolvency;

“Member Insurer”

§376.718 (11) “Member insurer”, any insurer, health maintenance organization, or health services corporation licensed or which 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 376.717, 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 any entity that operates on an assessment basis; (d) An insurance exchange; (e) An organization that issues qualified charitable gift annuities, as defined in section 352.500, and does not hold a certificate or license to transact insurance business; or (f) Any entity similar to any of the entities listed in paragraphs (a) to (e) of this subdivision;

Mississippi

Account Structure

§83-23-211(1). Two accounts: For purposes of administration and assessment the association shall maintain two (2) accounts: (a) The life insurance and annuity account which includes the following subaccounts: (i) Life insurance account; (ii) Annuity account which shall include annuity contracts owned by a governmental retirement plan (or its trustee) established under Section 401, 403(b) or 457 of the United States Internal Revenue Code, but shall otherwise exclude unallocated annuities; and (iii) Unallocated annuity account which shall exclude contracts owned by a governmental retirement benefit plan (or its trustee) established under Section 401, 403(b) or 457 of the United States Internal Revenue Code. (b) The health account.

Advertising Prohibition

§83-23-235 “Use of association’s name to advertise; statement of purpose and limitations of article; attachment to contracts; disclaimer” (1) 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, written or oral, which uses the existence of the 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 Mississippi Life and Health Insurance Guaranty Association Act. However, this § shall not apply to the Mississippi Life and Health Insurance Guaranty Association or any other entity which does not sell or solicit insurance or coverage by a health maintenance organization.

Assessments

Assessment Limits

§83-23-217(5)(a). Two percent (2%) of average annual premiums in state for policies covered by each account or subaccount during the three calendar years preceding the year in which the member insurer became impaired or insolvent.

Assessment Classes

§83-23-217(2). Two classes of assessments: Class A for administrative and legal costs, other expenses; and Class B to carry out the powers and duties of the association with regard to an impaired or insolvent insurer.

Benefit Limits

§83-23-205(4)(b)(i) With respect to any one (1) 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, including any net cash surrender and net cash withdrawal values; b. Three Hundred Thousand Dollars ($ 300,000.00) for disability income insurance and Three Hundred Thou-sand Dollars ($ 300,000.00) for long-term care insurance; c. Five Hundred Thousand Dollars ($ 500,000.00) for health benefit plans; 3. Two Hundred Fifty Thousand Dollars ($ 250,000.00) in the present value of annuity benefits, including net cash surrender and net cash withdrawal values; or (ii) With respect to each individual participating in a governmental retirement benefit plan established under Section 401, 403(b) or 457 of the United States Internal Revenue Code covered by an unallocated annuity contract or the beneficiaries of each such individual if deceased, in the aggregate, Two Hundred Fifty Thousand Dollars ($ 250,000.00) in present value annuity benefits, including net cash surrender and net cash withdrawal values; (iii) With respect to each payee of a structured settlement annuity (or beneficiary or beneficiaries of the payee if deceased), Two Hundred Fifty Thousand Dollars ($ 250,000.00) in present value annuity benefits, in the aggregate, including net cash surrender and net cash withdrawal values, if any; (iv) However, in no event shall the association be obligated to cover more than (a) an aggregate of Three Hundred Thousand Dollars ($ 300,000.00) in benefits with respect to any one (1) life under paragraphs (b) (i), (b) (ii) and (b) (iii) of this subsection except with respect to benefits for health benefit plans under paragraph (b) (i) of this subsection, in which case the aggregate liability of the association shall not exceed Five Hundred Thousand Dollars ($ 500,000.00) with respect to any one (1) individual, or (b) with respect to one (1) owner of multiple nongroup 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; (v) With respect to either (a) one (1) contract owner provided coverage under subsection (1) (c) (ii) of this section; or (b) one (1) plan sponsor whose plans own directly or in trust one or more unallocated annuity contracts not included in paragraph (b) (ii) of this subsection, Five Million Dollars ($ 5,000,000.00) in benefits, irrespective of the number of contracts with respect to the contract owner or plan sponsor. However, in the case where one or more unallocated annuity contracts are covered contracts under this article and are owned by a trust or other entity for the benefit of two (2) or more plan sponsors, coverage shall be afforded by the association if the largest interest in the trust or entity owning the contract or contracts is held by a plan sponsor whose principal place of business is in this state and in no event shall the association be obligated to cover more than Five Million Dollars ($ 5,000,000.00) in benefits with respect to all these unallocated contracts;

Coverages

Covered Contracts

§83-23-205(2)(a) This article shall provide coverage to the persons specified in subsection (1) of this section for policies or contracts of direct, nongroup life insurance, health insurance (which for the purposes of this article includes health maintenance organization subscriber contracts and certificates), or annuities and supplemental contracts to any of these, for certificates under direct group policies and contracts, and for unallocated annuity contracts issued by member insurers, except as limited by this article. Annuity contracts and certificates under group annuity contracts include, but are not limited to, guaranteed investment contracts, deposit administration contracts, unallocated funding agreements, allocated funding agreements, structured settlement annuities, annuities issued to or in connection with government lotteries and any immediate or deferred annuity contracts.

Non-Covered Contracts

§83-23-205(2)(b) This article shall not provide coverage for: (i) A portion of a policy or contract not guaranteed by the member insurer, or under which the risk is borne by the policy or contract owner; (ii) A policy or contract of reinsurance, unless assumption certificates have been issued pursuant to the reinsurance policy or contract; (iii) 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 member insurer becomes an impaired or insolvent insurer under this article, whichever is earlier, exceeds the 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 member insurer becomes an impaired or insolvent insurer under this article, whichever is earlier; and 2. On and after the date on which the member insurer becomes an impaired or insolvent insurer under this article, whichever is earlier, exceeds the rate of interest determined by subtracting three (3) percentage points from Moody’s Corporate Bond Yield Average as most recently available; (iv) 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 1002(40); 2. A minimum premium group insurance plan; 3. A stop-loss group insurance plan; or 4. An administrative services only contract; (v) 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; (vi) 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 such policy or contract in this state; (vii) An unallocated annuity contract issued to or in connection with a benefit plan protected under the federal Pension Benefit Guaranty Corporation, regardless of whether the federal Pension Benefit Guaranty Corporation has yet become liable to make any payments with respect to the benefit plan; (viii) A portion of any unallocated annuity contract that is not issued to or in connection with a specific employee, union or association of natural persons benefit plan or a government lottery; (ix) A portion of a policy or contract to the extent that the assessments required by Section 83-23-217 with respect to the policy or contract are preempted by federal or state law; (x) 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, contract owner 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; (xi) A contractual agreement that establishes the member insurer’s obligations 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; (xii) 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 this article, 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 paragraph, 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; and (xiii) 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 & D), or Subchapter XIX, Chapter 7 of Title 42 of the United States Code (commonly known as Medicaid), or any regulations issued pursuant thereto. (xiv) Structured settlement annuity benefits to which a payee (or beneficiary) has transferred his or her rights in a structured settlement factoring transaction as defined in 26 U.S.C. 5891(c)(3)(A), regardless of whether the transaction occurred before or after 26 U.S.C. 5891(c)(3)(A) became effective.

Non-Resident Coverage

§83-23-205(1)(b)(ii). Yes. Covers nonresidents under the following conditions: 1) the member insurer that issued the policies or contract is domiciled in this state; 2) the states in which the persons reside have associations similar to the association created by this article; and 3) the persons are not eligible for coverage 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 state’s guaranty association law.

Definition Of Premium

§ 83-23-209 (r) “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 policies or contracts for which coverage is not provided under Section 83-23-205(2), except that assessable premium shall not be reduced on account of Sections 83-23-205(2)(b)(iii) relating to interest limitations and 83-23-205(3) (b) relating to limitations with respect to one (1) individual, one (1) participant and one (1) policy or contract owner. “Premiums” shall not include: (i) Premiums in excess of Five Million Dollars ($ 5,000,000.00) on an unallocated annuity contract not issued under a governmental retirement benefit plan (or its trustee) established under Section 401, 403(b) or 457 of the United States Internal Revenue Code; or (ii) With respect to multiple nongroup policies of life insurance owned by one (1) 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, premiums in excess of Five Million Dollars ($ 5,000,000.00) with respect to these policies or contracts, regardless of the number of policies or contracts held by the owner.

Interest Rate Adjustments

§83-23-205(2)(b)(iii). Guaranty Association excludes from coverage: 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 member insurer becomes an impaired or insolvent insurer under this article, whichever is earlier, exceeds the 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 member insurer becomes an impaired or insolvent insurer under this article, whichever is earlier; and 2. On and after the date on which the member insurer becomes an impaired or insolvent insurer under this article, whichever is earlier, exceeds the rate of interest determined by subtracting three (3) percentage points from Moody’s Corporate Bond Yield Average as most recently available; 3. The exclusion from coverage referenced in subsection (2)(b)(iii) of this section shall not apply to any portion of a policy or contract, including a rider, that provides long-term care or any other health insurance benefits.

Tax Offsets

§83-23-218(1). Yes. Prior to July 1, 1993, up to 25% of amount of assessment may be offset for the next two succeeding years; covers all but administrative expenses. After July 1, 1993, up to 20% of amount of assessments over the succeeding 5 years may be offset. Carryover is allowed where the offset is less than 20%, until offset is fully used.

Triggers

Discretionary Triggers

§83-23-215(1). When a member insurer is impaired.

Mandatory Triggers

§83-23-215(2). When a member insurer is insolvent.

Foreign Triggers

No separate provision.

“Impaired Insurer”

§83-23-209(k). A member insurer which, after the effective date of this article, is not an insolvent insurer, and is placed under an order of rehabilitation or conservation by a court of competent jurisdiction.

“Insolvent Insurer”

§83-23-209(l). A member insurer which, after the effective date of this article, is placed under an order of liquidation by a court of competent jurisdiction with a finding of insolvency. (Amended effective 3-15-99)

“Member Insurer”

§83-23-209(m). An insurer or health maintenance organization licensed or that holds a certificate of authority to transact in Mississippi any kind of insurance or a health maintenance organization business for which coverage is provided under Section 83-23-205, 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: (i) A hospital or medical service organization whether profit or nonprofit; (ii) A fraternal benefit society; (iii) A mandatory state pooling plan; (iv) A mutual assessment company or other person that operates on an assessment basis; (v) An insurance exchange; (vi) An organization that has a certificate or license limited to the issuance of charitable gift annuities; or (vii) Any entity similar to any of the above.

Minnesota

Account Structure

§61B.21, subd.1. Two accounts: (a) life insurance and annuity account, which includes life, annuity and unallocated annuity sub accounts; and (b) health account.

Advertising Prohibition

§61B.28 Subd. 4. Prohibited sales practice. 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, an advertisement, announcement, or statement, written or oral, which uses the existence of the Minnesota Life and Health Insurance Guaranty Association for the purpose of sales, solicitation, or inducement to purchase any form of insurance or other coverage covered by sections 61B.18 to 61B.32. The notice required by subdivision 8 is not a violation of this subdivision nor is it a violation of this subdivision to explain verbally to an applicant or potential applicant the coverage provided by the Minnesota Life and Health Insurance Guaranty Association at any time during the application process or thereafter. This subdivision does not apply to the Minnesota Life and Health Insurance Guaranty Association or an entity that does not sell or solicit insurance or coverage by a health maintenance organization.

Assessments

Assessment Limits

§61B.24, subd.5. Two percent (2%) of average annual premiums in state for the three prior calendar years for policies covered by each account or each sub account.

Assessment Classes

§61B.24, subd.2. Two classes of assessments: Class A, for administrative, legal and other expenses, and examinations; Class B, to carry out the powers and duties of the association with regard to impaired or insolvent insurers.

Benefit Limits

§61B.19, subd.4 (2). With respect to any one life, regardless of the number of policies or contracts: (i) $500,000 in life insurance death benefits, but not more than $130,000 in net cash surrender and net cash withdrawal values for life insurance; (ii) $500,000 in health insurance, long-term care, and disability income insurance benefits, including any net cash surrender and net cash withdrawal values; (iii) $250,000 in the present value of annuity benefits, including net cash surrender and net cash withdrawal values; (iv) $410,000 in present value of annuity benefits for structured settlement annuities or for annuities in regard to which periodic annuity benefits, for a period of not less than the annuitant’s lifetime or for a period certain of not less than ten years, have begun to be paid, on or before the date of impairment or insolvency; or (3) subject to the limitations in clauses (5) and (6), with respect to each individual resident participating in a retirement plan, except a defined benefit plan, established under section 401, 403(b), or 457 of the Internal Revenue Code of 1986, as amended through December 31, 1992, covered by an unallocated annuity contract, or the beneficiaries of each such individual if deceased, in the aggregate, $250,000 in net cash surrender and net cash withdrawal values; (4) where no coverage limit has been specified for a covered policy or benefit, the coverage limit shall be $500,000 in present value; (5) in no event shall the association be liable to cover more than $500,000 in benefits in the aggregate with respect to any one life under clause (2), items (i), (ii), (iii), (iv), and clause (4), and any one individual under clause (3); (6) in no event shall the association be liable to cover more than $10,000,000 in benefits with respect to all unallocated annuities of a retirement plan, except a defined benefit plan, established under section 401, 403(b), or 457 of the Internal Revenue Code of 1986, as amended through December 31, 1992. If total claims from a plan exceed $10,000,000, the $10,000,000 shall be prorated among the claimants.

Coverages

Covered Contracts

§61B.19, subd.2(b). Sections 61B.18 to 61B.32 provide coverage to the persons specified in paragraph (a) for direct, non-group life insurance, health insurance, annuity, and supplemental policies or contracts, for subscriber contracts issued by a nonprofit health service plan corporation operating under chapter 62C, for health maintenance contracts issued by a health maintenance organization under chapter 62D, for certificates under direct group policies and contracts, and for unallocated annuity contracts issued by member insurers, except as limited by sections 61B.18 to 61B.32. Except as expressly excluded under subdivision 3, annuity contracts and certificates under group annuity contracts include, but are not limited to, guaranteed investment contracts, deposit administration contracts, unallocated funding agreements, allocated funding agreements, structured settlement annuities, annuities issued to or in connection with government lotteries, and any immediate or deferred annuity contracts. Covered unallocated annuity contracts include those that fund a qualified defined contribution retirement plan under sections 401, 403(b), and 457 of the Internal Revenue Code of 1986, as amended through December 31, 1992. Approved 5/21/01.

Non-Covered Contracts

§61B.19, subd.3. Sections 61B.18 to 61B.32 do not provide coverage for: (1) a portion of a policy or contract not guaranteed by the member insurer or under which the investment risk is borne by the policy or contract holder; (2) a policy or contract of reinsurance, unless assumption certificates have been issued and the insured has consented to the assumption as provided under section 60A.09, subdivision 4a; (3) a policy or contract issued by an assessment benefit association operating under section 61A.39, or a fraternal benefit society operating under chapter 64B; (4) any obligation to nonresident participants of a covered retirement plan or to the plan sponsor, employer, trustee, or other party who owns the contract; in these cases, the association is obligated under this chapter only to participants in a covered plan who are residents of the state of Minnesota on the date of impairment or insolvency; (5) a structured settlement annuity in situations where a liability insurer remains liable to the payee; (6) a portion of an unallocated annuity contract which is not issued to or in connection with a specific employee, union, or association of natural persons benefit plan or a governmental lottery, including but not limited to, a contract issued to, or purchased at the direction of, any governmental bonding authority, such as a municipal guaranteed investment contract; (7) a portion of a policy or contract issued to a plan or program of an employer, association, or similar entity to provide life, health, or annuity benefits to its employees or members to the extent that the plan or program is self-funded or uninsured, including benefits payable by an employer, association, or similar entity under: (i) a multiple employer welfare arrangement as defined in the ERISA of 1974, United States Code, title 29, section 1002(40)(A), as amended; (ii) a minimum premium group insurance plan; (iii) a stop-loss group insurance plan; or (iv) an administrative services only contract; (8) any policy or contract issued by an 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; (9) an unallocated annuity contract issued to or in connection with a benefit plan protected under the federal PBGC; (10) a portion of a policy or contract to the extent that it provides for (i) dividends or experience rating credits except to the extent the dividends or experience rating credits have actually become due and payable or have been credited to the policy or contract before the date of impairment or insolvency, (ii) voting rights, (iii) payment of any fees or allowances to any person, including the policy or contract holder, in connection with the service to, or administration of, the policy or contract; (11) a contractual agreement that establishes the member insurer’s obligations 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; (12) 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; (13) 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 sections 61B.18 to 61B.32, whichever is earlier; and (14) a portion of a policy or contract to the extent that the assessments required by section 61B.24 with respect to the policy or contract are preempted by federal or state law; (15) a policy or contract providing any hospital, medical, prescription drug, or other health care benefits pursuant to United States Code, title 42, chapter 7, subchapter XVIII, Part C or Part D, commonly known as Medicare Part C & D, or United States Code, title 42 chapter 7, subchapter XIX, commonly known as Medicaid, or any regulations issued under those provisions; and (16) structured settlement annuity benefits to which a payee or beneficiary has transferred his or her rights in a structured settlement factoring transaction, as defined in United States Code, title 26, section 5891, regardless of whether the transaction occurred before or after the effective date of section 5891.

Non-Resident Coverage

§61B.19, Subd.2(a)(1)(i)(B). Yes. Covers persons who are not residents, but only under all of the following conditions: the member insurers that issued the policies or contracts are domiciled in the state of Minnesota; those insurers never held a license or certificate of authority in the states in which those persons reside; those states have associations similar to the association; and those persons are not eligible for coverage by those associations.

Definition Of Premium

§ 61B.20 Subd. 15. Premiums. “Premiums” means amounts or considerations by whatever name called received on covered policies or contracts less premiums, considerations, and deposits returned, and less dividends and experience credits on those covered policies or contracts to the extent not guaranteed in advance. The term does not include amounts received for policies or contracts or for the portions of policies or contracts for which coverage is not provided under section 61B.19, subdivision 3, except that assessable premium shall not be reduced on account of section 61B.19, subdivision 4, relating to limitations with respect to any one life, any one individual, and any one contract holder. Premiums subject to assessment under section 61B.24, include all amounts received on any unallocated annuity contract issued to a contract holder resident in this state if the contract is not otherwise excluded from coverage under section 61B.19, subdivision 3; provided that “premiums” shall not include any premiums in excess of the liability limit on any unallocated annuity contract specified in section 61B.19, subdivision 4.

Interest Rate Adjustments

§61B.19, subd. 3 (12) Guaranty Association excludes from coverage: 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: (i) averaged over the period of four years prior to the date on which the member insurer becomes an impaired or insolvent insurer under sections 61B.18 to 61B.32, whichever is earlier, exceeds the rate of interest determined by subtracting two per-centage points from Moody’s Corporate Bond Yield Average averaged for that same four-year period or for the lesser period if the policy or contract was issued less than four years before the member insurer becomes an impaired or insolvent insurer under sections 61B.18 to 61B.32, whichever is earlier; and (ii) on and after the date on which the member insurer becomes an impaired or insolvent insurer under this chapter, whichever is earlier, exceeds the rate of interest determined by subtracting three percentage points from Moody’s Corporate Bond Yield Average as most recently available. (iii) however, this paragraph shall not apply to a contract, policy, or rider for long-term care or health insurance.

Tax Offsets

§ 297I.20 Yes. An insurance company or health maintenance organization may offset up to 20% of assessment amount for each of the five calendar years following the year in which the assessment was paid. Carry forward of offset is allowed when cap is exceeded. Amended effective for taxable years beginning after December 31, 2000.

Triggers

Discretionary Triggers

§61B.23, subd.1. If a member insurer is an impaired domestic insurer.

Mandatory Triggers

§61B.23, subd.2. When a member insurer is impaired, not paying claims timely, and (1) if domestic, has been placed under an order of rehabilitation by a court of competent jurisdiction; or (2) if foreign, has been prohibited from soliciting or accepting new business in this state, the insurer’s certificate of authority has been suspended or revoked in this state and a petition for rehabilitation has been filed in a court of competent jurisdiction in the insurer’s domestic state. §61B.23, subd.3. If a member insurer is insolvent.

Foreign Triggers

See Mandatory Triggers.

“Impaired Insurer”

§61B.20, subd.11. A member insurer that is not an insolvent insurer and (1) is placed under an order of rehabilitation, or conservation by a court of competent jurisdiction or (2) is determined by the commissioner to be potentially unable to fulfill its contractual obligations.

“Insolvent Insurer”

§61B.20, subd.12. A member insurer that is placed under an order of liquidation by a court of competent jurisdiction with a finding of insolvency. The order of liquidation is the initial order granting request to begin a liquidation.

“Member Insurer”

§61B.20, Subd. 13. An insurer or health maintenance organization licensed or holding a certificate of authority to transact in Minnesota any kind of insurance or health maintenance organization business for which coverage is provided under section 61B.19, subdivision 2, and includes an insurer or health maintenance organization whose license or certificate of authority in this state may have been suspended, revoked, not renewed, or voluntarily withdrawn. The term does not include: (1) a nonprofit hospital or medical service organization, other than a nonprofit health service plan corporation that operates under chapter 62C; (2) a fraternal benefit society; (3) a mandatory state pooling plan; (4) a mutual assessment company or an entity that operates on an assessment basis; (5) an insurance exchange; (6) a community integrated service network; or (7) an entity similar to those listed in clauses (1) to (6).

Michigan

Account Structure

§500.7706(1). Two accounts: For purposes of administration and assessment the association shall maintain the following 2 accounts: (a) The health insurance account. (b) The life insurance and annuity account which includes the following subaccounts: (i) A life insurance subaccount. (ii) An annuity subaccount, which shall include unallocated annuity contracts owned by a governmental retirement plan, or its trustee, established under section 401, 403(b), or 457 of the internal revenue code of 1986, 26 USC 401, 403, and 457, but shall not include other unallocated annuities. (iii) An unallocated annuity subaccount, which shall not include unallocated annuity contracts owned by a governmental retirement benefit plan, or its trustee, established under section 401, 403(b), or 457 of the internal revenue code of 1986, 26 USC 401, 403, and 457. *NOTE: this provision is updated as of 1/10/2007.

Advertising Prohibition

No provision.

Assessments

Assessment Limits

§500.7709(8). Two percent (2%) of the member insurer’s average annual premiums received in the state on the policies covered by each account or subaccount during the three calendar years prior to the impairment/insolvency. *NOTE: this provision is updated as of 1/10/2007.

Assessment Classes

§500.7709(2). Two classes of assessments: Class A for administrative and legal costs, other general expenses; and Class B to carry out the powers and duties of the association with regard to an impaired insurer or insolvent insurer.

Benefit Limits

§500.7704(6)(b) With respect to 1 life, regardless of the number of policies or contracts: (i) $300,000.00 in life insurance death benefits, but not more than $100,000.00 in net cash surrender and net cash withdrawal values for life insurance. (ii) Except as otherwise provided in subparagraphs (iv) and (v), $100,000.00 in health insurance benefits, including any net cash surrender and net cash withdrawal values. (iii) $250,000.00 in the present value of annuity benefits, including net cash surrender and net cash withdrawal values * * *. (iv) $300,000.00 in disability income insurance benefits or long-term care benefits. (v) $500,000.00 in basic hospital, medical, and surgical insurance benefits. (c) With respect to each individual participating in a governmental retirement benefit plan established under section 401(k), 403(b), or 457 of the internal revenue code of 1986, 26 USC 401, 403, and 457, covered by an unallocated annuity contract or the beneficiaries of each such individual, if deceased, in the aggregate, $250,000.00 in present value annuity benefits, including net cash surrender and net cash withdrawal values. (d) With respect to each payee of a structured settlement annuity, or the beneficiary or beneficiaries of a deceased payee, $250,000.00 in present value annuity benefits, in the aggregate, including net cash surrender and net cash withdrawal values, if any. (e) For either 1 contract owner provided coverage under subsection (1)(c)(ii) or 1 plan sponsor whose plans own directly or in trust 1 or more unallocated annuity contracts not included in subdivision (C), $5,000,000.00 in benefits, irrespective of the number of contracts with respect to the contract owner or plan sponsor. However, if 1 or more unallocated annuity contracts are covered contracts under this chapter and are owned by a trust or other entity for the benefit of 2 or more plan sponsors, coverage shall be afforded by the association if the largest interest in the trust or entity owning the contract or contracts is held by a plan sponsor whose principal place of business is in this state, but in no event is the association obligated to cover more than $5,000,000.00 in benefits for all those unallocated contracts. (7) In no event is the association obligated to cover more than the following: (a) An aggregate of $300,000.00 in benefits for any 1 life under subsection (6)(b)(i), (ii), (iii), and (iv), (c), and (d). (b) An aggregate of $500,000.00 in benefits for any 1 life under subsection (6)(b)(v). (c) For 1 owner of multiple nongroup policies of life insurance, whether the policy owner is an individual, firm, corporation, or other person, and whether the persons insured are officers, managers, employees, or other persons, $5,000,000.00 in benefits, regardless of the number of policies and contracts held by the owner. Amended effective 9.2.2010.

Coverages

Covered Contracts

§500.7704(2). Provides coverage for direct non group life, health, annuity and supplemental policies or contracts, for certificates under direct group policies, for legal expense insurance policies, and for unallocated annuity contracts issued by member insurers, except as limited by the act.

Non-Covered Contracts

§500.7704(5). (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, including, but not limited to, the nonguaranteed portion of a variable or separate account product. (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 exceeds the following: (i) Averaged over the period of 4 years prior to the date on which the member insurer becomes an impaired insurer or an insolvent insurer, whichever occurs first, the rate of interest determined by subtracting 2 percentage points from Moody’s corporate bond yield average averaged for that same 4-year period or for a lesser period if the policy or contract was issued less than 4 years before the member insurer becomes an impaired insurer or an insolvent insurer, whichever occurs first. (ii) On and after the date on which the member insurer becomes an impaired insurer or an insolvent insurer, whichever occurs first, the rate of interest determined by subtracting 3 percentage points from Moody’s corporate bond yield average as most recently available. (d) A portion of a plan 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 any of the following: (i) A multiple employer welfare arrangement as defined in section 7001. (ii) A minimum premium group insurance plan. (iii) A stop-loss or excess-loss group insurance plan. This subparagraph does not apply to the insured portion of a stop-loss or excess-loss group insurance plan written pursuant to section 407a or 5208 or written by a member property casualty insurer if the premiums were identified as disability insurance premiums in its annual statement. (iv) An administrative services only contract. (e) A portion of a policy or contract to the extent that it provides dividends or experience rating credits, voting rights, or payment of any fees or allowances be paid to a 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 an insurer at a time when it did not have a certificate of authority to issue the policy or contract in this state. (g) An unallocated annuity contract issued to or in connection with a benefit plan protected under the federal pension benefit guaranty corporation regardless of whether the federal pension benefit guaranty corporation has become liable to make any payments with respect to the benefit plan. (h) A portion of an unallocated annuity contract that is not issued to or in connection with a specific employee, union, or association of natural persons benefit plan or a government lottery. (i) An obligation that does not arise under the express written terms of the policy or contract issued by the insurer to the contract owner or policy owner, including, but not limited to, any of the following: (i) A claim based on marketing materials. (ii) A claim based on side letters, riders, or other documents that were issued by the insurer without meeting applicable policy form filing or approval requirements. (iii) A claim based on misrepresentations of or regarding policy benefits. (iv) An award of exemplary or punitive damages or statutory interest and claims related to bad faith in the payment of claims, and attorney fees and costs. (v) A claim for penalties or consequential or incidental damages. (j) A contractual agreement that establishes the member insurer’s obligations 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. (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 insurer or an insolvent insurer, whichever occurs first. 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 subdivision, the interest or change in value determined by using the procedures defined in the policy or contract shall be credited as if the contractual date of crediting interest or changing values was the date of impairment or insolvency, whichever is earlier, and is not subject to forfeiture. (l) A portion of a policy or contract to the extent that the assessments required by section 7709 for the policy or contract are preempted by federal or state law. (m) A policy or contract providing any hospital, medical, prescription drug, or other health care benefits under part C or part D of title XVIII of the social security act, 42 USC 1395w–21 to 1395w–29 and 42 USC 1395w–101 to 1395w–152, or under regulations issued under part C or part D of title XVIII of the social secu-rity act, 42 USC 1395w–21 to 1395w–29 and 42 USC 1395w–101 to 1395w–152. Amended 9.2.2010.

Non-Resident Coverage

§500.7704(1)(b)(ii), (iii). Yes. (b) Covers persons who are owners of, or certificate holders under, a policy or contract covered by the act, other than an unallocated annuity contract or structured settlement contract, covers the person who is the contract holder, and which owner, certificate holder, or contract holder is a resident, or a nonresident, under all of the following conditions: (A) The insurer that issued the policy or contract is domiciled in Michigan. (B)The state in which the person resides has an association similar to the association created by this chapter. (C) The person is not eligible for coverage by an association in any other state because the insurer was not licensed in that state at the time specified in the state’s guaranty association law. Also covers nonresidents under subparagraph (iii), if either of the following conditions are met: (A) The person would have been considered a resident at the time the coverage was obtained by the person. (B) The person is not eligible for coverage by another guaranty association. (Amended effective 1/10/2007)

Definition Of Premium

§ 500.7705 (p) “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. The term “premiums” does not include an amount or consideration received for a policy or contract, or a portion of a policy or contract for which coverage is not provided under section 7704. However, accessible premiums shall not be reduced on account of sections 7704(5)(c) relating to interest limitations and 7704(6)(b), (c), and (e) relating to limitations with respect to any 1 individual, any 1 participant, and any 1 contract holder. Premiums shall not include premiums in excess of the following: (i) $5,000,000.00 on an unallocated annuity contract not issued under a governmental retirement plan established under section 401(k), 403(b), or 457 of the internal revenue code of 1986, 26 USC 401, 403, and 457. (ii) For multiple nongroup policies of life insurance owned by 1 owner, whether the policyowner is an individual, firm, corporation, or other person, and whether the persons insured are officers, managers, employees, or other persons, $5,000,000.00 with respect to these policies or contracts, regardless of the number of policies or contracts held by the owner.

Interest Rate Adjustments

§500.7704(5)(c). Guaranty Association excludes from coverage: 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 exceeds the following: (i) Averaged over the period of 4 years prior to the date on which the member insurer becomes an impaired insurer or an insolvent insurer, whichever occurs first, the rate of interest determined by subtracting 2 percentage points from Moody’s corporate bond yield average averaged for that same 4-year period or for a lesser period if the policy or contract was issued less than 4 years before the member insurer becomes an impaired insurer or an insolvent insurer, whichever occurs first. (ii) On and after the date on which the member insurer becomes an impaired insurer or an insolvent insurer, whichever occurs first, the rate of interest determined by subtracting 3 percentage points from Moody’s corporate bond yield average as most recently available.

Tax Offsets

§208.22. Yes. Amount a member insurer may offset varies according to formula in the Single Business Tax – Insurance Companies (Public Act No. 262).

Triggers

Discretionary Triggers

§500.7708(2). If a member insurer is an impaired insurer. *NOTE: this provision is updated as of 1/10/2007.

Mandatory Triggers

§500.7708(3)-(4). When a member insurer is impaired, not paying claims timely, and (1) if domestic, has been placed under an order of rehabilitation by a court of competent jurisdiction; or (2) if foreign, has been prohibited from soliciting or accepting new business in this state, the insurer’s certificate of authority has been suspended or revoked in this state and a petition for rehabilitation has been filed in a court of competent jurisdiction in the insurer’s domestic state. §500.7708(5). If a member insurer is insolvent.

Foreign Triggers

See Mandatory Triggers.

“Impaired Insurer”

§500.7705(i). A member insurer considered by the commissioner after May 1, 1982, to be potentially unable to fulfill the insurer’s contractual obligations or that is placed under an order of rehabilitation or conservation by a court of competent jurisdiction. Impaired does not mean insolvent.

“Insolvent Insurer”

§500.7705(j). A member insurer that after May 1, 1982, becomes insolvent and is placed under an order of liquidation by a court of competent jurisdiction with a finding of insolvency.

“Member Insurer”

§500.7705(k). A person authorized to transact a kind of insurance or annuity business in this state for which coverage is provided under section 7704 and includes an insurer whose certificate of authority in this state may have been suspended, revoked, not renewed, or voluntarily withdrawn. Member insurer does not include the following: (i) A fraternal benefit society. (ii) A cooperative plan insurer authorized under chapter 64. (iii) A health maintenance organization authorized or licensed under chapter 35. (iv) A mandatory state pooling plan.(v) A mutual assessment or any entity that operates on an assessment basis. (vi) A nonprofit dental care corporation operating under 1963 PA 125, MCL 550.351 to 550.373. (vii) A nonprofit health care corporation operating under the nonprofit health care corporation reform act, 1980 PA 350, MCL 550.1101 to 550.1704. (viii) An insurance exchange. (ix) An organization that has a certificate or license limited to the issuance of charitable gift annuities. (x) Any entity similar to the entities described in this subdivision. *NOTE: This provision is updated as of 1/10/2007.

Massachusetts

Account Structure

§146B(6)(A). Three accounts: health insurance, life insurance and annuity.

Advertising Prohibition

175§146B: (19) No person, including an insurer, agent or affiliate of an insurer shall make, publish, disseminate, circulate, or place before the public, or cause directly, 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, written or oral, which uses the existence of the Massachusetts Life and Health Insurance Guaranty Association for the purposes of sales, solicitation, or inducement to purchase any form of insurance covered by this §; provided, however, that this § shall not apply to the Massachusetts Life and Health Insurance Guaranty Association or any other entity which does not sell or solicit insurance.

Assessments

Assessment Limits

§146B(9)(E). Two percent (2%) of insurers average premiums received in the state for policies covered by each account during the three calendar years preceding the year of impairment/insolvency.

Assessment Classes

§146B(9)(B). Two classes of assessments: Class A for administrative costs, other expenses and examinations; and Class B to carry out the powers and duties of the association with regard to an impaired or insolvent insurer.

Benefit Limits

§146B(4)(B)(3)(b) with respect to any one life regardless of the number of policies or contracts: (i) three hundred thousand dollars in life insurance death benefits, but not more than one hundred thousand dollars in net cash surrender and net cash withdrawal values under life insurance policies; (ii) in health insurance benefits: (I) $100,000 for coverage not defined as disability income insurance or basic hospital expense insurance, basic medical-surgical insurance, major medical expense insurance or long term care insurance, including any cash surrender and net cash withdrawal values, (II) $300,000 for disability income insurance, (III) $300,000 for long term care insurance and (IV) $500,000 for basic hospital expense insurance, basic medical-surgical expense insurance or major medical expense insurance; (iii) $250,000 in the present value of annuity benefits, including net cash surrender and net cash withdrawal values; and (c) with respect to each payee of a structured settlement annuity, or beneficiary or beneficiaries of the payee if deceased, $250,000 in present value of annuity benefits in the aggregate, including net cash surrender and net cash withdrawal values. (4) The association shall not be obligated to cover more than (i) an aggregate of $300,000 in benefits with respect to any 1 life under clauses (b) or (c) of subparagraph (3), except with respect to benefits for basic hospital expense insurance, basic medical-surgical insurance or major medical expense insurance under item (IV) of subclause (ii) of clause (b) of said subparagraph (3), in which case the aggregate liability of the association shall not exceed $500,000 with respect to any 1 individual, or (ii) with respect to 1 owner of multiple non-group policies of life insurance, whether the policy owner is an individual, firm, corporation or other person, and whether the persons insured are officers, managers, employees or other persons, more than $5,000,000 in benefits, regardless of the number of policies and contracts held by the owner. (Amended effective 3/19/2015)

Coverages

Covered Contracts

§146B(4)(B)(1) This section shall provide coverage to the persons specified in paragraph (A) of this subsection for direct, nongroup life, health, annuity, and supplemental policies or contracts, and for certificates under direct group life and health insurance policies or annuity or supplemental contracts issued by member insurers, except as otherwise limited in this section.

Non-Covered Contracts

§146B(4)(B)(2) This section shall not provide coverage under: (a) any portion of a policy or contract not guaranteed by the insurer, or under which the risk is borne by the policy or contract holder; (b) any policy or contract of reinsurance, other than reinsurance for which assumption certificates have been issued; (c) any annuity contract or group annuity certificate that is not issued to and owned by an individual, except to the extent of any annuity benefits guaranteed to an individual by the insurer under any such contract or certificate; (d) any 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 (i) averaged over the period of four years prior to the date on which the association becomes obligated with respect to such policy or contract, exceeds the rate of interest determined by subtracting two percentage points from the published monthly average as averaged for the same four year period, and (ii) on and after the date on which the association becomes obligated with respect to such policy or contract, exceeds the rate of interest determined by subtracting three percentage points from the published monthly average as most recently available on the date on which the association becomes obligated with respect to such policy or contract; (e) any plan or program of an employer, association or similar entity to provide life, health, or annuity benefits to its employees or members to the extent that such plan or program is self-funded or uninsured, including but not limited to benefits payable by an employer, association or similar entity under (i) a Multiple Employer Welfare Arrangement as defined in Section 514 of the Employee Retirement Income Security Act of 1974, as amended; (ii) a minimum premium group insurance plan; (iii) a stop-loss group insurance plan; or (iv) an administrative services only contract; (f) any portion of a policy or contract to the extent that it provides dividends or experience rating credits, or provides that any fees or allowances be paid to any person, including the policy or contract holder, in connection with the service to or administration of such policy or contract; (g) any policy or contract issued in the commonwealth by a member insurer at a time when it was not licensed or did not have a certificate of authority to issue such policy or contract in the commonwealth; (h) any policy or contract and any portion of a policy or contract to the extent that the assessments required by subsection (9) with respect to the policy or contract are preempted by federal or state law; (i) any obligation that does not arise under the express written terms of the policy or contract issued to the contract owner or policy owner, including without limitation: (i) claims based on marketing materials; (ii) claims based on side letters, riders or other documents that were issued by the insurer without meeting applicable policy form filing or approval requirements; (iii) misrepresentation of or regarding policy benefits; (iv) extra-contractual claims, such as claims relating to bad faith in the payment of claims, punitive or exemplary damages or attorneys’ fees and costs; or (v) a claim for penalties or consequential or incidental damages; (j) any 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 this section, whichever is earlier; provided, that if a policy’s or contract’s interest or changes in value are credited less frequently than annually, then for the purposes of determining the values that have been credited and are not subject to forfeiture under this clause, the interest or change in value determined by using the procedures defined in the policy or contract shall be credited as if the contractual date of crediting interest or changing values was the date of impairment or insolvency, whichever is earlier, and shall not be subject to forfeiture; and (k) 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 and D, or any regulation issued pursuant thereto. (Amended effective 3/19/2015)

Non-Resident Coverage

§146B(4)(A)(2)(b). Yes. Covers persons who are not residents, but only under all of the following conditions: (i) the insurers which issued such policies or contracts are domiciled in the commonwealth, (ii) the states in which the persons reside have a life and health insurance guaranty association and (iii) such persons are not eligible for coverage by such guaranty association due to the fact that the insurer was not licensed in the state at the time specified in the state’s guaranty association law. (Amended effective 3/19/2015)

Definition Of Premium

175 §146B(2) “Premiums”, amounts received on covered policies or contracts, less premiums, considerations and deposits returned thereon, and less dividends and experience credits thereon; provided, that “premiums” shall not include any amount received for any policies or contracts or for the portions of any policies or contracts for which coverage is not provided under paragraph (B) of subsection (4), except that assessable premiums shall not be reduced on account of clause (d) of subparagraph (2) of said paragraph (B) of said subsection (4) relating to interest limitations and subparagraph (3) of said paragraph (B) of said subsection (4) relating to limitations with respect to 1 individual and 1 contract owner; provided, further that “Premiums” shall not include, with respect to multiple non-group policies of life insurance owned by 1 owner, whether the policy owner is an individual, firm, corporation or other person, and whether the persons insured are officers, managers, employees or other persons, premiums in excess of $5,000,000 with respect to these policies or contracts, regardless of the number of policies or contracts held by the owner. (Amended effective 3/19/2015)

Interest Rate Adjustments

§146B(4)(B)(2)(d). any 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 (i) averaged over the period of four years prior to the date on which the association becomes obligated with respect to such policy or contract, exceeds the rate of interest determined by subtracting two percentage points from the published monthly average as averaged for the same four year period, and (ii) on and after the date on which the association becomes obligated with respect to such policy or contract, exceeds the rate of interest determined by subtracting three percentage points from the published monthly average as most recently available on the date on which the association becomes obligated with respect to such policy or contract; (Amended effective 3/19/2015)

Tax Offsets

§146B(13)(A). Yes. Up to 10% of assessment amount may be offset for next five years; covers all assessments but administrative expenses. Total offsets of all member insurers against premium, excise, franchise, or income tax may not exceed $3 million per year. Carry forward of offset is permitted when cap is exceeded.

Triggers

Discretionary Triggers

§146B(8)(A). If a member is an impaired insurer (Amended effective 3/19/2015)

Mandatory Triggers

§146B(8)(B). If a member insurer is an insolvent insurer (Amended effective 3/19/2015)

Foreign Triggers

No separate provision. (Amended effective 3/19/2015)

“Impaired Insurer”

§146B(2). A member insurer which, is not an insolvent insurer, and (i) is deemed by the commissioner to be potentially unable to meet its obligations, or (ii) is placed under an order of rehabilitation or conservation by a court of competent jurisdiction.

“Insolvent Insurer”

§146B(2). A member insurer which is placed under an order of liquidation by a court of competent jurisdiction with a finding of insolvency.

“Member Insurer”

§146B (2) “Member insurer”, any insurer licensed or which holds a certificate of authority to transact in the commonwealth any kind of insurance for which coverage is provided under subsection (4) and any insurer whose license or certificate of authority to transact in the commonwealth such insurance may have been suspended, revoked, not renewed, or voluntarily withdrawn after the effective date of this section, other than a (a) fraternal benefit society, (b) mutual protective association, (c) mutual assessment company or other entity that operates on an assessment basis, (d) medical service corporation, (e) hospital service corporation, (f) health maintenance organization, (g) dental service corporation, (h) optometric service corporation, (i) mandatory state pooling plan, (j) insurance exchange, or (k) any other entity similar to any of the above.

Maryland

Account Structure

§ 9-405(d). Three accounts: health, life insurance and annuity.

Advertising Prohibition

§9-414 Miscellaneous provisions … (f) Unfair trade practices. — It is a prohibited unfair method of competition, subject to Title 27 of this article (Unfair Trade Practices), for a person to make use in any manner of the protection afforded by this subtitle in the sale of insurance or health maintenance organization coverage.

Assessments

Assessment Limits

§ 9-409(f)(1). Two percent (2%) of premiums in state for policies covered by the account.

Assessment Classes

§ 9-409(c). Two classes of assessments: Class A assessments for administrative costs and other general expenses not related to a particular impaired or insolvent insurer; and Class B assessments to the extent necessary to carry out the powers and duties of the Corporation with regard to an impaired or insolvent insurer.

Benefit Limits

§ 9-407(K)(3) Benefits for which the Corporation may become liable may not exceed the lesser of: (i) the contractual obligations for which the member insurer is or would have been liable if it were not an impaired insurer or insolvent insurer; or (ii) with respect to any one life, regardless of the number of policies or contracts: 1. $300,000 in life insurance death benefits, but not more than $100,000 in net cash surrender and net cash withdrawal values for life insurance; 2. for health insurance benefits: A. $500,000 for health benefit plans; B. $300,000 for disability insurance and $300,000 for long-term care insurance, as defined in § 18–101 of this article; and C. $100,000 for coverages not included as disability insurance, health benefit plans, or long-term care insurance, including any net cash surrender and net cash withdrawal values under items A and B of this item; and 3. A. $250,000 in the present value of annuity benefits, including net cash surrender and net cash withdrawal values ; and B. with respect to each payee under a structured settlement annuity, or beneficiary of the payee if the payee is deceased, $250,000 in present value annuity benefits, in the aggregate, including any net cash surrender and net cash withdrawal values. (4)(i) Except as provided in subparagraph (ii) of this paragraph, the Corporation may not, with respect to any one life, be liable for coverage greater than an aggregate of $300,000 for the benefits described in paragraph (3)(ii)1, 2, and 3 of this subsection. (ii) The Corporation may not, with respect to any one life, be liable for coverage greater than an aggregate of $500,000 for health benefit plans under paragraph (3)(ii)2A of this subsection. (Amended effective 10/1/12)

Coverages

Covered Contracts

§ 9-403(g)(1) Except as provided in paragraph (2) of this subsection or otherwise limited by this subtitle, coverage shall be provided under this subtitle to persons specified in subsections (b) and (c) of this section for the following policies and contracts issued by member insurers: (i) direct, nongroup life insurance, health insurance, which for the purposes of this subtitle includes health maintenance organization subscriber contracts and group master certificates, annuities, including structured settlement annuities, and supplemental policies or contracts to any of these; or (ii) certificates under direct, group policies or contracts , and supplemental policies or contracts to any of these.

Non-Covered Contracts

§ 9-403(g)(2) Coverage may not be provided under this subtitle for: (i) any part of a policy or contract that is not guaranteed by the member insurer, or under which the risk is borne by the policyholder or contract holder; (ii) a policy or contract of reinsurance, unless assumption certificates have been issued; (iii) except for a part of a policy or contract, including a rider, that provides long-term care or any other health insurance benefits, any part 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 4 years before the date on which the Corporation becomes obligated with respect to the policy or contract, exceeds a rate of interest determined by subtracting 2 percentage points from Moody’s corporate bond yield average for the 4–year period before the date on which the Corporation became obligated or, if the policy or contract was issued less than 4 years before the Corporation became obligated, for that period; or 2. on or after the date on which the Corporation becomes obligated with respect to the policy or contract, exceeds the rate of interest determined by subtracting 3 percentage points from the most recent published Moody’s corporate bond yield average; (iv) a plan or program of an employer, association, or similar entity to provide life, health, or annuity benefits to its employees or members to the extent that the plan or program is self-funded or uninsured, including benefits payable by an employer, association, or similar entity under: 1. a multiple employer welfare arrangement, as defined in 29 U.S.C. § 1002(40); 2. a minimum premium group insurance plan; 3. a stop-loss group insurance plan; or 4. an administrative services only contract; (v) any part of a policy or contract to the extent that it provides dividends or experience rating credits or provides that a fee or allowances be paid to any person, including the policy or contract holder, in connection with the service to or administration of the policy or contract; (vi) a policy or contract issued in the 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 the State; (vii) an annuity contract or group annuity certificate that is not issued to and owned by an individual, except to the extent of annuity benefits guaranteed to an individual by an insurer under the annuity contract or group certificate, including the following contracts: 1. unallocated funding agreements; 2. unallocated annuity contract benefits; 3. deposit administration contracts; or 4. guaranteed investment contract accounts; (viii) a policy issued by an organization as provided in § 1–202(3) of this article; (ix) an annuity agreement issued under § 16–114 of this article ; (x) a portion of a policy or contract to the extent that the assessments required by § 9–409 of this subtitle with respect to the policy or contract are preempted by federal or state law; (xi) 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, contract owner, or policy owner, including without limitation: 1. claims made on marketing materials; 2. claims based on side letters, riders, or other documents that were issued by the member insurer without meeting applicable policy form or contract filing or approval requirements; 3. misrepresentations of or regarding policy or contract benefits; 4. extra-contractual claims; and 5. a claim for penalties or consequential or incidental damages; (xii) subject to paragraph (3) of this subsection, a portion of a policy or contract to the extent that 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 insurer or insolvent insurer under this subtitle, whichever is earlier; (xiii) a policy or contract providing any hospital, medical, prescription drug, or other health care benefits under any of the following provisions or regulations adopted under one of the following provisions: 1. Title 42, Chapter 7, Subchapter XVIII, Part C or Part D of the United States Code(“Medicare Part C & D”); 2. Title 42, Chapter 7, Subchapter XIX of the United States Code (“Medicaid”) of Title 15, Subtitle 3 of the Health – General Article; or (XIV) A structured Settlement annuity benefit to which a payee, or beneficiary of a payee if the payee is deceased, has transferred the rights in a structured settlement factoring transaction, as defined in 26 U.S.C. § 5891(c)(3)(A), regardless of whether the transaction occurred before or after the effective date of 26 U.S.C. § 5891(c)(3)(A). (3) If a policy’s or contract’s interest or changes in value are credited less frequently than annually, then to determine the values that have been credited and are not subject to forfeiture under this subsection, 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.

Non-Resident Coverage

§ 9-403(b)(1)(ii). Yes. Nonresidents will be covered if: 1. the member insurer that issued the policy or contract is domiciled in this State; 2. the state in which the nonresident resides has an insurance guaranty corporation or its equivalent similar to the Corporation established by § 9–405 of this subtitle; and 3. the nonresident is not eligible for coverage by the insurance guaranty corporation or its equivalent in the state in which the nonresident resides because the insurer or health maintenance organization was not licensed in that state at the time specified in that state’s guaranty corporation or association law.

Definition Of Premium

§ 9-401 (o)(1) “Premiums” means amounts received on covered policies or contracts, less premiums, considerations, and deposits returned, and less dividends and experience credits. (2) “Premiums” does not include amounts for policies or contracts, or for parts of policies or contracts, for which coverage is not provided under § 9-403(b) of this subtitle.

Interest Rate Adjustments

§ 9-403(b)(2)(iii). Except for a part of a policy or contract, including a rider, that provides long-term care or any other health insurance benefits, the Corporation excludes from coverage: any part 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 4 years before the date on which the Corporation becomes obligated with respect to the policy or contract, exceeds a rate of interest determined by subtracting 2 percentage points from Moody’s corporate bond yield average for the 4-year period before the date on which the Corporation became obligated or, if the policy or contract was issued less than 4 years before the Corporation became obligated, for that period; or 2. on or after the date on which the Corporation becomes obligated with respect to the policy or contract, exceeds the rate of interest determined by subtracting 3 percentage points from the most recent published Moody’s corporate bond yield average.

Tax Offsets

No provision.

Triggers

Discretionary Triggers

§ 9-407(a). If a member insurer is an impaired insurer.

Mandatory Triggers

§ 9-407(b). If a member insurer is an insolvent insurer.

Foreign Triggers

No separate provision.

“Impaired Insurer”

§9-401(h) “Impaired insurer” means a member insurer that: (1) after July 1, 1971, is not an insolvent insurer and is placed under an order of rehabilitation or conservation by a court of competent jurisdiction; or (2) is determined by the Commissioner after July 1, 1971, to be unable or potentially unable to fulfill its contractual obligations. (Amended effective 10/1/12)

“Insolvent Insurer”

§9-401(j) “Insolvent insurer” means a member insurer that, after July 1, 1971, is placed under an order of liquidation by a court of competent jurisdiction with a finding of insolvency. (Amended effective 10/1/12)

“Member Insurer”

§9-401(j)(1) “Member insurer” means an authorized insurer or a health maintenance organization that is licensed or that holds a certificate of authority to transact in the State any kind of insurance or health maintenance organization business to which this subtitle applies (2) “Member insurer” includes an insurer health maintenance organization whose license or certificate of authority in the State may have been suspended, revoked, not renewed, or voluntarily withdrawn. (3) “Member insurer” does not include: (i) a fraternal benefit society; (ii) a mandatory State pooling plan; (iii) a mutual assessment company or other entity that operates on an assessment basis; or (iv) an insurance exchange.

Maine

Account Structure

§4606.1. For purposes of administration and assessment, the association shall maintain 3 accounts: A. The health insurance account; B. The life insurance account; and C. The annuity account, which must include annuity contracts owned by a governmental retirement plan or its trustee established under Section 401, Section 403(b) or Section 457 of the United States Internal Revenue Code.

Advertising Prohibition

§4620. Prohibited advertisement of association in insurance sales. A person, including a member insurer or an agent or affiliate of a member insurer, may 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 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, written or oral, that uses the existence of the association for the purpose of sales, solicitation or inducement to purchases of any form of insurance covered by this chapter. This section does not apply to the Maine Life and Health Insurance Guaranty Association or any other entity that does not sell or solicit insurance or health maintenance organization coverage.

Assessments

Assessment Limits

§4609. 4. The association may abate or defer, in whole or in part, the assessment of a member insurer if, in the opinion of the board of directors, payment of the assessment would endanger the ability of the member insurer to fulfill its contractual obligations. Once the conditions that caused a deferral have been removed or rectified, the member insurer shall pay all assessments that were deferred pursuant to a repayment plan approved by the association. The total of all assessments upon a member insurer for each account may not in any one calendar year exceed 2% of the insurer’s premiums in this State on the policies covered by the account.

Assessment Classes

§4609.2-A. There are 2 classes of assessments, as set out in this subsection. A. Class A assessments are authorized and called for the purpose of meeting administrative costs and other general expenses. Class A assessments may be authorized and called whether or not related to a particular impaired or insolvent insurer. B. Class B assessments are authorized and called to the extent necessary to carry out the powers and duties of the association under section 4608 with regard to an impaired or an insolvent insurer.

Benefit Limits

§4603.3.The benefits that the association may become obligated to cover may not exceed the least of: A. The contractual obligations for which the member insurer is liable or would have been liable if it were not an impaired or insolvent insurer; B. With respect to one life, regardless of the number of policies or contracts: (1) Three hundred thousand dollars in life insurance death benefits, but not more than $100,000 in net cash surrender and net cash withdrawal values for life insurance; (2) The following limits for health insurance benefits: (a) Three hundred thousand dollars for coverages not defined as disability income insurance, long-term care insurance or health plans as defined in section 4301-A, subsection 7, including any net cash surrender and net cash withdrawal values; (b) Three hundred thousand dollars for disability income and long-term care insurance; or (c) Five hundred thousand dollars for health plans as defined in section 4301-A, subsection 7; or (3) Two hundred fifty thousand dollars in the present value of annuity benefits, including net cash surrender and net cash withdrawal values; C. With respect to each payee of a structured settlement annuity, or beneficiary or beneficiaries of the payee if deceased, $ 250,000 in present value annuity benefits, in the aggregate, including net cash surrender and net cash withdrawal values; and D. With respect to each individual participating in a governmental retirement benefit plan established under the United States Internal Revenue Code, 26 United States Code, Section 401, 403(b) or 457, or the beneficiaries of each individual if deceased, the financial interest of such participant allocated to an annuity contract by either the member insurer that issued the annuity or the plan, but not to exceed in the aggregate $ 250,000 in present value of annuity benefits, including net cash surrender and net cash withdrawal values under all such annuities issued by the same member insurer. 4. Maximum Obligation in Benefits. Notwithstanding subsection 3, the association is not in any event obligated to cover more than: A. An aggregate of $300,000 in benefits with respect to any one life under subsection 3, paragraph B except with respect to benefits for health plans under subsection 3, paragraph B, subparagraph (2), in which case the aggregate liability of the association may not exceed $500,000 with respect to any one individual; or B. Five million dollars in benefits, regardless of the number of policies and contracts held by the owner, with respect to one owner of multiple nongroup policies of life insurance, whether the policy owner is an individual, firm, corporation or other person, and whether the persons insured are officers, managers, employees or other persons.

Coverages

Covered Contracts

§4603.1. This chapter applies to direct nongroup life insurance policies, health insurance policies, annuity contracts and contracts supplemental to life and health insurance policies and annuity contracts and to certificates under direct group life insurance policies, health insurance policies and annuity contracts, except as limited by this chapter. For the purposes of this chapter: A. Health insurance policies include individual and group health maintenance organization enrollment contracts, and health maintenance organizations are considered to be health insurers; B. Annuity contracts and certificates under group annuity contracts include allocated funding agreements, structured settlement annuities and any immediate or deferred annuity contracts; and C. Benefits provided by a long-term care rider to a life insurance policy or annuity contract are considered the same type of benefits as the base life insurance policy or annuity contract to which the rider relates.

Non-Covered Contracts

§4603.2. This chapter does not apply to: A. That portion of a policy or contract not guaranteed by an insurer; B. Any policies or contracts, or any part of these policies or contracts, under which the risk is borne by the policyholder; C. Any contract of reinsurance, other than reinsurance for which assumption certificates have been issued; D. Any policy or contract issued by assessment mutuals and nonprofit hospital and medical service plans; E. With the exception of a policy or contract or portion of a policy or contract, including a rider, that provides long-term care or any other health insurance benefits, any portion of a policy or contract to the extent that the rate of interest on which it is based, 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 a period of 4 years before the date on which the member insurer becomes an impaired insurer or becomes an insolvent insurer under this chapter, whichever is earlier, exceeds a rate of interest determined by subtracting 2 percentage points from Moody’s Corporate Bond Yield Average averaged over the same 4-year period or for a lesser period if the policy or contract was issued less than 4 years before the member insurer becomes an impaired insurer or becomes an insolvent insurer, whichever is earlier; and (2) On or after the date on which the member insurer becomes an impaired insurer or becomes an insolvent insurer under this chapter, whichever is earlier, exceeds the rate of interest determined by subtracting 3 percentage points from Moody’s Corporate Bond Yield Average as most recently available; F. Any 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 United States Code, Section 1144; (2) A minimum premium group insurance plan; (3) A stop loss group insurance plan; or (4) An administrative-services-only contract; G. Any 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; H. Any 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; I. Any portion of a policy or contract to the extent that the assessments required by section 4609 with respect to the policy or contract are preempted by federal or state law; J. Any obligation that does not arise under the express written terms of the policy or contract issued by the insurer to the contract owner, policy owner, enrollee or certificate holder, including without limitation: (1) Claims based on marketing materials; (2) Claims based on side letters, riders or other documents that were issued by the insurer without meeting applicable form filing or approval requirements; (3) Misrepresentations of or regarding policy or contract benefits; (4) Extra-contractual claims; or (5) Claims for penalties or consequential or incidental damages; K. Any contractual agreement that establishes the member insurer’s obligations 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, neither of which is an affiliate of the member insurer; L. Any unallocated annuity contract, except any annuity, whether allocated or unallocated, issued to a governmental retirement benefit plan established under the United States Internal Revenue Code, 26 United States Code, Section 401, 403(b) or 457; M. Any 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 that 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 insurer or becomes an insolvent insurer under this chapter, 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 paragraph, 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; and N. Any policy or contract providing hospital, medical, prescription drug or other health care benefits pursuant to 42 United States Code, Chapter 7, Subchapter XVIII, Part C or D (2018), also known as Medicare Part C or D, or pursuant to 42 United States Code, Chapter 7, Subchapter XIX (2018), also known as Medicaid, or any regulations issued pursuant thereto.

Non-Resident Coverage

§4603.1-A.B. Yes. The statute covers non residents, if all the following conditions are met: (a) The insurer that issued the policy or contract is domiciled in this State; (b) The insurer never held a license or certificate of authority in the state in which the person resides; (c) The state in which the person resides has an association similar to the Maine Life and Health Insurance Guaranty Association; and (d) The person is not eligible for coverage by the association in that state

Definition Of Premium

§ 4605-A 16. “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 policies or contracts for which coverage is not provided under section 4603, except that assessable premiums may not be reduced on account of the provisions of section 4603 relating to interest limitations and relating to limitations with respect to one individual, one participant and one contract owner. “Premiums” does not include: A. Premiums on an unallocated annuity contract; or B. With respect to multiple nongroup policies of life insurance owned by one owner, whether the policy owner is an individual, firm, corporation or other person, and whether the persons insured are officers, managers, employees or other persons, premiums in excess of $ 5,000,000 with respect to these policies or contracts, regardless of the number of policies or contracts held by the owner.

Interest Rate Adjustments

§4603.2.E. Guaranty Association excludes from coverage: Any portion of a policy or contract to the extent that the rate of interest on which it is based, 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 a period of 4 years before the date on which the member insurer becomes an impaired insurer or becomes an insolvent insurer under this chapter, whichever is earlier, exceeds a rate of interest determined by subtracting 2 percentage points from Moody’s Corporate Bond Yield Average averaged over the same 4-year period or for a lesser period if the policy or contract was issued less than 4 years before the member insurer becomes an impaired insurer or becomes an insolvent insurer, whichever is earlier; and (2) On or after the date on which the member insurer becomes an impaired insurer or becomes an insolvent insurer under this chapter, whichever is earlier, exceeds the rate of interest determined by subtracting 3 percentage points from Moody’s Corporate Bond Yield Average as most recently available.

Tax Offsets

§4621 Yes. to the extent of 20% of the amount of the assessment for each of the 5 calendar years following the year in which the assessment was paid. Amended effective for assessments paid on or after January 1, 2005.

Triggers

Discretionary Triggers

§4608.1. If a member insurer is an impaired insurer. Amended effective 9/17/05.

Mandatory Triggers

§4608.3-A. If a member insurer is an insolvent insurer. (Amended effective 9/17/05)

Foreign Triggers

No separate provision under Act. (Amended effective 9/17/2005)

“Impaired Insurer”

§4605-A.10. Impaired insurer. “Impaired insurer” means a member insurer that, after the effective date of this section, is not an insolvent insurer and is placed under an order of rehabilitation or conservation by a court of competent jurisdiction. Amended effective 9/17/05.

“Insolvent Insurer”

§4605-A.11. Insolvent insurer. “Insolvent insurer” means a member insurer that, after the effective date of this section, is placed under an order of liquidation by a court of competent jurisdiction with a finding of insolvency. Amended effective 9/17/05.

“Member Insurer”

§4605-A.12. “Member insurer” means an insurer or health maintenance organization that is licensed or that holds a certificate of authority to transact in this State any kind of insurance, annuity or health maintenance organization business for which coverage is provided under section 4603 and includes an 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 hospital or medical service organization, whether profit or nonprofit; . C. A fraternal benefit society; D. A mandatory state pooling plan; E. A mutual assessment company or other person that operates on an assessment basis; F. An insurance exchange; G. An organization that has a certificate or license limited to the issuance of charitable gift annuities under this Title; or H. An entity similar to any of those listed in this subsection.

Louisiana

Account Structure

LSA-R.S. 22:2085.A. For purposes of administration and assessment, the association shall maintain all of the following accounts: (1) The life insurance account. (2) The annuity account excluding unallocated annuity contracts and defined contribution government plans qualified under Section 403(b) of the United States Internal Revenue Code (26 U.S.C. 403(b)). (3) The defined contribution plan account, meaning defined contribution plans qualified under Section 403(b) of the United States Internal Revenue Code. (4) The health account.

Advertising Prohibition

LSA-R.S. 22:2098 “Prohibited advertisement of Insurance Guaranty Association Act in insurance sales; notice to policyholders” 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, written or oral, which uses the existence of the 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 Louisiana Life and Health Insurance Guaranty Association Law. This Section shall not apply to the Louisiana Life and Health Insurance Guaranty Association or any other entity which does not sell or solicit insurance or coverage by a health maintenance organization.

Assessments

Assessment Limits

LSA-R.S. 22:2088.E(1). (a) The total of all assessments upon an insurer for each account shall not in any one calendar year exceed two percent of such average premiums received of the insurers in this state on the policies and contracts covered by the account during the three calendar years preceding the year in which the member insurer became an impaired or insolvent insurer.

Assessment Classes

LSA-R.S. 22:2088.B. There shall be two assessments, as follows: (1) Class A assessments shall be made for the purpose of meeting administrative and legal costs and other expenses and examinations conducted under the authority of R.S. 22:2091. Class A assessments may be made whether or not related to a particular impaired or insolvent insurer and their administration thereof. (2) Class B assessments shall be made to the extent necessary to carry out the powers and duties of the association pursuant to R.S. 22:2087 with regard to an impaired or an insolvent insurer.

Benefit Limits

LSA-R.S. 22:2083.C. The benefits for which the association shall become liable shall in no event exceed the lesser of the following: (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. (2) With respect to any one life, regardless of the number of policies or contracts: (a) Three hundred thousand dollars in life insurance death benefits, but not more than one hundred thousand dollars in net cash surrender and net cash withdrawal values for life insurance. (b) Five hundred thousand dollars in health insurance benefits. (c) Two hundred fifty thousand dollars in the present value of annuity benefits, including net cash surrender and net cash withdrawal values. D. However, in no event shall the association be liable to expend more than five hundred thousand dollars in the aggregate with respect to any one individual under Subsection C of this Section.

Coverages

Covered Contracts

LSA-R.S. 22:2083.B(1). This Part 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 including, for purposes of this Part, health maintenance organization subscriber contracts and certificates, or annuities, for certificates under direct group policies and contracts for supplemental contracts to any of these, and for unallocated annuity contracts, in each case issued by member insurers, except as limited by this Part.

Non-Covered Contracts

LSA-R.S. 22:2083.B(2). Except as otherwise provided in Paragraph (3) of this Subsection, this Part shall not provide coverage for any of the following: (a) Any portion of a policy or contract not guaranteed by the member insurer, or under which the risk is borne by the policy or contract holder. (b) Any policy or contract of reinsurance, unless assumption certificates have been issued. (c) Any 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: (i) Averaged over the period of four years prior to the date on which the member insurer becomes an impaired or insolvent insurer under this Part, whichever is earlier, exceeds the rate of interest determined by subtracting two 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 years before the member insurer becomes an impaired or insolvent insurer under this Part, whichever is earlier. (ii) On and after the date on which the member insurer becomes an impaired or insolvent insurer under this Part, whichever is earlier, exceeds the rate of interest determined by subtracting three percentage points from Moody’s Corporate Bond Yield Average as most recently available. (d) Any plan or program of an employer, association, or similar entity to provide life, health, or annuity benefits to its employees or members to the extent that such plan or program is self-funded or uninsured, including but not limited to benefits payable by an employer, association, or similar entity under: (i) A Multiple Employer Welfare Arrangement as defined in 29 U.S.C. § 1002(40) (the Employee Retirement Income Security Act of 1974) as amended. (ii) A minimum premium group insurance plan. (iii) A stop-loss group insurance plan. (iv) An administrative services only contract. (e) Any portion of a policy or contract to the extent that it provides dividends, premium refunds, or experience rating credits, or provides that any fees or allowances be paid to any person, including the policy or contract holder, in connection with the service to or administration of such policy or contract. (f) Any 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 such policy or contract in this state. (g) Any unallocated annuity contract except unallocated annuity contracts and defined contribution government plans qualified under Section 403(b) of the United States Internal Revenue Code (26 U.S.C. § 403(b)). (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, contract owner, or policy owner, including, without limitations, any of the following: (i) Claims based upon marketing materials. (ii) 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. (iii) Misrepresentations of or regarding policy or contract benefits. (iv) Extra-contractual claims. (v) A claim for penalties or consequential or incidental damages. (i) A policy or contract providing any hospital, medical, prescription drug, or other healthcare benefits pursuant to Part A, Part B, Part C, or Part D of Subchapter XVIII, Chapter 7 of Title 42 of the United States Code, commonly referred to as “Medicare Part A coverage”, “Medicare Part B coverage”, “Medicare Part C coverage”, and “Medicare Part D coverage”, or Subchapter XIX of Chapter 7 of Title 42 of the United States Code, commonly referred to as “Medicaid”, and any regulations issued pursuant to those parts or subchapters. (j) 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 this Part, 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 Paragraph, the interest or change in value determined by using the procedures defined in the policy or contract shall be credited as if the contractual date of crediting interest or changing values was the date of impairment or insolvency, whichever is earlier, and shall not be subject to forfeiture. (k) Structured settlement annuity benefits to which a payee or beneficiary has transferred his rights in a “structured settlement factoring transaction” as defined in 26 U.S.C. 5891(c)(3)(A), regardless of when the transaction occurred.

Non-Resident Coverage

LSA-R.S. 22:2083.A(2)(b) Yes. Covers nonresidents but only if all of the following conditions are satisfied (i) The member insurer which issued such policy or contract is domiciled in this state. (ii) The member insurer has never held a license or certificate of authority in the state in which such person resides. (iii) The state has an association similar to the association created by this Part. (iv) The person is not eligible for coverage by such association.

Definition Of Premium

§ 22:2084 (11) “Premiums” means amounts received on covered policies or contracts, less considerations, deposits, dividends, and experience credits thereon. “Premiums” shall not include any amounts received for any policies or contracts or for the portions of any policies or contracts for which coverage is not provided by R.S. 22:2083(B), except that accessible premiums shall not be reduced on account of R.S. 22:2083(B)(2)(c)(ii) relating to interest limitations with respect to any one individual, any one participant, and any one policyholder.

Interest Rate Adjustments

LSA-R.S. 22:2083.B(2)(c) Guaranty Association excludes from coverage: Any 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: (i) Averaged over the period of four years prior to the date on which the member insurer becomes an impaired or insolvent insurer under this Part, whichever is earlier, exceeds the rate of interest determined by subtracting two 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 years before the member insurer becomes an impaired or insolvent insurer under this Part, whichever is earlier. (ii) On and after the date on which the member insurer becomes an impaired or insolvent insurer under this Part, whichever is earlier, exceeds the rate of interest determined by subtracting three percentage points from Moody’s Corporate Bond Yield Average as most recently available.

Tax Offsets

LSA-R.S. 22:2092.A,B. Yes. A member insurer may offset up to 20% of the amount paid for next 5 years. Assessment amount may be reduced if the insurer has assets invested and maintained in qualifying Louisiana investments. Codified effective 6.21.2008.

Triggers

Discretionary Triggers

LSA-R.S. 22:2087.A. If a member insurer is an impaired insurer. (Amended effective 8/1/2014)

Mandatory Triggers

LSA-R.S. 22:2087.B. If a member insurer is an insolvent insurer. (Amended effective 8/1/2014)

Foreign Triggers

No separate provision. (Amended effective 8/1/2014)

“Impaired Insurer”

LSA-R.S. 22:2084(6). “Impaired insurer” means a member insurer which, after September 30, 1991, is not an insolvent insurer, and is placed under an order of rehabilitation or conservation by a court of competent jurisdiction. (Amended effective 8/1/2014)

“Insolvent Insurer”

LSA-R.S. 22:2084(7). A member insurer which after September 30, 1991, is placed under an order by a court of competent jurisdiction with a finding of insolvency. Codified effective 6.21.2008.

“Member Insurer”

LSA-R.S. 22:2084(8) “Member insurer” means any insurer licensed or which holds a certificate of authority to transact in this state any kind of insurance for which coverage is provided by R.S. 22:2083, and includes any insurer whose license or certificate of authority in this state may have been suspended, revoked, not renewed, or voluntarily withdrawn, but shall not include any of the following: (a) Repealed by Acts 2018, No. 97, § 2, effective August 1, 2018. (b) A fraternal benefit society. (c) A mandatory state pooling plan. (d) A mutual assessment company or any entity that operates on an assessment basis. (e) An insurance exchange. (f) A hospital or medical service organization, whether operated for profit or as a nonprofit. (g) An organization that issues charitable gift annuities as is defined in R.S. 22:952(A)(3). (h) Any entity similar to any of the above.

Kentucky

Account Structure

KRS 304.42-060(1). For purposes of administration and assessment, the association shall maintain three (3) accounts: (a) The health account; (b) The life insurance account; and (c) The annuity account.

Advertising Prohibition

§304.42-190 “Advertising Restrictions” No person, including a member insurer, agent, affiliate of a member insurer, life settlement provider, or life settlement broker 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 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 Kentucky Life and Health Insurance Guaranty Association Act. This section shall not apply to the Kentucky Life and Health Insurance Guaranty Association or any other entity which does not sell or solicit insurance or coverage by a health maintenance organization.

Assessments

Assessment Limits

KRS 304.42-090(5)(a). Subject to the provisions of paragraph (b) of this subsection, the total of all assessments authorized by the association with respect to a member insurer for each account shall not in any one (1) calendar year exceed two percent (2%) of the member insurer’s average annual premiums received in this state on the policies and contracts covered by the account during the three (3) calendar years preceding the year 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 other account, does not provide in any one (1) year in any other 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 this subtitle.

Assessment Classes

KRS 304.42-090(2). There shall be two (2) classes of assessments: (a) Class A assessments shall be made 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 or insolvent insurer; (b) Class B assessments shall be authorized and called to the extent necessary to carry out the powers and duties of the association under KRS 304.42-080 with regard to an impaired or insolvent insurer.

Benefit Limits

KRS 304.42-030(3)(a) The benefits that the association may become obligated to cover shall in no event exceed the lesser of 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 with respect to any one (1) life, regardless of the number of policies or contracts: 1. In life insurance, three hundred thousand dollars ($300,000) in death benefits, but not more than one hundred thousand dollars ($100,000) net cash surrender and net cash withdrawal values for life insurance; 2. For health insurance benefits: a. One hundred thousand dollars ($100,000) for coverages not defined as disability income insurance, health benefit plans, or long-term care insurance, including any net cash surrender and net cash withdrawal values; b. Three hundred thousand dollars ($300,000) for disability income insurance and long-term care insurance; and c. Five hundred thousand dollars ($500,000) for health benefit plans; and 3. In annuity benefits, two hundred fifty thousand dollars ($250,000) in the present value of annuity benefits, including net cash surrender and net cash withdrawal values; except with respect to each payee of a structured settlement annuity or beneficiary or beneficiaries of the payee if deceased, two hundred fifty thousand dollars ($250,000) in present value annuity benefits, in the aggregate, including net cash surrender and net cash withdrawal values. (b) In no event shall the association be obligated to cover more than: 1. An aggregate of three hundred thousand dollars ($300,000) in benefits with respect to any one (1) life under subparagraphs 2. and 3. of paragraph (a) of this subsection, except with respect to benefits for health benefit plans as stated in paragraph (a) of this subsection, in which case the aggregate liability of the association shall not exceed five hundred thousand dollars ($500,000) with respect to any one (1) individual; or 2. With respect to one (1) owner of multiple nongroup policies of life insurance, whether the policy 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) in benefits, regardless of the number of policies and contracts held by the owner.

Coverages

Covered Contracts

KRS 304.42-030(2)(a). This subtitle shall provide coverage to the persons specified in subsection (1) of this section for policies and contracts of direct, nongroup life insurance, health insurance, which for purposes of this subtitle includes health maintenance organization subscriber contracts and certificates, or annuities and supplemental contracts to any of these and for certificates issued under direct group policies and contracts.

Non-Covered Contracts

§304.42-030(2)(b). 1. Any portion of a policy or contract not guaranteed by the member insurer, or under which the risk is borne by the policy or contract owner; 2. Any policy or contract of reinsurance, unless assumption certificates have been issued pursuant to the reinsurance policy or contract; 3. Except as otherwise provided in paragraph (c) of this subsection, any portion of a policy or contract to the extent that the rate of interest on which it is based: a. Averaged over the period of four (4) years prior to the date on which the association becomes obligated with respect to such 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 (4) 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 b. 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; 4. Any 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 such plan or program is self-funded or uninsured including, but not limited to, benefits payable by an employer, association, or other person under: a. A multiple employer welfare arrangement as defined in 29 U.S.C. sec. 1144; b. A minimum premium group insurance plan; c. A stop-loss group insurance plan; or d. An administrative services only contract; 5. Any portion of a policy or contract to the extent that it provides for: a. Dividends or experience rating credits; b. Payment of any fees or allowances to any person, including the policy or contract owner, in connection with the service to or administration of such policy or contract; or c. Voting rights; 6. Any policy or contract issued in this state by a member insurer at a time when it did not have a certificate of authority to issue such policy or contract in this state; 7. Any unallocated annuity contract; 8. A portion of a policy or contract to the extent that the assessments required by KRS 304.42-090 with respect to the policy or contract are preempted by federal or state law; 9. 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, policyholder, contract owner, or policy owner, including without limitation: a. Claims based on marketing materials; b. 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; c. Misrepresentations of or regarding policy or contract benefits; d. Extracontractual claims; or e. A claim for penalties or consequential or incidental damages; 10. A contractual agreement that establishes the member insurer’s obligations 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; 11. A policy or contract providing any hospital, medical, prescription drug or other health care benefits pursuant to: a. Medicare Part C or Part D, 42 U.S.C. secs. 1395w-21 to w-154; b. Medicaid, 42 U.S.C. secs. 1396 to 1396w-5; or c. Any regulations issued pursuant to the sections referenced in subdivision a. or b. of this subparagraph; and 12. Structured settlement annuity benefits to which a payee or beneficiary has transferred his or her rights in a structured settlement factoring transaction as defined in 26 U.S.C. sec. 5891(c)(3)(A), regardless of whether the transaction occurred before or after the section became effective.

Non-Resident Coverage

KRS 304.42-030(1)(b) – Yes – Covers nonresident persons but only under the following conditions: a. The member insurer which issued the policies or contracts is domiciled in this state; b. The states in which the persons reside have associations similar to the association created by this subtitle; and c. 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 state’s guaranty association law.

Definition Of Premium

§ 304.42-050 (17) (a) “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. (b) “Premiums” does not include: 1. Amounts or considerations received for any policies or contracts or for the portions of policies or contracts for which coverage is not provided under KRS 304.42-030(2), except that assessable premium shall not be reduced on account of KRS 304.42-030(2)(b)3. relating to interest limitations and KRS 304.42-030(3)(b) relating to limitations with respect to one (1) individual and one (1) policy or contract owner; and 2. With respect to multiple nongroup policies of life insurance owned by one (1) 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, premiums in excess of one million dollars ($1,000,000) with respect to these policies or contracts, regardless of the number of policies or contracts held by the owner; r of policies or contracts held by the owner;

Interest Rate Adjustments

KRS 304.42-030(2)(b)3. Guaranty Association excludes from coverage: Except as otherwise provided in paragraph (c) of this subsection, any portion of a policy or contract to the extent that the rate of interest on which it is based: a. Averaged over the period of four (4) years prior to the date on which the association becomes obligated with respect to such 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 (4) 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 b. 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;

Tax Offsets

KRS 304.42-130. Yes. Up to 20% of assessment amount may be offset for next 5 years; applies only to Class B assessments (including administrative expenses directly incurred or allocated to each insolvency). Class A assessments not eligible for offset.

Triggers

Discretionary Triggers

KRS 304.42-080(1). If a member insurer is impaired. (Eff. 7/15/98)

Mandatory Triggers

KRS 304.42-080(2). If a member insurer is insolvent. (Eff. 7/15/98)

Foreign Triggers

No separate provision.

“Impaired Insurer”

KRS 304.42-050(10). A member insurer which after June 17, 1978, is not an insolvent insurer and is placed under an order of rehabilitation or conservation by a court of competent jurisdiction. (eff. 7/15/98)

“Insolvent Insurer”

KRS 304.42-050(11). A member insurer which after June 17, 1978, is placed under an order of liquidation by a court of competent jurisdiction with a finding of insolvency.

“Member Insurer”

KRS 304.42-050(12). “Member insurer” means any insurer or health maintenance organization licensed or authorized to transact in this state any kind of insurance or health maintenance organization business for which coverage is provided under KRS 304.42-030, 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 nonprofit hospital, medical-surgical, dental, and health service corporation, as defined by Subtitle 32 of this chapter; (b) A fraternal benefit society; (c) A mandatory state pooling plan; (d) An assessment or cooperative insurer or any entity that operates on an assessment basis; (e) An insurance exchange; (f) Any entity similar to the above; or (g) A limited health service organization;

Kansas

Account Structure

§40-3006(a). Three accounts: health insurance, life insurance and annuity (excludes unallocated annuities)

Advertising Prohibition

§40-3013a “Statement of existence of association not to be used to induce sales; description document, delivery to policyholder; disclaimer required; notice that policy is excluded from coverage under act” (a) No person, including an insurer, agent or affiliate of an 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, written or oral, which uses the existence of the insurance guaranty association of this state for the purpose of sales, solicitation or inducement to purchase any form of insurance covered by the Kansas life and health insurance guaranty association act. This § shall not apply to the Kansas life and health insurance guaranty association or any other entity which does not sell or solicit insurance.

Assessments

Assessment Limits

§40-3009(e)(1) The total of all assessments upon a member insurer for each account shall not in any one calendar year exceed 2% of such insurer’s average premiums received in this state on the policies and contracts covered by the account during the three calendar years preceding the years in which the insurer became an impaired or insolvent insurer.

Assessment Classes

§40-3009(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 conducted under the authority of sub-section (e) of K.S.A. 40-3012, and amendments thereto. 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 K.S.A. 40-3008, and amendments thereto, with regard to an impaired or an insolvent insurer.

Benefit Limits

§40-3008(o)The benefits for which the association may become liable shall in no event exceed the lesser of: (1) The contractual obligations for which the insurer is liable or would have been liable if it were not an impaired or insolvent insurer; or (2) with respect to any one life, regardless of the number of policies or contracts: (A) $300,000 in life insurance death benefits, but not more than $100,000 in net cash surrender and net cash withdrawal values for life insurance; (B) in health insurance benefits: (i) $100,000 for coverages not defined as disability insurance or basic hospital, medical and surgical insurance or major medical insurance or long-term care insurance including any net cash surrender and net cash withdrawal values; (ii) $300,000 for disability insurance and $300,000 for long-term care insurance; (iii) $500,000 for basic hospital, medical and surgical insurance or major medical insurance; (C) $250,000 in the present value of annuity benefits, including net cash surrender and net cash withdrawal values; (D) with respect to each payee of a structured settlement annuity (or beneficiary or beneficiaries of the payee if deceased), $250,000 in present value annuity benefits, in the aggregate, including net cash surrender and net cash withdrawal values; (E) however, in no event shall the association be obligated to cover more than: (1) An aggregate of $300,000 in benefits with respect to any one life as provided in paragraphs (A), (B), (C) and (D) of this subsection except with respect to benefits for basic hospital, medical and surgical insurance and major medical insurance under (o)(2)(B)(iii) of this subsection, in which case the aggregate liability of the association shall not exceed $500,000 with respect to any one individual; or (2) with respect to one owner of multiple nongroup policies of life insurance, whether the policy owner is an individual, firm, corporation or other person, and whether the persons insured are officers, managers, employees or other persons, more than $5,000,000 in benefits, regardless of the number of policies and contracts held by the owner; (Amended effective 7/1/2011).

Coverages

Covered Contracts

§40-3003(b) This act shall provide coverage to the persons specified in subsection (a) for direct, nongroup life, health, or annuity policies or contracts, supplemental contracts or unallocated annuity contracts covering individuals participating in a governmental deferred compensation plan established under section 457 of the U.S. internal revenue code pursuant to K.S.A. 2010 Supp. 74-49b08 through 74-49b14, and amendments thereto, whether or not a resident, or the beneficiaries of each such individual if deceased, and for certificates under direct group policies and contracts issued by member insurers, except as limited by this act. (Amended effective 7/1/2011).

Non-Covered Contracts

§40-3008(n). (1) Any portion of a policy or contract not guaranteed by the insurer, or under which the risk is borne by the policy or contract holder; (2) any policy or contract of reinsurance, unless assumption certificates have been issued; (3) any 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: (A) Averaged over the period of four years prior to the date on which the association becomes obligated with respect to such policy or contract, exceeds a rate of interest determined by subtracting two 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 years before the association became obligated; and (B) on and after the date on which the association becomes obligated with respect to such policy or contract, exceeds the rate of interest determined by subtracting three percentage points from Moody’s corporate bond yield average as most recently available; (4) any plan or program of an employer, association or similar entity to provide life, health or annuity benefits to its employees or members to the extent that such plan or program is self-funded or uninsured, including but not limited, to benefits payable by an employer, association or similar entity under: (A) A multiple employer welfare arrangement as defined in section 3 (40) of the employee retirement income security act of 1974 (29 U.S.C. § 1002(40)); (B) a minimum premium group insurance plan; (C) a stop-loss group insurance plan; or (D) an administrative services only contract; (5) any portion of a policy or contract to the extent that it provides dividends or experience rating credits, or provides that any fees or allowances be paid to any person, including the policy or contract holder, in connection with the service to or administration of such policy or contract; (6) any 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 such policy or contract in this state; (7) any unallocated annuity contract, except as provided in subsection (b) of K.S.A. 40–3003 , and amendments thereto; and (8) 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 & D) or any regulations issued pursuant thereto ; or (9)(A) Any portion of a policy or contract: (i) 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 (ii) 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 this act; whichever is earlier. (B) 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 which are not subject to forfeiture under this paragraph, the interest or change in value determined by using the procedures defined in the policy or contract shall be credited as if the contractual date of crediting interest or changing values was the date of impairment or insolvency, whichever is earlier, and shall not be subject to forfeiture. (Amended effective 7/1/2011).

Non-Resident Coverage

§40-3003(a)(2) Yes: (B) are not residents, but only with respect to an annuity contract awarded pursuant to K.S.A. 60-3407 or 60-3409, and amendments thereto, an annuity contract for future economic loss procured pursuant to a settlement agreement in a medical malpractice liability action, as defined by K.S.A. 60-3401, and amendments thereto, or fixed-return accounts of the Kansas public employees deferred compensation plan under K.S.A. 2010 Supp. 74-49b08 through 74-49b14, and amendments thereto; or (C) are not residents, but only under all of the following conditions: (i) The insurers which issued such policies or contracts are domiciled in this state; (ii) the states in which such persons reside have one or more associations similar to the association created by this act; (iii) the persons are not eligible for coverage by an association in any other state due to the fact that the insurer was not licensed in the state at the time specified in the state’s guaranty association law. (Amended effective 7/1/2011).

Definition Of Premium

§40-3005(m) “premiums” means amounts received on covered policies or contracts less premiums, considerations and deposits returned thereon, and less dividends and experience credits thereon. Premiums does not include any amounts received for any policies or contracts or for the portions of any policies or contracts for which coverage is not provided under subsection (b) of K.S.A. 40–3003 , and amendments thereto, except that assessable premiums shall not be reduced on accounts for subsection (n)(3) of K.S.A. 40–3008 , and amendments thereto , relating to interest limitations and subsection (o)(2) of K.S.A. 40–3008 , and amendments thereto , relating to limitations with respect to any one life and any one contract holder. Premiums shall not include : (1) Any premiums on any unallocated annuity contract; or (2) any premiums in excess of $5,000,000 with respect to multiple nongroup policies of life insurance owned by one policyholder, regardless of the number of policies or contracts held by the policyholder and regardless of whether: (A) The policyholder is an individual, firm, corporation or other person; and (B) the persons insured are officers, managers, employees or other persons;

Interest Rate Adjustments

§40-3008(n)(3). Guaranty Association excludes from coverage: any 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: (A) Averaged over the period of four years prior to the date on which the association becomes obligated with respect to such policy or contract, exceeds a rate of interest determined by subtracting two 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 years before the association became obligated; and (B) on and after the date on which the association becomes obligated with respect to such policy or contract, exceeds the rate of interest determined by subtracting three percentage points from Moody’s corporate bond yield average as most recently available. (Amended effective 7/1/2011).

Tax Offsets

§40-3016. Yes. Up to 20% of assessment amount may be offset for next 5 years, beginning with the calendar year after the year the certificate of contribution is issued. Tax offset covers only Class B assessments.

Triggers

Discretionary Triggers

§40-3008(a). If a member insurer is an impaired insurer. (Amended effective 7/1/2011).

Mandatory Triggers

§40-3008(b) If a member insurer is an insolvent insurer. (Amended effective 7/1/2011).

Foreign Triggers

No separate provision. (Amended effective 7/1/2011).

“Impaired Insurer”

§40-3005(f) “Impaired insurer” means a member insurer which, after the effective date of this act, is not an insolvent insurer, and which: (1) Is deemed by the commissioner to be potentially unable to fulfill its contractual obligations; or (2) is placed under an order of rehabilitation or conservation by a court of competent jurisdiction; (Amended effective 7/1/2011).

“Insolvent Insurer”

§40-3005(g). A member insurer which becomes insolvent and is placed under a final order of liquidation by a court of competent jurisdiction.

“Member Insurer”

§40-3005(h) “Member insurer” means any insurer licensed or holding a certificate of authority to transact in this state any kind of insurance for which coverage is provided under K.S.A. 40-3003, and amendments thereto, and includes any insurer whose license or certificate of authority in this state may have been suspended, revoked, nonrenewed or voluntarily withdrawn, but does not include: (1) A hospital or medical service organization regardless of whether such hospital or medical service organization is organized for profit or not-for-profit; (2) a health maintenance organization; (3) a fraternal benefit society; (4) a mandatory state pooling plan; (5) a mutual assessment company or any entity that operates on an assessment basis; (6) an insurance exchange, except a reciprocal or interinsurance exchange governed by the provisions of article 16 of chapter 40 of the Kansas Statutes Annotated, and amendments thereto; or (7) any entity similar to any of the organizations listed in paragraphs (1) through (6) inclusive; (Amended effective 7/1/2011).

Iowa

Account Structure

§508C.6.1. For purposes of administration and assessment, the association shall maintain all of the following accounts: a. A health account. b. A life insurance account. c. An annuity account, which shall include annuity contracts owned by a governmental retirement plan, or the plan’s trustee, established under section 401, 403(b), or 457 of the United States Internal Revenue Code, but shall otherwise exclude unallocated annuities. d. An unallocated annuity contract account, which shall exclude contracts owned by a governmental retirement benefit plan, or the plan’s trustee, established under section 401, 403(b), or 457 of the United States Internal Revenue Code.

Advertising Prohibition

§508C.18 “Prohibited advertisements” A person, including a member insurer, 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 a newspaper, magazine, or other publication, or in the form of a notice, circular, pamphlet, letter, or poster, or over a radio station or television station, or in any other way, an advertisement, announcement, or statement, written or oral, which uses the existence of the 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 this chapter. However, this section does not apply to the association or any other entity which does not sell or solicit insurance or coverage by a health maintenance organization.

Assessments

Assessment Limits

§508C.9.5.a. (1) Subject to the provisions of subparagraph (2) of this paragraph “a”, the total of all assessments authorized by the association with respect to a member insurer for each of the accounts established pursuant to section 508C.6, and designated as the health account, the life insurance account, the annuity account, and the unallocated annuity contract account, shall not in any one calendar year exceed two percent of that member insurer’s average annual premiums received in this state on the policies and contracts covered by the account during the three calendar years preceding the year in which the member insurer becomes impaired or insolvent.

Assessment Classes

§508C.9.2. There are two classes of assessments as follows: a. Class A assessments shall be authorized and called 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 or insolvent insurer. b. Class B assessments shall be authorized and called to the extent necessary to carry out the powers and duties of the association under section 508C.8 with regard to an impaired or an insolvent insurer.

Benefit Limits

§508C.3.4A a. The benefits that the association may become obligated to cover shall in no event exceed the lesser of either 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 or insolvent insurer. (2) Any of the following: (a) With respect to one life, regardless of the number of policies or contracts: (i) Three hundred thousand dollars in life insurance death benefits, but not more than one hundred thousand dollars in net cash surrender and net cash withdrawal values for life insurance. (ii) Five hundred thousand dollars for health benefit plans; three hundred thousand dollars for health insurance benefits which are disability income protection coverage as defined by the commissioner by rule pursuant to section 514D.4; three hundred thousand dollars for long-term care insurance as defined in section 514G.103; or one hundred thousand dollars for other health insurance benefits including any net cash surrender and net cash withdrawal values. (iii) Two hundred fifty thousand dollars in the present value of annuity benefits, including net cash surrender and net cash withdrawal values. (iv) With respect to each payee of a structured settlement annuity, or the beneficiary or beneficiaries of the payee if the payee is deceased, two hundred fifty thousand dollars in present value annuity benefits, in the aggregate, including net cash surrender and net cash withdrawal values. (b) (i) With respect to each individual participating in a retirement benefit plan established under section 401, 403(b), or 457 of the United States Internal Revenue Code, or each unallocated annuity contract account, excluding a plan established under section 401, 403(b), or 457 of the United States Internal Revenue Code, not more than two hundred fifty thousand dollars in the aggregate, in present value annuity benefits, including net cash surrender and net cash withdrawal values for the beneficiaries of the deceased individual. (ii) However, the association shall not in any event be obligated to cover more than an aggregate of three hundred fifty thousand dollars in benefits with respect to any one life under subparagraph division (a) and this subparagraph division (b), except with respect to benefits for health benefit plans under subparagraph division (a), subparagraph subdivision (ii), in which case the aggregate liability of the association shall not exceed five hundred thousand dollars with respect to any one individual, or more than five million dollars in benefits to one owner of multiple nongroup policies of life insurance regardless of 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, and regardless of the number of policies and contracts held by the owner. (c) With respect to a plan sponsor whose plan owns, directly or in trust, one or more unallocated annuity contracts not included under subparagraph division (b), not more than five million dollars in benefits, regardless of the number of contracts held by the plan sponsor. However, where one or more such unallocated annuity contracts are covered contracts under this chapter and are owned by a trust or other entity for the benefit of two or more plan sponsors, the association shall provide coverage if the largest interest in the trust or entity owning the contract is held by a plan sponsor whose principal place of business is in the state but in no event shall the association be obligated to cover more than five million dollars in benefits in the aggregate with respect to all such unallocated contracts.

Coverages

Covered Contracts

§508C.3.2. This chapter shall provide coverage to the persons specified in subsection 1 under policies or contracts of direct life insurance, health insurance, or annuities, supplemental contracts, certificates under group policies or contracts, and unallocated annuity contracts issued by member insurers. For purposes of this chapter, health insurance shall include without limitation health maintenance organization subscriber contracts and certificates, long-term care insurance, and disability insurance policies.

Non-Covered Contracts

§508C.3.4. This chapter does not apply to any of the following: a. Except for a portion of a policy or contract, including a rider, that provides coverage for long-term care or any health insurance benefits, any 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 and employed in calculating returns or changes in value, averaged over the period of four 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 percentage points from Moody’s corporate bond yield average for the same four-year period or over such lesser period if the policy or contract was issued less than four years before the association became obligated; and on or 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 percentage points from Moody’s corporate bond yield average as most recently available. b. That portion or part of a policy or contract not guaranteed by the member insurer, or under which the risk is borne by the policy or contract holder. c. A policy or contract or part of a policy or contract assumed by the impaired or insolvent insurer under a contract of reinsurance, other than reinsurance for which assumption certificates have been issued. d. An unallocated annuity contract issued to or in connection with an employee benefit plan protected under the federal pension benefit guaranty corporation, regardless of whether the federal pension benefit guaranty corporation has yet become liable to make any payments with respect to the benefit plan. e. A portion of an unallocated annuity contract which is not issued to or in connection with a specific employee, union, or association of natural persons, or any portion of a financial guarantee. f. A policy or contract issued by a company which is licensed under chapter 509A, 512A, 512B, 514, 518, 518A, or 520, or under section 514B.33. g. Except for a policy issued pursuant to section 515.48, subsection 5, paragraph “a”, a policy or contract issued by a company which is licensed under chapter 515. h. A charitable gift annuity under chapter 508F. i. An annuity contract issued to a government lottery. j. A funding agreement under section 508.31A. k. An obligation that does not arise under the express written terms of a covered policy or contract issued by the member insurer to the enrollee, certificate holder, policy owner, or contract owner including without limitation all of the following: (1) A claim based on marketing materials. (2) A claim 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) A claim based on misrepresentation of or misrepresentation regarding policy or contract benefits. (4) An extra-contractual claim. (5) A claim for penalties, consequential, or incidental damages. l. A contractual agreement that establishes a member insurer’s obligations 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. m. A portion of a covered policy 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 covered policy, but which have not been credited to the covered policy, or as to which the covered policy owner’s rights are subject to forfeiture, as of the date the member insurer becomes an impaired or insolvent insurer under this chapter, whichever is earlier. If a covered policy’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 the covered policy, the interest or change in value determined by using the procedures defined in the covered policy 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 the crediting interest or changing value shall not be subject to forfeiture. n. A policy or contract issued in this state by a member insurer at a time the insurer was not licensed or did not have a certificate of authority to issue the policy or contract in this state. o. 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 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 any of the following: (1) A multiple employer welfare arrangement as defined in section 3 of the federal Employee Retirement Income Security Act of 1974, 29 U.S.C. §1002, paragraph 40. (2) A minimum premium group insurance plan. (3) A stop-loss group insurance plan. (4) An administrative services-only contract. p. A portion of a policy or contract to the extent that it provides for any of the following: (1) Dividends or experience rating credits. (2) Voting rights. (3) Payment of any fees or allowances to any person, including the policy or contract owner, in connection with service to or administration of the policy or contract. q. A portion of a policy or contract to the extent that the assessments authorized by section 508C.9 with respect to the policy or contract are preempted by federal or state law. r. A policy or contract providing any hospital, medical, prescription drug, or other health care benefits pursuant to any of the following: (1) 42 U.S.C. ch. 7, subch. XVIII, Part C or Part D, commonly known as Medicare Part C and D, or any regulations issued pursuant thereto. (2) 42 U.S.C. ch. 7, subch. XIX, commonly known as Medicaid, or any regulations issued pursuant thereto. s. Structured settlement annuity benefits to which a payee or beneficiary has transferred the payee’s or beneficiary’s rights in a structured settlement factoring transaction as defined in 26 U.S.C. §5891(c)(3)(A).

Non-Resident Coverage

§508C.3.1.b. (2) Yes, Nonresidents are covered if all of the following conditions are met: (a) The state in which the person resides has an association similar to the association created in this chapter. (b) The person is not eligible for coverage by an association described in subparagraph division (a) in any other state due to the fact that the insurer or the health maintenance organization was not licensed in the state at the time specified in that state’s guaranty association law. (c) The member insurer that issued the policy or contract is domiciled in this state.

Definition Of Premium

§ 508C.5 17. “Premium” means amounts or consideration, by whatever name called, received on covered policies or contracts less returned premiums, considerations, and deposits and less dividends and experience credits. “Premium” does not include amounts for consideration received for policies or contracts or for the portions of policies or contracts for which coverage is not provided under section 508C.3, subsection 4, except that assessable premium shall not be reduced on account of the provisions of section 508C.3, subsection 4, paragraph “a”, relating to interest limitations and section 508C.3, subsection 4A, paragraph “a”, subparagraph (2), subparagraph division (a), relating to limitations with respect to one individual, one participant, and one policy or contract owner. “Premium” shall not include any of the following: a. Premiums in excess of five million dollars on an unallocated annuity contract not issued under a governmental retirement plan, or its trustee, established under section 401, 403(b), or 457 of the United States Internal Revenue Code. b. With respect to multiple nongroup 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, premiums in excess of five million dollars with respect to those polices or contracts, regardless of the number of policies or contracts held by the owner.

Interest Rate Adjustments

§508C.3.4.a. This chapter does not apply to any of the following: a. Except for a portion of a policy or contract, including a rider, that provides coverage for long-term care or any health insurance benefits, any 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 and employed in calculating returns or changes in value, averaged over the period of four 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 percentage points from Moody’s corporate bond yield average for the same four-year period or over such lesser period if the policy or contract was issued less than four years before the association became obligated; and on or 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 percentage points from Moody’s corporate bond yield average as most recently available.

Tax Offsets

§508C.19. Yes. Up to 20% of assessment amount may be offset for each of the 5 years following payment.

Triggers

Discretionary Triggers

§508C.8.1. If a member insurer is an impaired insurer. §508C.8.2. If a member insurer is an insolvent insurer.

Mandatory Triggers

No mandatory provision.

Foreign Triggers

See Discretionary Triggers.

“Impaired Insurer”

§508C.5. 10. “Impaired insurer” means a member insurer which is not an insolvent insurer and is placed under an order of rehabilitation or conservation by a court of competent jurisdiction.

“Insolvent Insurer”

§508C.5. 11. “Insolvent insurer” means a member insurer which is placed under an order of liquidation with a finding of insolvency by a court of competent jurisdiction.

“Member Insurer”

§508C.5. 12. “Member insurer” means an insurer or health maintenance organization which is licensed or which holds a certificate of authority to transact in this state any kind of insurance or health maintenance business for which coverage is provided under section 508C.3, and including an insurer or health maintenance organization whose license or certificate of authority in this state has been suspended, revoked, not renewed, or voluntarily withdrawn but does not include any of the following: a. An entity which is a licensed company specified in section 508C.3, subsection 4, paragraph “f” or “g”. b. A mandatory state pooling plan. c. A mutual assessment company or other person which operates on an assessment basis. d. An insurance exchange. e. An entity which issues a charitable gift annuity under chapter 508F. f. An entity whose only business in this state is operating as a managed care organization. For purposes of this paragraph, “managed care organization” means an entity that is under contract with the Iowa department of human services to provide services to Medicaid recipients and that also meets the definition of “health maintenance organization” in section 514B.1. g. An entity similar to any of the entities enumerated in this subsection.

Indiana

Account Structure

§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.

Advertising Prohibition

§ 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.

Assessments

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.

Benefit Limits

§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.

Coverages

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.

Definition Of Premium

§ 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.

Interest Rate Adjustments

§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.

Tax Offsets

§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.

Triggers

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).

Illinois

Account Structure

215 ILCS 5/531.06. For purposes of administration and assessment, the Association must maintain 2 accounts: (1) The life insurance and annuity account, which includes the following subaccounts: (a) Life Insurance Account; (b) Annuity account, which shall include annuity contracts owned by a governmental retirement plan (or its trustee) established under Section 401, 403(b), or 457 of the United States Internal Revenue Code, but shall otherwise exclude unallocated annuities; and (c) Unallocated annuity account, which shall exclude contracts owned by a governmental retirement benefit plan (or its trustee) established under Section 401, 403(b), or 457 of the United States Internal Revenue Code [215 ILCS 5/401, 215 ILCS 5/403(b), or 215 ILCS 5/457] (2) The health account.

Advertising Prohibition

§531.19 “Prohibited advertisement of action of the Insurance Guaranty Association in sale of insurance” (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, written or oral, which uses the existence of the 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 this Article; provided, however, that this Section shall not apply to the Illinois Life and Health Guaranty Association or any other entity which does not sell or solicit insurance or coverage by a health maintenance organization.

Assessments

Assessment Limits

215 ILCS 5/531.09(5). (a) Subject to the provisions of this paragraph, the total of all assessments authorized by the Association with respect to a member insurer for each subaccount of the life insurance and annuity account and for the health account shall not in one calendar year exceed 2% of that member insurer’s average annual premiums received in this State on the policies and contracts covered by the subaccount or account during the 3 calendar years preceding the year in which the member insurer became an impaired or insolvent insurer.

Assessment Classes

215 ILCS 5/215 ILCS 5/531.09(2). There shall be 2 classes of assessments, as follows: (a) Class A assessments shall be made for the purpose of meeting administrative costs and other general expenses and examinations conducted under the authority of the Director under subsection (5) of Section 531.12 [215 ILCS 5/531.12]. (b) Class B assessments shall be made to the extent necessary to carry out the powers and duties of the Association under Section 531.08 [215 ILCS 5/531.08] with regard to an impaired or insolvent domestic insurer or insolvent foreign or alien insurers.

Benefit Limits

215 ILCS 5/531.03(3). (b)(i) with respect to any one life, regardless of the number of policies or contracts: (A) $300,000 in life insurance death benefits, but not more than $100,000 in net cash surrender and net cash withdrawal values for life insurance; (B) for health insurance benefits: (I) $100,000 for coverages not defined as disability income insurance or health benefit plans or long-term care insurance, including any net cash surrender and net cash withdrawal values; (II) $300,000 for disability income insurance and $300,000 for long-term care insurance; and (III) $500,000 for health benefit plans; (C) $250,000 in the present value of annuity benefits, including net cash surrender and net cash withdrawal values; (ii) with respect to each individual participating in a governmental retirement benefit plan established under Section 401, 403(b), or 457 of the U.S. Internal Revenue Code covered by an unallocated annuity contract or the beneficiaries of each such individual if deceased, in the aggregate, $250,000 in present value annuity benefits, including net cash surrender and net cash withdrawal values; (iii) with respect to each payee of a structured settlement annuity or beneficiary or beneficiaries of the payee if deceased, $250,000 in present value annuity benefits, in the aggregate, including net cash surrender and net cash withdrawal values, if any; or (iv) with respect to either (1) one contract owner provided coverage under subparagraph (ii) of paragraph (c) of subsection (1) of this Section or (2) one plan sponsor whose plans own directly or in trust one or more unallocated annuity contracts not included in subparagraph (ii) of paragraph (b) of this subsection, $5,000,000 in benefits, irrespective of the number of contracts with respect to the contract owner or plan sponsor. However, in the case where one or more unallocated annuity contracts are covered contracts under this Article and are owned by a trust or other entity for the benefit of 2 or more plan sponsors, coverage shall be afforded by the Association if the largest interest in the trust or entity owning the contract or contracts is held by a plan sponsor whose principal place of business is in this State. In no event shall the Association be obligated to cover more than $5,000,000 in benefits with respect to all these unallocated contracts. In no event shall the Association be obligated to cover more than (1) an aggregate of $300,000 in benefits with respect to any one life under subparagraphs (i), (ii), and (iii) of this paragraph (b) except with respect to benefits for health benefit plans under item (B) of subparagraph (i) of this paragraph (b), in which case the aggregate liability of the Association shall not exceed $500,000 with respect to any one individual or (2) with respect to one owner of multiple nongroup 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, $5,000,000 in benefits, regardless of the number of policies and contracts held by the owner.

Coverages

Covered Contracts

215 ILCS 5/531.03(2)(a). This Article shall provide coverage to the persons specified in subsection (1) of this Section for policies or contracts of direct, (i) nongroup life insurance, health insurance (that, for the purposes of this Article, includes health maintenance organization subscriber contracts and certificates), annuities and supplemental contracts to any of these, (ii) for certificates under direct group policies or contracts, (iii) for unallocated annuity contracts and (iv) for contracts to furnish health care services and subscription certificates for medical or health care services issued by persons licensed to transact insurance business in this State under this Code. Annuity contracts and certificates under group annuity contracts include but are not limited to guaranteed investment contracts, deposit administration contracts, unallocated funding agreements, allocated funding agreements, structured settlement agreements, lottery contracts and any immediate or deferred annuity contracts.

Non-Covered Contracts

215 ILCS 5/531.03(2)(b). Except as otherwise provided in paragraph (c) of this subsection, this Article shall not provide coverage for: (i) that portion of a policy or contract not guaranteed by the member insurer, or under which the risk is borne by the policy or contract owner; (ii) any such policy or contract or part thereof assumed by the impaired or insolvent insurer under a contract of reinsurance, other than reinsurance for which assumption certificates have been issued; (iii) any 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 is determined by use of an index or other external reference stated in the policy or contract employed in calculating returns or changes in value: (A) averaged over the period of 4 years prior to the date on which the member insurer becomes an impaired or insolvent insurer under this Article, whichever is earlier, exceeds the rate of interest determined by subtracting 2 percentage points from Moody’s Corporate Bond Yield Average averaged for that same 4-year period or for such lesser period if the policy or contract was issued less than 4 years before the member insurer becomes an impaired or insolvent insurer under this Article, whichever is earlier; and (B) on and after the date on which the member insurer becomes an impaired or insolvent insurer under this Article, whichever is earlier, exceeds the rate of interest determined by subtracting 3 percentage points from Moody’s Corporate Bond Yield Average as most recently available; (iv) any unallocated annuity contract issued to or in connection with a benefit plan protected under the federal Pension Benefit Guaranty Corporation, regardless of whether the federal Pension Benefit Guaranty Corporation has yet become liable to make any payments with respect to the benefit plan; (v) any portion of any unallocated annuity contract which is not issued to or in connection with a specific employee, union or association of natural persons benefit plan or a government lottery; (vi) 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, contract owner, or policy owner, including without limitation: (A) a claim based on marketing materials; (B) a claim 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; (C) a misrepresentation of or regarding policy or contract benefits; (D) an extra-contractual claim; or (E) a claim for penalties or consequential or incidental damages; (vii) any stop-loss insurance, as defined in clause (b) of Class 1 or clause (a) of Class 2 of Section 4, and further defined in subsection (d) of Section 352 [215 ILCS 5/352]; (viii) any 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 & D), Subchapter XIX, Chapter 7 of Title 42 of the United States Code (commonly known as Medicaid), or any regulations issued pursuant thereto; (ix) any portion of a policy or contract to the extent that the assessments required by Section 531.09 of this Code [215 ILCS 5/531.09] with respect to the policy or contract are preempted or otherwise not permitted by federal or State law; (x) any 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: (A) a multiple employer welfare arrangement as defined in 29 U.S.C. Section 1002; (B) a minimum premium group insurance plan; (C) a stop-loss group insurance plan; or (D) an administrative services only contract; (xi) any portion of a policy or contract to the extent that it provides for: (A) dividends or experience rating credits; (B) voting rights; or (C) 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; (xii) any 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; (xiii) any contractual agreement that establishes the member insurer’s obligations 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; (xiv) any portion of a policy or contract to the extent that 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 this Code, 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 Section, 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 (xv) that portion or part of a variable life insurance or variable annuity contract not guaranteed by a member insurer.

Non-Resident Coverage

215ILCS 5/531.03(1)(b)(ii). Yes. Covers nonresidents but only under all of the following conditions: (A) the member insurer that issued the policies or contracts is domiciled in this State; (B) the states in which the persons reside have associations similar to the Association created by this Article; (C) 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 that state at the time specified in that state’s guaranty association law.

Definition Of Premium

§ 531.05 “Premiums” mean 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: (A) amounts or considerations received for policies or contracts or for the portions of policies or contracts for which coverage is not provided under Section 531.03 of this Code except that assessable premium shall not be reduced on account of the provisions of subparagraph (iii) of paragraph (b) of subsection (2) of Section 531.03 of this Code relating to interest limitations and the provisions of paragraph (b) of subsection (3) of Section 531.03 relating to limitations with respect to one individual, one participant, and one policy owner or contract owner; (B) premiums in excess of $5,000,000 on an unallocated annuity contract not issued under a governmental retirement benefit plan (or its trustee) established under Section 401, 403(b) or 457 of the United States Internal Revenue Code; or (C) with respect to multiple nongroup policies of life insurance owned by one owner, whether the policy owner or contract owner is an individual, firm, corporation, or other person, and whether the persons insured are officers, managers, employees, or other persons, premiums in excess of $5,000,000 with respect to these policies or contracts, regardless of the number of policies or contracts held by the owner.

Interest Rate Adjustments

215 ILCS 5/531.03(2)(b)(iii) Guaranty Association excludes from coverage: (iii) any 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 is determined by use of an index or other external reference stated in the policy or contract employed in calculating returns or changes in value: (A) averaged over the period of 4 years prior to the date on which the member insurer becomes an impaired or insolvent insurer under this Article, whichever is earlier, exceeds the rate of interest determined by subtracting 2 percentage points from Moody’s Corporate Bond Yield Average averaged for that same 4-year period or for such lesser period if the policy or contract was issued less than 4 years before the member insurer becomes an impaired or insolvent insurer under this Article, whichever is earlier; and (B) on and after the date on which the member insurer becomes an impaired or insolvent insurer under this Article, whichever is earlier, exceeds the rate of interest determined by subtracting 3 percentage points from Moody’s Corporate Bond Yield Average as most recently available;

Tax Offsets

215 ILCS 5/531.13. No. In the event the aggregate Class A, B and C assessments for all member insurers do not exceed $3,000,000 in any one calendar year, no member insurer shall receive a tax offset. However, for any one calendar year before 1998 in which the total of such assessments exceeds $3,000,000, the amount in excess of $3,000,000 shall be subject to a tax offset to the extent of 20% of the amount of such assessment for each of the 5 calendar years following the year in which such assessment was paid, and ending prior to January 1, 2003, and each member insurer may offset the proportionate amount of such excess paid by the insurer against its liabilities for the tax imposed by subsections (a) and (b) of Section 201 of the Illinois Income Tax Act. The provisions of this Section shall expire and be given no effect for any tax period commencing on and after January 1, 2003. (Eff. 5/29/98)

Triggers

Discretionary Triggers

215 ILCS 5/531.08(a)(1). If a member insurer is an impaired insurer. Amended effective 8.20.2010.

Mandatory Triggers

215 ILCS 5/531.08(a)(2). If a member insurer is an insolvent insurer. Amended effective 8.20.2010.

Foreign Triggers

No separate provision. Amended effective 8.20.2010.

“Impaired Insurer”

215 ILCS 5/531.05 “Impaired insurer” means (A) a member insurer which, after the effective date of this amendatory Act of the 96th General Assembly, is not an insolvent insurer, and is placed under an order of rehabilitation or conservation by a court of competent jurisdiction or (B) a member insurer deemed by the Director after the effective date of this amendatory Act of the 96th General Assembly to be potentially unable to fulfill its contractual obligations and not an insolvent insurer. Amended effective 8.20.2010.

“Insolvent Insurer”

215 ILCS 5/531.05 “Insolvent insurer” means a member insurer that, after the effective date of this amendatory Act of the 96th General Assembly, is placed under a final order of liquidation by a court of competent jurisdiction with a finding of insolvency. Amended effective 8.20.2010.

“Member Insurer”

215 ILCS 5/531.05 “Member insurer” means an insurer or health maintenance organization licensed or holding 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 531.03 of this Code and includes an insurer or health maintenance organization whose license or certificate of authority in this State may have been suspended, revoked, not renewed, or voluntarily withdrawn or whose certificate of authority may have been suspended pursuant to Section 119 of this Code, but does not include: (1) a hospital or medical service organization, whether profit or nonprofit; (2) (blank); (3) any burial society organized under Article XIX of this Code [215 ILCS 5/338 et seq.], any fraternal benefit society organized under Article XVII of this Code [215 ILCS 5/282.1 et seq.], any mutual benefit association organized under Article XVIII of this Code [215 ILCS 5/316 et seq.], and any foreign fraternal benefit society licensed under Article VI of this Code [215 ILCS 5/254 et seq.]; (4) a mandatory State pooling plan; (5) a mutual assessment company or other person that operates on an assessment basis; (6) an insurance exchange; (7) an organization that is permitted to issue charitable gift annuities pursuant to Section 121-2.10 of this Code [215 ILCS 5/121-2.10]; (8) any health services plan corporation established pursuant to the Voluntary Health Services Plans Act [215 ILCS 165/1 et seq.]; (9) any dental service plan corporation established pursuant to the Dental Service Plan Act [215 ILCS 110/1 et seq.]; or (10) an entity similar to any of the above.

Idaho

Account Structure

§41-4306. For purposes of administration and assessment, the association shall continue the existence and maintenance of three (3) accounts: (a) Life insurance account; (b) Health insurance account, formerly designated the “disability insurance account”; and (c) Annuity account.

Advertising Prohibition

§ 41-4319 “Prohibited advertisement of insurance guaranty association act in commercial sales” No person, including an insurer, agent or affiliate of an 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, written or oral, which uses the existence of the insurance guaranty association of this state for the purpose of sales, solicitation or inducement to purchase any form of insurance covered by the Idaho life and health insurance guaranty association act. Provided however, that this section shall not apply to the Idaho life and health insurance guaranty association or any other entity which does not sell or solicit insurance. This section shall also not prohibit the furnishing of written information that is in a form prepared by the association and approved by the director upon request of the policy owner.

Assessments

Assessment Limits

§41-4309(5)(a) The total of all class B assessments authorized by the association with respect to a member insurer for each account shall not in one (1) calendar year exceed two percent (2%) of such insurer’s premiums received in this state during the calendar year preceding the assessment on the policies covered by the account. If the maximum assessment, together with the other assets of the association in an account, does not provide in any one (1) year in an 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 this chapter.

Assessment Classes

§41-4309(2) There shall be two (2) classes of assessments: (a) Class A assessments shall be authorized and called for the purpose of meeting administrative and other expenses. Class A assessments may be authorized and called whether or not related to a particular impaired or insolvent insurer. (b) Class B assessments shall be authorized and called to the extent necessary to carry out the powers and duties of the association under section 41-4308, Idaho Code, with regard to an impaired or an insolvent insurer.

Benefit Limits

§41-4303(3) The benefits that the association may become obligated to cover shall in no event exceed the lesser of: (a) The contractual obligations for which the insurer is liable or would have been liable if it were not an impaired or insolvent insurer; or (b) Subject to the aggregate per life limitation in paragraph (c) of this subsection with respect to one (1) policy or contract: (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 for life insurance; (ii) Three hundred thousand dollars ($ 300,000) in health insurance claims or benefit payments or one hundred thousand dollars ($ 100,000) in net cash surrender and net cash withdrawal values for health benefits, except for major medical insurance as defined in section 41-4305, Idaho Code, and as provided for in subparagraph (iii) of this paragraph; (iii) Five hundred thousand dollars ($ 500,000) for major medical insurance as defined in section 41-4305, Idaho Code; (iv) Two hundred fifty thousand dollars ($ 250,000) in the present value of annuity benefits, including net cash surrender and net cash withdrawal values; (v) With respect to each payee of a structured settlement annuity, or beneficiary or beneficiaries of the payee if deceased, two hundred fifty thousand dollars ($ 250,000) 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: (i) An aggregate of three hundred thousand dollars ($ 300,000) in benefits with respect to any one (1) life under paragraph (b) of this subsection, except with respect to benefits for major medical insurance as provided in paragraph (b)(iii) of this subsection, in which case the aggregate liability of the association shall not exceed five hundred thousand dollars ($ 500,000) with respect to any one (1) life; or (ii) With respect to one (1) owner of multiple non-group policies of life insurance, whether the policy 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) in benefits, regardless of the number of policies and contracts held by the owner;

Coverages

Covered Contracts

§41-4303 (2)(a) The provisions of this chapter shall provide coverage to the persons specified in subsection (1) of this section for direct, non-group life, health or annuity policies or contracts and for certificates under direct group policies and contracts and for supplemental contracts to any of these, except as limited by this chapter. 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

§41-4303(2)(b) The provisions of this chapter shall not provide coverage for: (i) 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; (ii) A policy or contract of reinsurance, unless assumption certificates have been issued pursuant to the reinsurance policy or contract; (iii) 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 member insurer becomes an impaired or insolvent insurer under this chapter, whichever is earlier, exceeds the rate of interest determined by subtracting two (2) percentage points from Moody’s corporate bond yield average averaged for that same four (4) year period or for such lesser period if the policy or contract was issued less than four (4) years before the member insurer becomes an impaired or insolvent insurer under the provisions of this chapter, whichever is earlier; and 2. On and after the date on which the member insurer becomes an impaired or insolvent insurer under the provisions of this chapter, whichever is earlier, exceeds the rate of interest determined by subtracting three (3) percentage points from Moody’s corporate bond yield average as most recently available; (iv) 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 section 3(40) of the employee retirement income security act of 1974, 29 U.S.C. section 1002(40); 2. A minimum premium group insurance plan; 3. A stop-loss group insurance plan; or 4. An administrative services only contract; (v) 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; (vi) 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; (vii) A portion of a policy or contract to the extent that the assessments required in section 41-4309, Idaho Code, with respect to the policy or contract are preempted by federal or state law; (viii) An obligation that does not arise under the express written terms of the policy or contract issued by the insurer to the contract owner 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 insurer without meeting applicable policy form filing or approval requirements; 3. Misrepresentations of or regarding policy benefits; 4. Extra-contractual claims; or 5. A claim for penalties or consequential or incidental damages; (ix) A contractual agreement that establishes the member insurer’s obligations 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; (x) An unallocated annuity contract; (xi) 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 provisions of this chapter, 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; and (xii) A policy or contract providing any hospital, medical, prescription drug or other health care benefits pursuant to 42 U.S.C. part C or 42 U.S.C. part D, commonly known as medicare parts C and D, or any regulations issued pursuant thereto.

Non-Resident Coverage

§41-4303(1)(b)(ii). Yes. Covers nonresidents, but only under the following conditions: 1. The insurer that issued the policies or contracts is domiciled in this state; 2. The states in which the persons reside have associations similar to the association created by this chapter; and 3. The persons are not eligible for coverage by an association in any other state due to the fact that the insurer was not licensed in the state at the time specified in the state’s guaranty association law.

Definition Of Premium

§ 41-4305 (17)(a) “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. (b) “Premiums” does not include amounts or considerations received for policies or contracts or for the portions of policies or contracts for which coverage is not provided under section 41-4303(2), Idaho Code, except that assessable premium shall not be reduced on account of section 41-4303(2)(b)(iii), Idaho Code, relating to interest limitations and section 41-4303(3)(b), (c) and (d), Idaho Code, relating to limitations with respect to one (1) individual, one (1) participant and one (1) contract owner. “Premiums” shall not include: (i) Premiums on an unallocated annuity contract; or (ii) With respect to multiple non-group policies of life insurance owned by one (1) owner, whether the policy owner is an individual, firm, corporation or other person, and whether the persons insured are officers, managers, employees or other persons, premiums in excess of five million dollars ($ 5,000,000) with respect to these policies or contracts, regardless of the number of policies or contracts held by the owner.

Interest Rate Adjustments

§41-4303(2)(b)(iii) Guaranty Association excludes from coverage: 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 member insurer becomes an impaired or insolvent insurer under this chapter, whichever is earlier, exceeds the rate of interest determined by subtracting two (2) percentage points from Moody’s corporate bond yield average averaged for that same four (4) year period or for such lesser period if the policy or contract was issued less than four (4) years before the member insurer becomes an impaired or insolvent insurer under the provisions of this chapter, whichever is earlier; and 2. On and after the date on which the member insurer becomes an impaired or insolvent insurer under the provisions of this chapter, whichever is earlier, exceeds the rate of interest determined by subtracting three (3) percentage points from Moody’s corporate bond yield average as most recently available;

Tax Offsets

§41-4313. Yes. Up to 20% of assessment amount may be offset for 5 years following payment. An allowable offset, or any portion thereof, not used in any calendar year cannot be carried over or back to any other year.

Triggers

Discretionary Triggers

§41-4308(1). If a member insurer is an impaired insurer. Amended effective 7/1/11.

Mandatory Triggers

§41-4308(2) If a member insurer is an insolvent insurer. Amended effective 7/1/11.

Foreign Triggers

No separate provision under Act. Prior provision repealed effective 7/1/11.

“Impaired Insurer”

§41-4305(10) “Impaired insurer” means a member insurer: (a) Deemed by the director after the effective date of this chapter to be potentially unable to fulfill its contractual obligations and not an insolvent insurer; or (b) Which, after the effective date of this chapter, is not an insolvent insurer and is placed under an order of rehabilitation or conservation by a court of competent jurisdiction. Amended effective 7/1/11.

“Insolvent Insurer”

§41-4305 (11) “Insolvent insurer” means a member insurer which, after the effective date of this chapter, is placed under an order of liquidation by a court of competent jurisdiction with a finding of insolvency. Amended effective 7/1/11.

“Member Insurer”

§41-4305(13)(a) “Member insurer” means an insurer licensed or that holds a certificate of authority to transact in this state any kind of insurance for which coverage is provided under section 41-4303, Idaho Code, and includes an insurer whose license or certificate of authority in this state may have been suspended, revoked, not renewed or voluntarily withdrawn. (b) “Member insurer” does not include: (i) A hospital or medical service corporation or organization, whether profit or nonprofit; (ii) A fraternal benefit society; (iii) A mandatory state pooling plan; (iv) A mutual assessment company or other person that operates on an assessment basis; (v) An insurance exchange; (vi) An organization that issues charitable gift annuities under section 41-120, Idaho Code; (vii) A mutual benefit association; (viii) A reciprocal insurer; (ix) A limited managed care plan; (x) A self-funded health care plan; or (xi) A consumer operated and oriented plan established under section 1322 of the patient protection and affordable care act, P.L. 111-148.

Hawaii

Account Structure

§431:16-206. Three accounts: life, disability and annuity (excludes unallocated annuities).

Advertising Prohibition

§ 431:16-218 Prohibited advertisement of association act in insurance sales; notice to policyholders.(a) No person, including an insurer, and an agent or affiliate of an 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, written or oral, which uses the existence of the Hawaii Life and Disability Insurance Guaranty Association of this State for the purpose of sales, solicitation or inducement to purchase any form of insurance covered by the Hawaii Life and Disability Insurance Guaranty Association Act. This section shall not apply to the Hawaii Life and Disability Insurance Guaranty Association or any other entity which does not sell or solicit insurance.

Assessments

Assessment Limits

§431:16-209(e)(1) Subject to the provisions of paragraph (2), the total of all assessments authorized by the association with respect to a member insurer for each account shall not in any one calendar year exceed two per cent of the insurer’s average premiums received in this State on the policies and contracts covered by the account during the three calendar years preceding the year in which the insurer became an impaired or insolvent insurer. (2) If two or more assessments are authorized in one calendar year with respect to insurers that become impaired or insolvent in different calendar years, the average annual premiums for purposes of the aggregate assessment percentage limitation referenced in this section shall be equal and limited to the higher of the three-year average annual premiums for the applicable account as calculated pursuant to this section. (Amended effective 7/1/12)

Assessment Classes

§431:16-209(b) There shall be two assessments, as follows: (1) Class A assessments shall be authorized and called for the purpose of meeting administrative and legal costs, and other expenses and examinations conducted under the authority of section 431:16–212(e). Class A assessments may be authorized and called whether or not related to a particular impaired or insolvent insurer. (2) Class B assessments shall be authorized and called to the extent necessary to carry out the powers and duties of the association under section 431:16–208 with regard to an impaired or an insolvent insurer. (Amended effective 7/1/12)

Benefit Limits

§431:16-203 (c) The benefits for which the association may become liable shall in no event exceed the lesser of: (1) The contractual obligations for which the insurer is liable or would have been liable if it were not an impaired or insolvent insurer, or (2) With respect to any one life, regardless of the number of policies or contracts: (A) $300,000 in life insurance death benefits, but not more than $100,000 in net cash surrender and net cash withdrawal values for life insurance; (B) In accident and health or sickness insurance benefits: (i) $100,000 for coverages not defined as disability insurance or basic hospital, medical, and surgical insurance, or major medical insurance or long-term care insurance, including any net cash surrender and net cash withdrawal values; (ii) $300,000 for disability insurance and $300,000 for long-term care insurance; or (iii) $500,000 for basic hospital, medical, and surgical insurance or major medical insurance; (C) $250,000 in the present value of annuity benefits, including net cash surrender and net cash withdrawal values; or (D) With respect to each payee of a structured settlement annuity, or beneficiary or beneficiaries of the payee if deceased, $250,000 in present value annuity benefits, in the aggregate, including net cash surrender and net cash withdrawal values, if any. (d) In no event shall the association be obligated to cover more than: (1) An aggregate of $300,000 in benefits with respect to any one life under subsection (c) except with respect to benefits for basic hospital, medical, and surgical insurance and major medical insurance under subsection (c)(2)(B), in which case the aggregate liability of the association shall not exceed $500,000 with respect to any one individual; or (2) $5,000,000 in benefits with respect to one owner or multiple non-group policies of life insurance, regardless of: (A) The number of policies and contracts held by the owner; (B) Whether the policy owner is an individual, firm, corporation, or other person; and (C) Whether the persons insured are officers, managers, employees, or other persons. (e) The limitations set forth in this section are limitations on the benefits for which the association is obligated before taking into account its subrogation and assignment rights or the extent to which those benefits could be provided out of the assets of the impaired or insolvent insurer attributable to covered policies. The costs of the association’s obligations under this part may be met by the use of assets attributable to covered policies or reimbursed to the association pursuant to its subrogation and assignment rights. (Amended effective 7/1/12)

Coverages

Covered Contracts

§431:16-203(b)(1) This part shall provide coverage to the persons specified in subsection (a) for direct, nongroup life, accident and health or sickness, or annuity policies or contracts, for certificates under direct group life, accident and health or sickness, or annuity policies or contracts, and for supplemental contracts to any of these, in each case issued by member insurers except as limited by this part. Annuity contracts and certificates under group annuity contracts include allocated funding agreements, structured settlement annuities, and any immediate or deferred annuity contracts. (Amended effective 7/1/12)

Non-Covered Contracts

§431:16-203(b)(2) This part shall not provide coverage for: (A) Any 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) Any policy or contract of reinsurance, unless assumption certificates have been issued pursuant to the reinsurance policy or contract; (C) Any portion of a policy or contract to the extent that the rate of interest on which it is based: (i) Averaged over the period of four years prior to the date on which the association becomes obligated with respect to such policy or contract, exceeds a rate of interest determined by subtracting two 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 years before the association became obligated; and (ii) On or after the date on which the association becomes obligated with respect to such policy or contract, exceeds the rate of interest determined by subtracting three percentage points from Moody’s Corporate Bond Yield Average as most recently available; (D) Any portion of a policy or contract issued to a plan or program of an employer, association, or other person to provide life, accident and health or sickness, or annuity benefits to its employees, members , or other persons 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: (i) A Multiple Employer Welfare Arrangement as defined in section 514 of the Employee Retirement Income Security Act of 1974, as amended; (ii) A minimum premium group insurance plan; (iii) A stop-loss group insurance plan; or (iv) An administrative services only contract; (E) Any portion of a policy or contract to the extent that it provides dividends, experience rating credits, or voting rights, or provides that any fees or allowances be paid to any person, including the policy or contract holder, in connection with the service to or administration of such policy or contract; (F) Any 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 such policy or contract in this State; (G) Any portion of a policy or contract to the extent that the assessments required by this part with respect to the policy or contract are preempted or otherwise not permitted by federal or state law; (H) Any obligation that does not arise under the express written terms of the policy or contract issued by the insurer to the contract owner or policy owner, including without limitation: (i) Claims based on marketing materials; (ii) Claims based on side letters, riders, or other documents that were issued by the insurer without meeting applicable policy form filing or approval requirements; (iii) Misrepresentations of or regarding policy benefits; (iv) Extra-contractual claims; or (v) A claim for penalties or consequential or incidental damages; (I) Any contractual agreement that establishes the member insurer’s obligations 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) Any unallocated annuity contract; (K) Any 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 that 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 this part. 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 section 431:16 403(b)(2)(L), the interest or change in value determined by using the procedures defined in the policy or contract shall be credited as if the contractual date of crediting interest or changing values was the date of impairment or insolvency and shall not be subject to forfeiture; or (L) Any 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, Title 42 of the United States Code, commonly known as medicare part C and D, or any regulations adopted pursuant thereto. (Amended effective 7/1/12)

Non-Resident Coverage

§431:16-203(a)(2)(B). Yes. Covers persons who are not residents, (i) The insurer that issued the policies or contracts is domiciled in this State; (ii) The state in which the persons reside has associations similar to the association created by this part; and (iii) The persons are not eligible for coverage by an association in any other state because the insurer was not licensed in the state at the time specified in the state’s guaranty association law. (Amended effective 7/1/12)

Definition Of Premium

§431:16-205. “Premiums” means amounts and considerations received on covered policies or contracts less premiums, considerations and deposits returned thereon, and less dividends and experience credits thereon. Premiums does not include any amounts or consideration received for any policies or contracts or for the portions of any policies or contracts for which coverage is not provided under section 431:16-203(b) except that assessable premium shall not be reduced on accounts under section 431:16-203(b)(2)(C) relating to interest limitations and section 431:16-203(c)(2) relating to limitations with respect to any one life and any one contract holder. Premiums shall also not include: (1) Premiums on an unallocated annuity contract; or (2) Premiums in excess of $5,000,000, regardless of: (A) The number of policies or contracts held by the owner, with respect to multiple non-group policies of life insurance owned by one owner; (B) Whether the policy owner is an individual, firm, corporation, or other person; and (C) Whether the persons insured are officers, managers, employees, or other persons.

Interest Rate Adjustments

§431:16-203(b)(2)(C) Guaranty Association excludes from coverage: Any portion of a policy or contract to the extent that the rate of interest on which it is based: (i) Averaged over the period of four years prior to the date on which the association becomes obligated with respect to such policy or contract, exceeds a rate of interest determined by subtracting two 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 years before the association became obligated; and (ii) On or after the date on which the association becomes obligated with respect to such policy or contract, exceeds the rate of interest determined by subtracting three percentage points from Moody’s Corporate Bond Yield Average as most recently available;

Tax Offsets

§431:16-213. Yes. Up to 20% of assessment amount may be offset for the 5 years following payment; covers all assessments except administrative expenses.

Triggers

Discretionary Triggers

§431:16-208(a) If a member insurer is an impaired insurer. (Amended effective 7/1/12)

Mandatory Triggers

§431:16-208(b). If a member insurer is an insolvent insurer. (Amended effective 7/1/12)

Foreign Triggers

No separate provision. (Amended effective 7/1/12)

“Impaired Insurer”

§431:16-205. “Impaired insurer” means a member insurer that after July 1, 1988, is not an insolvent insurer, and is placed under an order of rehabilitation or conservation by a court of competent jurisdiction. (Amended effective 7/1/12)

“Insolvent Insurer”

§431:16-205. A member insurer that is placed under an order of liquidation by a court of competent jurisdiction with a finding of insolvency.

“Member Insurer”

§431:16-205. “Member insurer” means any insurer licensed or who holds a certificate of authority to transact in this State any kind of insurance for which coverage is provided under section 431:16–203, and includes any insurer whose license or certificate of authority in this State may have been suspended, revoked, not renewed, or voluntarily withdrawn, but does not include: (1) A nonprofit hospital or medical service organization; (2) A health maintenance organization; (3) A fraternal benefit society; (4) A mandatory state pooling plan; (5) A mutual assessment company or any entity that operates on an assessment basis; (6) An insurance exchange; (7) An organization that has a certificate or license limited to the issuance of charitable gift annuities; or (8) Any entity similar to any of the above. (Amended effective 7/1/12)

Georgia

Account Structure

§33-38-5(c) and (d). Two accounts: (c) For purposes of administration and assessment, the association shall maintain two accounts: (1) the health insurance account; and (2) the life insurance and annuity account. The life insurance and annuity account shall contain three subaccounts: (A) the life insurance account; (B) the annuity account; and (C) the unallocated annuity account. (d) For purposes of assessment, supplemental contracts shall be covered under the account in which the basic policy is covered.

Advertising Prohibition

§ 33-38-21 “References to the association in advertisements for insurance” (a) No person, including a member insurer or 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; in the form of a notice, circular, pamphlet, letter, or poster; over any radio station or television station; or in any other way, any advertisement, announcement, or statement which uses the existence of the association for the purposes of sales, solicitation, or inducement to purchase any form of insurance or other coverage covered by this chapter. This Code section shall not apply to the association or any other entity which does not sell or solicit insurance or coverage provided by a health maintenance organization or health corporation. (b) Any person who violates subsection (a) of this Code section may, after notice and hearing and upon order of the Commissioner, be subject to one or more of the following: (1) A monetary penalty of not more than $1,000.00 for each act or violation, but not to exceed an aggregate penalty of $10,000.00; or (2) Suspension or revocation of his or her license or certificate of authority.

Assessments

Assessment Limits

§ 33-38-15(e)(1). Two percent (2%) of premiums in state for policies covered by the account in the calendar year preceding the assessment.

Assessment Classes

§ 33-38-15(b) There shall be two classes of assessments, as follows: (1) Class A assessments shall be authorized and called for the purpose of meeting administrative costs and legal and other general expenses not related to a particular impaired or insolvent insurer, and examinations conducted under the authority of subsection (c) of Code Section 33–38–16; and (2) Class B assessments shall be authorized and called to the extent necessary to carry out the powers and duties of the association under Code Section 33–38–7 with regard to an impaired or insolvent insurer. (Amended effective 7/1/12)

Benefit Limits

§ 33-38-7(12) The benefits that the association may become obligated to cover shall in no event exceed the lesser of: (A) The contractual obligations for which the member insurer is liable or would have been liable if it were not an impaired or insolvent insurer; (B) With respect to one life, regardless of the number of policies or contracts: (i) The amount of $300,000.00 in life insurance death benefits, but not more than $100,000.00 in net cash surrender and net cash withdrawal values for life insurance; (ii) For health insurance benefits, $300,000.00 for disability income insurance; $300,000.00 for long-term care insurance; $300,000.00 for health insurance other than disability income insurance as referenced above, long-term care insurance as referenced above or health benefit plans as referenced below, including any net cash surrender and net cash withdrawal values; and $500,000.00 for health benefit plans; and (iii) The amount of $300,000.00 in the present value of annuity benefits, but not more than $250,000.00 in net cash surrender and net cash withdrawal values for an annuity; (C) With respect to each payee of a structured settlement annuity, or beneficiary or beneficiaries of the payee if deceased, $300,000.00 in present value annuity benefits, in the aggregate, including net cash surrender and net cash withdrawal values, if any; (D) However, in no event shall the association be obligated to cover more than: (i) An aggregate of $300,000.00 in benefits with respect to any one life under subparagraphs (B) and (C) of this paragraph except with respect to benefits for health benefit plans under division (ii) of this subparagraph, in which case the aggregate liability of the association shall not exceed $500,000.00 with respect to any one individual; or (ii) With respect to one owner of multiple nongroup 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 $5 million in benefits, regardless of the number of policies and contracts held by the owner; (E) With respect to either one contract owner provided coverage under subparagraph (b)(2)(B) of Code Section 33–38–2 or one plan sponsor whose plans own directly or in trust one or more unallocated annuity contracts, $5 million in benefits, regardless of the number of contracts with respect to the contract owner or plan sponsor. However, in the case where one or more unallocated annuity contracts are covered contracts under this chapter and are owned by a trust or other entity for the benefit of two or more plan sponsors, coverage shall be afforded by the association if the largest interest in the trust or entity owning the contract or contracts is held by a plan sponsor whose principal place of business is in this state and in no event shall the association be obligated to cover more than $5 million in benefits with respect to all these unallocated contracts; (F) The limitations set forth in this paragraph are limitations on the benefits for which the association is obligated before taking into account either its subrogation and assignment rights or the extent to which those benefits could be provided out of the assets of the impaired or insolvent insurer attributable to covered policies. The costs of the association’s obligations under this chapter may be met by the use of assets attributable to covered policies or reimbursed to the association pursuant to its subrogation and assignment rights; and (G) For purposes of this chapter, benefits provided by a long-term care rider to a life insurance policy or annuity contract shall be considered the same type of benefits as the base life insurance policy or annuity contract to which it relates.

Coverages

Covered Contracts

§ 33-38-2(a). This chapter shall provide coverage to the persons specified in subsection (b) of this Code section for policies or contracts of direct, nongroup life insurance; health insurance which for the purposes of this chapter includes health maintenance organization subscriber contracts and certificates and health care plans issued by health care corporations; annuities; for certificates under direct group policies and contracts and supplemental contracts to any of these; and for unallocated annuity contracts , in each case issued by member insurers, except as limited by this chapter. Annuity contracts and certificates under group annuity contracts include, but are not limited to, guaranteed investment contracts, deposit administration contracts, unallocated funding agreements, allocated funding agreements, structured settlement annuities, annuities issued to or in connection with government lotteries, and any immediate or deferred annuity contracts.

Non-Covered Contracts

§ 33-38-2(c) Except as otherwise provided in subsection (d) of this Code section, this chapter shall not provide coverage to: (1) That portion or part of a policy or contract not guaranteed by a member insurer, or under which the risk is borne by the policy or contract owner; (2) A policy or contract of reinsurance or any policy or contract or part thereof assumed by the impaired or insolvent insurer under a contract of reinsurance, unless assumption certificates have been issued pursuant to the reinsurance policy or contract; (3) 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: (A) Averaged over the period of four years prior to the date on which the member insurer becomes an impaired or insolvent insurer under this chapter, whichever is earlier, exceeds the rate of interest determined by subtracting two 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 years before the member insurer becomes an impaired or insolvent insurer under this chapter, whichever is earlier; and (B) On and after the date on which the member insurer becomes an impaired or insolvent insurer under this chapter, whichever is earlier, exceeds the rate of interest determined by subtracting three percentage points from Moody’s Corporate Bond Yield Average as most recently available; (4) Any prepaid legal services plan, as defined in Code Section 33–35–2; (5) Any policy, contract, or certificate issued by a fraternal benefit society, as defined in Code Section 33–15–1; (6) Accident and sickness insurance as defined in Code Section 33–7–2 when written by a property and casualty insurer as part of an automobile insurance contract; (7) 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: (A) A multiple employer welfare arrangement as defined in 29 U.S.C. Section 1002(40); (B) A minimum premium group insurance plan; (C) A stop-loss insurance policy; or (D) An administrative services only contract; (8) A portion of a policy or contract to the extent that it provides for: (A) Dividends or experience rating credits; (B) Voting rights; or (C) 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; (9) 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; (10) Any unallocated annuity contract issued to an employee benefit plan protected under the federal Pension Benefit Guaranty Corporation , regardless of whether the federal Pension Benefit Guaranty Corporation has yet become liable to make any payments with respect to the benefit plan; or (11) Any portion of any unallocated annuity contract which is not issued to or in connection with a specific employee, union, or association of natural persons benefit plan or a government lottery; (12) A portion of a policy or contract to the extent that the assessments required by Code Section 33–38–15 with respect to the policy or contract are preempted by federal or state law; (13) An obligation that does not arise under the express written terms of the policy or contract issued by the insurer to the enrollee, certificate holder, contract owner or policy owner, including without limitation: (A) Claims based on marketing materials; (B) 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; (C) Misrepresentations of or regarding policy or contract benefits; (D) Extra-contractual claims; or (E) A claim for penalties or consequential or incidental damages; (14) A contractual agreement that establishes the member insurer’s obligations 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; (15) 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 this chapter, 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 paragraph, 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 (16) 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 & D, Subchapter XIX, Chapter 7 of Title 42 of the United States Code (commonly known as Medicaid), or any regulations issued pursuant thereto; or (17) Structured settlement annuity benefits to which a payee or beneficiary has transferred his or her rights in a structured settlement factoring transaction, as such term is defined in 26 U.S.C. Section 5891(c)(3)(A) as such term existed on January 23, 2002, regardless of whether the transaction occurred before or after such date. (d) The exclusion from coverage referenced in paragraph (3) of subsection (c) of this Code section shall not apply to any portion of a policy or contract, including a rider, that provides long-term care for any other health insurance benefit.

Non-Resident Coverage

§ 33-38-2(b)(1)(B)(ii). Yes. Covers nonresidents when: the member insurers which issued such policies or contracts are domiciled in this state; the states in which such persons reside; have associations similar to the association created by this chapter; and such persons are not eligible for coverage by an association in any other state due to the fact that the insurer, health maintenance organization, or health care corporation was not licensed in the state at the time specified in the state’s guaranty association law.

Definition Of Premium

§ 33-38-4(20) ‘Premiums’ means amounts or considerations, by whatever name called, received on covered policies or contracts, less return returned premiums, considerations and deposits thereon and less dividends and experience credits. The term ‘premiums’ shall not include: (A) Amounts or considerations received for policies or contracts or for the portions of policies or contracts for which coverage is not provided under this chapter except that assessable premium shall not be reduced on account of paragraph (3) of subsection (c) of Code Section 33–38–2, relating to interest limitations, and paragraph (12) of Code Section 33–38–7, relating to limitations with respect to one individual, one participant, and one policy or contract owner; (B) Premiums in excess of $5 million on any an unallocated annuity contract; or (C) With respect to multiple nongroup 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, premiums in excess of $5 million with respect to these policies or contracts, regardless of the number of policies or contracts held by the owner.

Interest Rate Adjustments

§ 33-38-2(c)(3) Guaranty Association excludes from coverage: 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: (A) Averaged over the period of four years prior to the date on which the member insurer becomes an impaired or insolvent insurer under this chapter, whichever is earlier, exceeds the rate of interest determined by subtracting two 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 years before the member insurer becomes an impaired or insolvent insurer under this chapter, whichever is earlier; and (B) On and after the date on which the member insurer becomes an impaired or insolvent insurer under this chapter, whichever is earlier, exceeds the rate of interest determined by subtracting three percentage points from Moody’s Corporate Bond Yield Average as most recently available; (d) The exclusion from coverage referenced in paragraph (3) of subsection (c) of this Code section shall not apply to any portion of a policy or contract, including a rider, that provides long-term care for any other health insurance benefit.

Tax Offsets

§ 33-38-22. Yes. Up to 20% of assessment amount may be offset for next 5 years following payment. Tax offset covers only Class B assessments.

Triggers

Discretionary Triggers

§ 33-38-7 (a)(1). If a member insurer is an impaired insurer.

Mandatory Triggers

§ 33-38-7 (a)(2). If a member insurer is an insolvent insurer.

Foreign Triggers

No separate provision.

“Impaired Insurer”

§ 33-38-4(13) ‘Impaired insurer’ means a member insurer which is not an insolvent insurer and is placed under an order of rehabilitation or conservation by a court of competent jurisdiction on or after July 1, 1981.

“Insolvent Insurer”

§ 33-38-4(14) ‘Insolvent insurer’ means a member insurer against which an order of liquidation containing a finding of insolvency has been entered by a court of competent jurisdiction on or after July 1, 1981.

“Member Insurer”

§ 33-38-4(13) ‘Member insurer’ means any insurer, health maintenance organization, or health care corporation which is licensed or which holds a certificate of authority to transact in this state any kind of insurance, health care plan, or health maintenance organization business for which coverage is provided under Code Section 33–38–2 and includes any insurer, health care corporation, 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 any entity that operates on an assessment basis; (D) An insurance exchange; or (E) An organization that has a certificate or license limited to the issuance of charitable gift annuities under Code Sections 33–58–1 through 33–58–6; or (F) Any entity similar to those described in subparagraphs (A) through (E) of this paragraph.

Florida

Account Structure

§631.715(2)(a).Three accounts :health insurance; life insurance; and annuity.

Advertising Prohibition

§ 631.735 “Prohibited advertisement of Florida Life and Health Insurance Guaranty Association Act in sale of insurance” A person may 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, any advertisement, announcement, or statement which uses the existence of the Insurance Guaranty Association of this state for the purpose of sales, solicitation, or inducement to purchase any form of insurance covered by the Florida Life and Health Insurance Guaranty Association Act. However, this section does not apply to the Florida Life and Health Insurance Guaranty Association or any other entity that does not sell or solicit insurance. This section also does not prohibit the furnishing of written information that is in a form prepared by the association, that summarizes the claim, cash value, and annuity cash value limits of the association, upon request of the policyholder or applicant for insurance.

Assessments

Assessment Limits

§631.718(5)(a) 1. The total of all assessments upon a member insurer for each account may not in any one calendar year exceed 1 percent of the sum of the insurer’s premiums written in this state regarding business covered by the account received during the 3 calendar years preceding the year in which the assessment is made, divided by three. If premium information for the 3-year period is not reasonably available for each member insurer, the association may use any reasonably available premium information. 2. For long-term care insurer impairments and insolvencies only, the total assessments upon a member insurer or member health maintenance organization of the Florida Health Maintenance Organization Consumer Assistance Plan may not, in any one calendar year, exceed 0.5 percent of the sum of the member insurer’s or member health maintenance organization’s premiums written in this state regarding business covered by the account received during the calendar year preceding the year in which the assessment is made. If premium information is not reasonably available for each member insurer or member health maintenance organization of the Florida Health Maintenance Organization Consumer Assistance Plan, the association or the Florida Health Maintenance Organization Consumer Assistance Plan may use any reasonably available premium information. (b) The provisions of this subsection apply to any assessments made on or after October 1, 1995, without regard to the date of the impairment or insolvency.

Assessment Classes

§631.718(2). There shall be two classes of assessments, as follows: (a) Class A assessments shall be made by the board of directors for the purpose of meeting administrative costs and other general expenses and for examinations conducted under the authority of s. 631.723(3) which are not related to a particular impaired or insolvent insurer. (b) Class B assessments shall be made by the board of directors for the purpose of carrying out the powers and duties of the association under s. 631.717 relating to an impaired or insolvent domestic, foreign, or alien insurer.

Benefit Limits

§631.717(12) The association’s liability for the contractual obligations of the insolvent insurer must be as great as, but no greater than, the contractual obligations of the insurer in the absence of such insolvency, unless such obligations are reduced as permitted by subsection (4), but the aggregate liability of the association with respect to one life shall not exceed the following: (a) For life insurance, $100,000 in net cash surrender and net cash withdrawal values. (b) For deferred annuity contracts, $250,000 in net cash surrender and net cash withdrawal values. (c) For all other benefits, including in long-term care policies, $300,000, including cash values, except as provided in paragraph (d). (d) Effective January 1, 2020, for basic hospital expense health insurance policies, basic medical-surgical health insurance policies, or major medical expense health insurance policies, but not including long-term care policies, $500,000. In no event is the association liable for any penalties or interest.

Coverages

Covered Contracts

§631.713(1). This part shall apply to direct life insurance policies, health insurance policies, annuity contracts, and supplemental contracts with or without life contingencies issued by persons licensed to transact such insurance in this state.

Non-Covered Contracts

§631.713(3) This part does not apply to: (a) That portion or part of a variable life insurance contract or variable annuity contract not guaranteed by an insurer. (b) That portion or part of any policy or contract under which the risk is borne by the policyholder. (c) Any policy or contract or part thereof assumed by the impaired or insolvent insurer under a contract of reinsurance, other than reinsurance for which assumption certificates have been issued. (d) Fraternal benefit societies as defined in s. 632.601. (e) Health maintenance organizations, except for assessments levied pursuant to ss. 631.715(2)(a)1., 631.718(3)(b), and 631.819(2)(c) for long-term care insurer impairments or insolvencies. (f) Dental service plan insurance. (g) Pharmaceutical service plan insurance. (h) Optometric service plan insurance. (i) Ambulance service association insurance. (j) Preneed funeral merchandise or service contract insurance. (k) Prepaid health clinic insurance. (l) Any annuity contract or group annuity contract that is not issued to and owned by an individual, except to the extent of any annuity benefits: 1. Guaranteed directly and not through an intermediary to an individual by an insurer under such contract or certificate; 2. Under an annuity issued by an insurer under 26 U.S.C. s. 408(b); or 3. Under an annuity issued by an insurer and held by a custodian or trustee in accordance with 26 U.S.C. s. 408(a). This paragraph applies to every insolvency regardless of its date of inception, and an assessment base may not include premiums for such excluded products. (m) Any federal employees’ group policy or contract that, under 5 U.S.C. s. 8909(f), is prohibited from being subject to an assessment under s. 631.718. (n) Except as provided in this paragraph, a portion of a policy or contract, to the extent that the rate of interest on which the policy or contract 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 4 years immediately preceding the date on which the member insurer becomes an impaired or insolvent insurer under this part, whichever is earlier, exceeds the rate of interest determined by subtracting 2 percentage points from Moody’s Corporate Bond Yield Average averaged for that same 4-year period or for such lesser period if the policy or contract was issued less than 4 years before the member insurer becomes an impaired or insolvent insurer under this part, whichever is earlier; and 2. On and after the date on which the member insurer becomes an impaired or insolvent insurer under this part, whichever is earlier, exceeds the rate of interest determined by subtracting 3 percentage points from the most current version of Moody’s Corporate Bond Yield Average. This paragraph does not apply to any portion of a policy or contract, including a rider, which provides long-term care or any other health insurance benefit. (o) A portion of a policy or contract to the extent the policy or contract 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 has 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 this part. However, if the interest or change in value is credited less frequently than annually as determined by using the procedures defined in the policy or contract, interest or change in value shall be credited by using the procedure defined in the policy or contract as if the contractual date of crediting interest or changing values was the date of impairment or insolvency, whichever is earlier, and shall not be subject to forfeiture. (p) A policy or contract providing any hospital, medical, prescription drug, or other health care benefits pursuant to Title XVIII (Medicare), Title XIX (Medicaid), or Title XXI (the Children’s Health Insurance Program) of the Social Security Act or any regulations promulgated thereunder. (q) Structured settlement annuity benefits to which a payee, or a beneficiary if the payee is deceased, has transferred his or her rights in a structured settlement factoring transaction, as that term is defined in 26 U.S.C. s. 5891(c)(3)(A).

Non-Resident Coverage

§631.713(2)(b)2. Yes. Covers residents of other states, but only if: a. The insurers which issued such policies or contracts are domiciled in this state; b. Such insurers were not licensed in the states in which such persons reside at the time specified in a state’s guaranty association law as necessary for coverage by that state’s association; c. Such other states have associations similar to the association created by this part; and d. Such persons are not eligible for coverage by such associations.

Definition Of Premium

§ 631.714 (8) “Premium” means any direct gross insurance premium and any annuity consideration written on covered policies, less return premium and consideration thereon and dividends paid or credited to policyholders on such direct business. “Premium” does not include premium and consideration on contracts between insurers and reinsurers.

Interest Rate Adjustments

§631.713(3)(n) Except as provided in this paragraph, a portion of a policy or contract, to the extent that the rate of interest on which the policy or contract 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 4 years immediately preceding the date on which the member insurer becomes an impaired or insolvent insurer under this part, whichever is earlier, exceeds the rate of interest determined by subtracting 2 percentage points from Moody’s Corporate Bond Yield Average averaged for that same 4-year period or for such lesser period if the policy or contract was issued less than 4 years before the member insurer becomes an impaired or insolvent insurer under this part, whichever is earlier; and 2. On and after the date on which the member insurer becomes an impaired or insolvent insurer under this part, whichever is earlier, exceeds the rate of interest determined by subtracting 3 percentage points from the most current version of Moody’s Corporate Bond Yield Average. This paragraph does not apply to any portion of a policy or contract, including a rider, which provides long-term care or any other health insurance benefit.

Tax Offsets

§631.72. For assessments levied before Jan. 1, 1997 member insurers may offset 0.1% of the assessment, less any refunds, for each year following the year in which the assessment was paid until the total of all offsets claimed for a given year’s assessment equals the amount of the assessment paid in that year. For assessments levied or paid after Dec. 31, 1996, member insurers may offset 5% of the amount of the assessment, less any refunds, for 20 years following the year the assessment was paid. Member insurers may not offset both premium taxes and corporate income taxes for the same assessment amount. Tax returns covering tax year 1997 will be the first on which member insurers may claim a credit. (Eff. 10/1/96)

Triggers

Discretionary Triggers

§631.717(1). When domestic insurer is impaired.

Mandatory Triggers

§631.717(2). If a domestic insurer is insolvent. §631.717(3). If a foreign or alien insurer is an insolvent insurer. However, this subsection does not apply when the department has determined that the foreign or alien insurer’s domiciliary jurisdiction or state of entry provides, by statute, protection substantially similar to that provided by this part for residents of this state.

Foreign Triggers

See Mandatory Triggers.

“Impaired Insurer”

§631.714(5) A member insurer deemed by the department to be potentially unable to fulfill its contractual obligations and not an insolvent insurer.

“Insolvent Insurer”

§631.714(6). (6) “Insolvent insurer” means a member insurer authorized to transact insurance in this state, either at the time the policy was issued or when the insured event occurred, and against which an order of liquidation with a finding of insolvency has been entered by a court of competent jurisdiction. Amended effective 7.1.2010.

“Member Insurer”

§631.714(7). Any person licensed to transact in Florida any kind of insurance as set out in §631.713.

DistrictofColumbia

Account Structure

§31-5403. Two accounts: (1) life insurance and annuity account with sub accounts (a) life insurance and ( b) annuity; and (2) health insurance account.

Advertising Prohibition

§31-5416. Prohibited advertisement of Association act in insurance sale; notice to policyholders. (a)(1) No person, including an insurer, agent, or affiliate of an 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, written or oral, which uses the existence of the District of Columbia Life and Health Insurance Guaranty Association for the purpose of sales, solicitation, or inducement to purchase any form of insurance covered by this chapter. (2) This subsection shall not apply to the Association or any other entity which does not sell or solicit insurance.

Assessments

Assessment Limits

§31-5406(e)(1). Two percent (2%) of the average premiums received on business in the state covered by each account during the three calendar years preceding the year in which the insurer is declared impaired or insolvent.

Assessment Classes

§31-5406(b). Two classes of assessments: Class A for administrative and legal costs and other expenses; Class B to carry out the powers and duties of the association with regard to an impaired or insolvent insurer.

Benefit Limits

§31-5402(c) (2) (A) With respect to any 1 life, regardless of the number of policies, contracts, or certificates: (i) $ 300,000 in life insurance death benefits, but not more than $ 100,000 in net cash surrender and net cash withdrawal values for life insurance; (ii) In health insurance benefits: (I) $ 100,000 for coverage not defined as disability insurance or basic hospital, medical, and surgical insurance or major medical insurance or long- term care insurance, including any net cash surrender and net cash withdrawal values; (II) $ 300,000 for disability insurance; (III) $ 300,000 for long-term care insurance; and (IV) $ 500,000 for basic hospital, medical, and surgical insurance or major medical insurance; or (iii) $ 300,000 in the present value of annuity benefits, including net cash surrender and net cash withdrawal values. (A-i) With respect to each payee of a structured settlement annuity (or beneficiary or beneficiaries of the payee if deceased), $ 300,000 in present value annuity benefits, in the aggregate, including net cash surrender and net cash withdrawal values, if any. (A-ii) The Association shall not be obligated to cover: (i) More than an aggregate of $ 300,000 in benefits with respect to any one life under subparagraphs (A) and (A-i) of this paragraph except with respect to benefits for basic hospital, medical, and surgical insurance and major medical insurance under subparagraph (A)(ii) of this paragraph, in which case the aggregate liability of the Association shall not exceed $ 500,000 with respect to any one individual; or (ii) With respect to one owner of multiple non-group policies of life insurance, whether the policy owner is an individual, firm, corporation, or other person, and whether the persons insured are officers, managers, employees, or other persons, more than $ 5,000,000 in benefits, regardless of the number of policies and contracts held by the owner; (A-iii) (i) The limitations set forth in this subsection are limitations on the benefits for which the Association is obligated before taking into account either its subrogation and assignment rights or the extent to which those benefits could be provided out of the assets of the impaired or insolvent insurer attributable to covered policies. (ii) The costs of the Association’s obligations under this chapter may be met by the use of assets attributable to covered policies or reimbursed to the Association pursuant to its subrogation and assignment rights. (Amended effective 7/23/2014)

Coverages

Covered Contracts

§31-5402(b)(1). Coverage shall be provided to the persons specified in subsection (a) of this section for direct, non-group life, health, annuity, and supplemental policies or contracts, and for certificates under direct group policies or contracts, except as limited by this chapter. Annuity contracts and certificates under group annuity contracts include, but are not limited to, allocated funding agreements, structured settlement annuities, lottery contracts, and any immediate or deferred annuity contracts.

Non-Covered Contracts

§31-5402(b)(2) (A) Any portion of a policy or contract not guaranteed by the insurer, or under which the risk is borne by the owner of the policy, contract, or certificate; (B) Any policy or contract of reinsurance, unless assumption certificates have been issued and delivered pursuant to the reinsurance policy or contract; (C) Any portion of a policy, contract, or certificate, to the extent of the rate of interest on which it is based, or the interest rate, crediting rate, or similar factor determined by the use of an index or other external reference stated in the policy or contract employed in calculating returns or changes in value: (i) Averaged over the 4-year period prior to the date on which the Association becomes obligated with respect to the policy, contract, or certificate, exceeds a rate of interest determined by subtracting 2 percentage points from Moody’s Corporate Bond Yield Average averaged for that same 4-year period or for a lesser period if the policy, contract, or certificate was issued and delivered less than 4 years before the Association became obligated; and (ii) On and after the date on which the Association becomes obligated with respect to the policy, con-tract, or certificate, exceeds the rate of interest determined by subtracting 3 percentage points from the most recent Moody’s Corporate Bond Yield Average; (D) Any portion of a policy or contract issued to a plan or program of an employer, association, or similar entity to provide life, health, or annuity benefits to its employees or members 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 similar entity under: (i) A Multiple Employer Welfare Arrangement as defined in section 514 of the Employee Retirement Income Security Act of 1974 (29 U.S.C. § 1144), as amended; (ii) A minimum premium group insurance plan; (iii) A stop-loss group insurance plan; or (iv) An administrative services only contract; (E) Any portion of a policy or contract that provides for: (i) Dividends or experience rating credits; (ii) Voting rights; or (iii) Payment of fees or allowances to any person, including the policy or contract owner, in connection with the service or administration of the policy or contract; (F) Any policy, contract, or certificate issued and delivered in the District of Columbia by a member in-surer at a time when it was not licensed or did not have a certificate of authority to issue and deliver the policy, contract, or certificates in the District of Columbia; (G) Any unallocated annuity contract; (H) Any portion of a policy or contract to the extent the assessments required by § 31-5406 with respect to the policy or contract are preempted by federal or state law; (I) Any obligation that does not arise under the express written terms of the policy or contract issued by the insurer to the contract owner or policy owner, including: (i) Claims based on marketing materials; (ii) Claims based on side letters, riders, or other documents that were issued by the insurer without meeting applicable policy form filing or approval requirements; (iii) Misrepresentations of or regarding policy benefits; (iv) Extra-contractual claims; or (v) A claim for penalties or consequential or incidental damages; (J) Any contractual agreement that establishes the member insurer’s obligations 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; (K) Any portion of a policy or contract that provides for interest or other changes in value to be deter-mined by the use of an index or other external reference stated in the policy or contract, but 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 this chapter, whichever is earlier. If a policy or con-tract’s interest or changes in value are credited less frequently than annually, then for purposes of determining the values that has been credited and are not subject to forfeiture under this subsection, the interest or change in value determined by using the procedures defined in the policy or contract shall 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) Any policy or contract providing any hospital, medical, prescription drug, or other health care benefits pursuant to the Balanced Budget Act of 1997, approved August 11, 1997 (111 Stat. 251; 42 U.S.C. §§ 1395w-21 et seq.), and the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, approved December 8, 2003 (117 Stat. 2066; 42 U.S.C. §§ 1395w-101 et seq.) (referred to as “Medicare Parts C & D” respectively), or any regulations issued pursuant to those acts. (Amended effective 7/23/2014)

Non-Resident Coverage

§31-5402(a)(2)(B). Yes. Coverage shall be provided for persons who are not residents, subject to the following conditions: (i) The insurers which issued and delivered the policies or contracts are domiciled in the District of Columbia; (ii) The states in which the persons reside have associations similar to the Association created by this chapter; and (iii) The persons are not eligible for coverage by an association in any other state due to the fact that the insurer was not licensed in the state at the time specified in the state’s guaranty association law. (Amended effective 7/23/2014)

Definition Of Premium

§ 31-5401 (11) “Premiums” means amounts (or consideration by whatever name called) received on covered policies or contracts, or for the portions of policies or contracts, less premiums, considerations, deposits returned, dividends, and experience credits. The term “premiums” shall not include: (A) Any amounts received for policies or contracts for which coverage is not provided under § 31-5402(b), except that assessable premiums shall not be reduced on account of § 31-5402(b)(2)(C) relating to interest limitations, and § 31-5402(c)(2) relating to limitations with respect to any one individual, any one participant, and any one contract holder; or (B) With respect to multiple non-group policies of life insurance owned by one owner, whether the policy owner is an individual, firm, corporation, or other person, and whether the persons insured are officers, managers, em-ployees or other persons, premiums in excess of $ 5,000,000 with respect to these policies or contracts, regardless of the number of policies or contracts held by the owner. (Amended effective 7/23/2014)

Interest Rate Adjustments

§31-5402(b)(2)(C) Guaranty Association excludes from coverage: Any portion of a policy, contract, or certificate, to the extent of the rate of interest on which it is based, or the interest rate, crediting rate, or similar factor determined by the use of an index or other external reference stated in the policy or contract employed in calculating returns or changes in value: (i) Averaged over the 4-year period prior to the date on which the Association becomes obligated with respect to the policy, contract, or certificate, exceeds a rate of interest determined by subtracting 2 percentage points from Moody’s Corporate Bond Yield Average averaged for that same 4-year period or for a lesser period if the policy, contract, or certificate was issued and delivered less than 4 years before the Association became obligated; and (ii) On and after the date on which the Association becomes obligated with respect to the policy, con-tract, or certificate, exceeds the rate of interest determined by subtracting 3 percentage points from the most recent Moody’s Corporate Bond Yield Average; (Amended effective 7/23/2014)

Tax Offsets

§31-5410. Yes. Up to 10% of amount assessed may be offset, spread over 10 years following payment; covers all assessments but administrative expenses.

Triggers

Discretionary Triggers

§31-5405(a). If a member insurer is an impaired domestic insurer.

Mandatory Triggers

§31-5405(b). When a member insurer is impaired, not paying claims timely, and (1) if domestic, has been placed under an order of rehabilitation by a court of competent jurisdiction; or (2) if foreign, has been prohibited from soliciting or accepting new business in this state, the insurer’s certificate of authority has been suspended or revoked in this state and a petition for rehabilitation has been filed in a court of competent jurisdiction in the insurer’s domestic state. §31-5405(c). If a member insurer is insolvent.

Foreign Triggers

See Mandatory Triggers.

“Impaired Insurer”

§31-5401(5). A member insurer which is not an insolvent insurer and (a) is deemed by the Mayor to be potentially unable to fulfill its contractual obligations, or (b) is placed under an order of rehabilitation or conservation by a court of competent jurisdication.

“Insolvent Insurer”

§31-5401(6). A member insurer which is placed under an order of liquidation by a court of competent jurisdiction with a finding of insolvency.

“Member Insurer”

§31-5401(8) “Member insurer” means any insurer licensed or holding a certificate of authority after July 22, 1992, in the District of Columbia to sell any kind of insurance for which coverage is provided under § 31-5402. The term “member insurer” shall include Group Hospitalization and Medical Services, Inc., as well as any insurer whose license or certificate of authority in the District of Columbia may have been suspended, revoked, not renewed, or voluntarily withdrawn, but does not include: (A) A nonprofit hospital or medical service organization; (B) A health maintenance organization; (C) A fraternal benefit society; (D) A mandatory state pooling plan; (E) A mutual assessment company or any entity that operates on an assessment basis; (F) A risk retention group; (G) An insurance exchange; (H) An organization that has a certificate or license limited to the issuance of charitable gift annuities; or (I) Any entity similar to any of the above. (Amended effective 7/23/2014)

Delaware

Account Structure

§4406(a). For purposes of administration and assessment, the Association shall maintain 2 accounts: (1) The life insurance and annuity account, which includes the following subaccounts: a. Life insurance account; b. Annuity account, which shall include annuity contracts owned by a governmental retirement plan (or its trustee) established under §401, §403(b) or §457 of the United States Internal Revenue Code [26 U.S.C. §401, §403(b) or §457], but shall otherwise exclude unallocated annuities; and c. Unallocated annuity account, which shall exclude contracts owned by a governmental retirement benefit plan (or its trustee) established under §401, §403(b) or §457 of the United States Internal Revenue Code [26 U.S.C. §401, §403(b) or §457]. (2) The health account.

Advertising Prohibition

§ 4419 “Advertising” 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 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 this chapter. Provided, however, that this section shall not apply to the Delaware Life and Health Insurance Guaranty Association or any other entity which does not sell or solicit insurance or coverage by a managed care organization or health maintenance organization.

Assessments

Assessment Limits

§4409(e)(1)(a). Subject to paragraph (e)(1)b. of this section, the total of all assessments authorized by the Association with respect to a member insurer for each subaccount of the life insurance and annuity account and for the health account shall not in 1 calendar year exceed 2% of that member insurer’s average annual premiums received in this State on the policies and contracts covered by the subaccount or account during the 3 calendar years preceding the year in which the member insurer became an impaired or insolvent insurer.

Assessment Classes

§4409(b). There shall be 3 classes of assessment as follows: (1) Class A assessments, shall be authorized and called for the purpose of meeting administrative costs and other expenses. Class A assessments may be authorized and called whether or not related to a particular impaired or insolvent insurer. (2) Class B assessments shall be authorized and called annually to provide for the oversight activity of the Commissioner, thereby minimizing the need to make class C assessments. (3) Class C assessments shall be authorized and called to the extent necessary to carry out the duties of the Association under this title with regards to an impaired or insolvent member insurer.

Benefit Limits

§4403(c). (c) The benefits that the Association may become obligated to cover shall in no event exceed the lesser of the following: (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. $300,000 in life insurance death benefits, but not more than $100,000 in net cash surrender and net cash withdrawal values for life insurance; 2. For health insurance benefits: A. $100,000 for coverages not defined as disability income insurance, health benefit plans, or long-term care insurance including any net cash surrender and net cash withdrawal values; B. $300,000 for disability income insurance and $300,000 for long-term care insurance. For purposes of this section, “disability income insurance” means the type of policy which pays a monthly or weekly amount if an individual is disabled and cannot work. “Long-term care insurance” means as defined in § 7103(5) of this title; C. $500,000 for health benefit plans; or 3. $250,000 in present value of annuity benefits including net cash surrender and net cash withdrawal values. b. With respect to each individual participating in a governmental retirement benefit plan established under § 401, § 403(b) or § 457 of the U.S. Internal Revenue Code (26 U.S.C. § 401, § 403(b) or § 457) covered by an unallocated annuity contract, or the beneficiaries of each such individual if deceased, $250,000 in the aggregate in present value annuity benefits, including net cash surrender and net cash withdrawal values; c. With respect to each payee of a structured settlement annuity (or beneficiary or beneficiaries of the payee, if deceased), $250,000 in present value annuity benefits, in the aggregate, including net cash surrender and net cash withdrawal values, if any; d. However, in no event shall the Association be obligated to cover more than (i) an aggregate of $300,000 in benefits with respect to any 1 life under paragraphs (c)(2)a., (c)(2)b., and (c)(2)c. of this section except with respect to benefits for health benefit plans under paragraph (c)(2)a.2. of this section, in which case the aggregate liability of the Association shall not exceed $500,000 with respect to any 1 individual; or (ii) with respect to 1 owner of multiple nongroup 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 $1,000,000 in benefits, regardless of the number of policies and contracts held by the owner; e. With respect to either (i) 1 contract owner provided coverage under paragraph (a)(3)b. of this section; or (ii) 1 plan sponsor whose plans own directly or in trust 1 or more unallocated annuity contracts not included in paragraph (c)(2)b. of this section, $1,000,000 in benefits, irrespective of the number of contracts with respect to the contract owner or plan sponsor. However, in the case where 1 or more unallocated annuity contracts are covered contracts under this chapter and are owned by a trust or other entity for the benefit of 2 or more plan sponsors, coverage shall be afforded by the Association if the largest interest in the trust or entity owning the contract or contracts is held by a plan sponsor whose principal place of business is in this State and in no event shall the Association be obligated to cover more than $1,000,000 in benefits with respect to all these unallocated contracts. f. The limitations set forth in this subsection are limitations on the benefits for which the Association is obligated before taking into account either its subrogation and assignment rights or the extent to which those benefits could be provided out of the assets of the impaired or insolvent insurer attributable to covered policies. The costs of the Association’s obligations under this chapter may be met by the use of assets attributable to covered policies or reimbursed to the Association pursuant to its subrogation and assignment rights. g. For purposes of this chapter, benefits provided by a long-term care rider to a life insurance policy or annuity contract are considered the same type of benefits as the base life insurance policy or annuity contract to which it relates.

Coverages

Covered Contracts

§4403(b)(1). This chapter shall provide coverage to the persons specified in subsection (a) of this section for policies or contracts of direct, nongroup life insurance; health insurance, which for the purposes of this chapter includes managed care organization and health maintenance organization subscriber contracts and certificates; or annuities for certificates under direct group policies and contracts, and for supplemental contracts to any of these, and for unallocated annuity contracts, in each case issued by member insurers, except as limited by this chapter. Annuity contracts and certificates under group annuity contracts include but are not limited to guaranteed investment contracts, deposit administration contracts, unallocated funding agreements, structured settlement annuities, annuities issued to or in connection with government lotteries, and any immediate or deferred annuity contracts.

Non-Covered Contracts

§4403(b)(2). Except as otherwise provided in paragraph (b)(3) of this section, this chapter shall not provide coverage for the following: a. Any portion of a policy or contract not guaranteed by the member insurer or under which the risk is borne by the policy or contract owner; b. Any policy or contract of reinsurance unless assumption certificates have been issued pursuant to the reinsurance policy or contract; c. Any 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 4 years prior to the date on which the member insurer becomes an impaired or insolvent insurer under this chapter, whichever is earlier, exceeds the rate of interest determined by subtracting 2 percentage points from Moody’s Corporate Bond Yield Average averaged for that same 4-year period or for such lesser period if the policy or contract was issued less than 4 years before the member insurer becomes an impaired or insolvent insurer under this chapter, whichever is earlier; and 2. On and after the date on which the member insurer becomes an impaired or insolvent insurer under this chapter, whichever is earlier, exceeds the rate of interest determined by subtracting 3 percentage points from Moody’s Corporate Bond Yield Average as most recently available; d. Any 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 such plan or program is self-funded or uninsured, including benefits payable by an employer, association, or other person under any of the following: 1. A multiple employer welfare arrangement, as defined in § 3(40) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. § 1002(40)); 2. A minimum premium group insurance plan; 3. A stop-loss group insurance plan; or 4. An administrative services only contract; e. Any portion of a policy or contract to the extent that it provides: 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 such policy or contract; f. Any 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 such policy or contract in this State; g. Any unallocated annuity contract issued to or in connection with a benefit plan protected under the federal Pension Benefit Guaranty Corporation, regardless of whether the federal Pension Benefit Guaranty Corporation has yet become liable to make any payments with respect to the benefit plan; h. Any portion of any unallocated annuity contract which is not issued to or in connection with a specific employee, union or association of natural persons benefit plan or a government lottery; i. A portion of a policy or contract to the extent that the assessments required by §4409 of this title with respect to the policy or contract are preempted by federal or state law; j. 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, contract owner, or policy owner, including: 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. Extracontractual claims; or 5. A claim for penalties or consequential or incidental damages; and k. A contractual agreement that establishes the member insurer’s obligations 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. l. 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 this chapter, 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 paragraph (b)(2)l., of this section, 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. m. Any employer owned life insurance policy, as defined in § 2704(e) of this title. n. A policy or contract providing any hospital, medical, prescription drug, or other health-care benefits under Part C or Part D of Subchapter XVIII, Chapter 7 of Title 42 of the U.S.C. (commonly known as Medicare Part C and D); Subchapter XIX, Chapter 7 of Title 42 of the U.S.C. (commonly known as Medicaid); or any regulations issued under either of these provisions. o. Structured settlement annuity benefits to which a payee or beneficiary has transferred the payee’s or beneficiary’s rights in a structured settlement factoring transaction, as defined in 26 U.S.C. § 5891(c)(3)(A), regardless of whether the transaction occurred before or after 26 U.S.C. § 5891(c)(3)(A) became effective.

Non-Resident Coverage

§4403(a)(2). Yes, non-residents are covered, but only under all of the following conditions: 1. The member insurer which issued such policies or contracts is domiciled in this State; 2. The states in which the persons reside have associations similar to the Association created by this chapter; 3. The persons are not eligible for coverage by an association in any other state due to the fact that the insurer, managed care organization, or health maintenance organization was not licensed in the state at the time specified in the state’s guaranty association law.

Definition Of Premium

§ 4405 (18) “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 policies or contracts for which coverage is not provided under § 4403(b) of this title except that assessable premium shall not be reduced on account of § 4403(b)(2)c. of this title relating to interest limitations and § 4403(c)(2) of this title relating to limitations with respect to 1 individual, 1 participant, and 1 policy or contract owner. “Premiums” does not include: a. Premiums in excess of $1,000,000 on an unallocated annuity contract not issued under a governmental retirement benefit plan (or its trustee) established under §401, §403(b) or §457 of the United States Internal Revenue Code [26 U.S.C. §401, §403(b) or §457], or b. With respect to multiple nongroup policies of life insurance owned by 1 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, premiums in excess of $1,000,000 with respect to these policies or contracts, regardless of the number of policies or contracts held by the owner.

Interest Rate Adjustments

§4403(b)(2)(c). Guaranty Association excludes from coverage: c. Any 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 4 years prior to the date on which the member insurer becomes an impaired or insolvent insurer under this chapter, whichever is earlier, exceeds the rate of interest determined by subtracting 2 percentage points from Moody’s Corporate Bond Yield Average averaged for that same 4-year period or for such lesser period if the policy or contract was issued less than 4 years before the member insurer becomes an impaired or insolvent insurer under this chapter, whichever is earlier; and 2. On and after the date on which the member insurer becomes an impaired or insolvent insurer under this chapter, whichever is earlier, exceeds the rate of interest determined by subtracting 3 percentage points from Moody’s Corporate Bond Yield Average as most recently available;

Tax Offsets

§4413(a). Yes. Up to 20% of assessment amount may be offset for 5 years following payment; covers class C assessments only.

Triggers

Discretionary Triggers

§4408(a). When a member insurer is impaired. Amended effective 06/25/02.

Mandatory Triggers

§4408(b). When a member insurer is insolvent. (Amended effective 06/25/02).

Foreign Triggers

No separate provision.

“Impaired Insurer”

§4405(11). A member insurer which is not an insolvent insurer, and is placed under an order of rehabilitation or conservation by a court of competent jurisdiction. Amended effective 06/25/02.

“Insolvent Insurer”

§4405(12). A member insurer which is placed under an order of liquidation by a court of competent jurisdiction with a finding of insolvency. Amended effective 06/25/02.

“Member Insurer”

§4405(13). an insurer, managed care organization, or health maintenance organization licensed or that holds a certificate of authority to transact in this State any kind of insurance, managed care organization, or health maintenance organization business for which coverage is provided under § 4403 of this title, and includes an insurer, managed care organization, 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 hospital or medical service organization, whether profit or nonprofit; b. [Repealed.] c. A fraternal benefit society; d. A mandatory state pooling plan; e. A mutual assessment company or other person that operates on an assessment basis; f. An insurance exchange; g. An organization which has a certificate or license limited to the issuance of charitable gift annuities; or h. An entity similar to any of the above.

Connecticut

Account Structure

§38a-863(a). For purposes of administration and assessment, the association shall maintain two accounts: (1) The life insurance and annuity account which includes the following subaccounts: (A) Life insurance account; (B) Annuity account which shall include, but is not limited to, annuity contracts owned by a governmental retirement plan, or its trustee, established under Section 401, 403(b) or 457 of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as from time to time amended, but shall otherwise exclude unallocated annuities; and (C) Unallocated annuity account which shall exclude contracts owned by a governmental retirement benefit plan, or its trustee, established under Section 401, 403(b) or 457 of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as from time to time amended; and (2) The health account.

Advertising Prohibition

§ 38a-871. “Liability for unpaid assessments. Records. Use of assets of impaired insurer. Distributions” …(e) It shall be a prohibited unfair trade practice and a violation of section 38a-815 for any person to make use in any manner of the protection afforded by sections 38a-858 to 38a-875, inclusive, in the solicitation, negotiation, procurement or effectuation of insurance provided, this subsection shall not apply to the distribution of any publication approved by the commissioner and describing the general purposes and current limitations of sections 38a-858 to 38a-874, inclusive. Violations of this section shall be subject to the provisions of section 38a-817.

Assessments

Assessment Limits

§38a-866(e)(1)(A) Subject to the provisions of subparagraph (B) of this subdivision, the total of all assessments authorized by the association with respect to a member insurer for each subaccount of the life insurance and annuity account and for the health account shall not in any one calendar year exceed two per cent of such insurer’s average annual premiums received in this state on the policies and contracts covered by the subaccount or account during the three calendar years preceding the year in which the member insurer became an impaired or insolvent insurer.

Assessment Classes

§38a-866(b) There shall be two classes of assessments, as follows: (1) Class A assessments shall be made for the purpose of meeting administrative costs and other general expenses not related to a particular impaired or insolvent insurer; and (2) Class B assessments shall be authorized and called to the extent necessary to carry out the powers and duties of the association under section 38a-865 with regard to an impaired or insolvent insurer.

Benefit Limits

§38a-860(g). The benefits for which the association may become liable shall in no event exceed the lesser of: (1) The contractual obligations for which the insurer is liable or would have been liable if it were not an impaired insurer, or (2) (A) with respect to any one life, regardless of the number of policies or contracts: (i) Five hundred thousand dollars in life insurance death benefits, but no more than five hundred thousand dollars in net cash surrender and net cash withdrawal values for life insurance; (ii) five hundred thousand dollars in health insurance benefits, including, but not limited to, any net cash surrender and net cash withdrawal values; (iii) five hundred thousand dollars in the present value of annuity benefits, including, but not limited to, net cash surrender and net cash withdrawal values; (B) with respect to each individual participating in a governmental retirement plan established under Section 401, 403(b) or 457 of the United States Internal Revenue Code of 1986, or any subsequent internal revenue code of the United States, as amended from time to time, covered by an unallocated annuity contract or the beneficiaries of each such individual if deceased, in the aggregate, five hundred thousand dollars in present value annuity benefits, including, but not limited to, net cash surrender and net cash withdrawal values; (C) with respect to each payee of a structured settlement annuity, or beneficiary or beneficiaries of the payee if deceased, five hundred thousand dollars in present value annuity benefits, in the aggregate, including, but not limited to, net cash surrender and net cash withdrawal values, if any, provided in no event shall the association be liable to expend (i) more than the five hundred thousand dollars in the aggregate with respect to any one individual under subparagraphs (A), (B) and (C) of this subdivision, and (ii) with respect to one owner of multiple nongroup 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 in benefits, regardless of the number of policies and contracts held by the owner; (D) with respect to either (i) one contract owner provided coverage under subdivision (2) of subsection (b) of this section, or (ii) one plan sponsor whose plans own directly or in trust one or more unallocated annuity contracts not included in subparagraph (B) of subdivision (2) of this subsection, five million dollars in benefits regardless of the number of contracts with respect to the contract owner or plan sponsor, except that in the case where one or more unallocated annuity contracts are covered contracts under sections 38a-858 to 38a-875, inclusive, and are owned by a trust or other entity for the benefit of two or more plan sponsors, coverage shall be afforded by the association if the largest interest in the trust or entity owning the contract or contracts is held by a plan sponsor whose principal place of business is in this state and in no event shall the association be obligated to cover more than five million dollars in benefits with respect to all such unallocated contracts; and (E) the limits set forth in this subsection are limits on the benefits for which the association is obligated before taking into account either the association’s subrogation and assignment rights or the extent to which those benefits could be provided out of the assets of the impaired or insolvent insurer that are attributable to covered policies. The costs of the association’s obligations under sections 38a-858 to 38a-875, inclusive, may be met by the use of assets attributable to covered policies or reimbursed to the association pursuant to the association’s subrogation and assignment rights.

Coverages

Covered Contracts

§38a-860(f)(1). Sections 38a-858 to 38a-875, inclusive, shall provide coverage to the persons specified in subsections (a) to (e), inclusive, of this section for policies or contracts of direct, nongroup life insurance, health insurance, or annuities and supplemental contracts to such policies or contracts, for certificates under direct group policies and contracts, and for unallocated annuity contracts issued by member insurers, except as limited by said sections. Annuity contracts and certificates under group annuity contracts include, but are not limited to, guaranteed investment contracts, deposit administration contracts, unallocated funding agreements, allocated funding agreements, structured settlement annuities, annuities issued to or in connection with government lotteries and any immediate or deferred annuity contracts.

Non-Covered Contracts

§38a-860(f)(2). Sections 38a-858 to 38a-875, inclusive, shall not provide coverage for: (A) Any portion of a policy or contract not guaranteed by the insurer, or under which the risk is borne by the policy or contract holder; (B) any policy or contract of reinsurance, unless assumption certificates have been issued; (C) except as set forth in subdivision (3) of this subsection, any 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 (i) averaged over the period of four years prior to the date on which the member insurer becomes an impaired or insolvent insurer under sections 38a-858 to 38a-875, inclusive, exceeds the rate of interest determined by subtracting two 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 years before the member insurer becomes an impaired or insolvent insurer under sections 38a-858 to 38a-875, inclusive, whichever is earlier, and (ii) on and after the date on which the member insurer becomes an impaired or insolvent insurer under sections 38a-858 to 38a-875, inclusive, whichever is earlier, exceeds the rate of interest determined by subtracting three percentage points from Moody’s corporate bond yield average as most recently available; (D) a portion of a policy or contract issued to any plan or program of an employer, association or similar entity to provide life, health or annuity benefits to its employees or members to the extent that such plan or program is self-funded or uninsured, including, but not limited to, benefits payable by an employer, association or similar entity under (i) a multiple employer welfare arrangement as defined in Section 514 of the federal Employee Retirement Income Security Act of 1974, as amended from time to time, (ii) a minimum premium group insurance plan, or (iii) an administrative services only contract; (E) any 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; (F) any portion of a policy or contract to the extent that it provides dividends, experience rating credits, voting rights or provides that any fees or allowances be paid to any person, including, but not limited to, the policy or contract holder, in connection with the service to or administration of such policy or contract; (G) any 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 such policy or contract in this state; (H) any unallocated annuity contract issued to an employee benefit plan protected under the federal Pension Benefit Guaranty Corporation, regardless of whether the federal Pension Benefit Guaranty Corporation has yet become liable to make any payments with respect to the benefit plan; (I) any portion of an unallocated annuity contract that is not issued to, or in connection with a specific employee, union or association of natural persons benefit plan or a government lottery; (J) a portion of a policy or contract to the extent that the assessments required by section 38a-866, with respect to the policy or contract are preempted by federal or state law; (K) a contractual agreement that establishes the insurer’s obligation by reference to a portfolio of assets that is not owned or possessed by the insurance company; (L) 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, contract owner or policy owner, including, but not limited to, (i) a claim based on marketing materials, (ii) a claim based on side letters, riders or other documents that were issued by the member insurer without meeting applicable policy contract form filing or approval requirements, (iii) a misrepresentation of or regarding policy or contract benefits, (iv) an extra-contractual claim, or (v) a claim for penalties or consequential or incidental damages; (M) a contractual agreement that establishes the member insurer’s obligations 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; (N) 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 that 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 sections 38a-858 to 38a-875, inclusive, 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 shall be credited as if the contractual date of crediting interest or changing values was the date of impairment or insolvency, whichever is earlier, and shall not be subject to forfeiture; (O) structured settlement annuity benefits to which a payee or beneficiary has transferred the payee’s or beneficiary’s rights in a structured settlement factoring transaction as defined in 26 USC 5891(c)(3)(A), regardless of whether the transaction occurred before or after said section became effective; and (P) any policy or contract providing hospital, medical, prescription drugs or other health care benefits pursuant to Part C, 42 USC 1395w21 et seq., Part D, 42 USC 1395w101 et seq., or 42 USC Chapter 7, Subchapter XIX, as said parts and subchapter may be amended from time to time, or any regulations issued thereunder.

Non-Resident Coverage

§38a-860(a)(2)(B). Yes. Covers nonresidents, but only under all of the following conditions: (i) the member insurer that issued such policy or contract is domiciled in this state, (ii) the state in which the person resides has an association similar to the association created by this section and sections 38a-837, 38a-838, 38a-845, 38a-853, 38a-859, 38a-862, 38a-863, 38a-865 and 38a-866, and (iii) the person is not eligible for coverage by an association in any other state because the insurer was not licensed in the state in which the person resides at the time specified in the state’s guaranty association law.

Definition Of Premium

§ 38a-862 (17) “Premiums” means amounts or considerations, by whatever name called, received on covered policies or contracts less premiums, considerations and deposits returned thereon, and less dividends and experience credits thereon. “Premiums” does not include (A) any amounts or considerations received for any policies or contracts or for the portions of any policies or contracts for which coverage is not provided under subsection (f) of section 38a-860, except that (i) assessable premium shall not be reduced on account of subparagraph (C) of subdivision (2) of subsection (f) of section 38a-860, relating to interest limitations, and subdivision (2) of subsection (g) of section 38a-860, relating to limitations with respect to any one individual, any one participant and any one policy or contract owner, and (ii) “premiums” does not include any premiums in excess of five million dollars on any unallocated annuity contract not issued under a governmental retirement benefit plan established under Section 401, 403(b) or 457 of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as from time to time amended, or (B) with respect to multiple nongroup policies of life insurance owned by one owner, whether the policy owner or contract owner is an individual, firm, corporation or other person, and whether the persons insured are officers, managers, employees or other persons, premiums in excess of five million dollars with respect to such policies or contracts, regardless of the number of policies or contracts held by the owner;

Interest Rate Adjustments

§38a-860(f)(2)(C) Guaranty Association excludes from coverage: except as set forth in subdivision (3) of this subsection, any 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 (i) averaged over the period of four years prior to the date on which the member insurer becomes an impaired or insolvent insurer under sections 38a-858 to 38a-875, inclusive, exceeds the rate of interest determined by subtracting two 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 years before the member insurer becomes an impaired or insolvent insurer under sections 38a-858 to 38a-875, inclusive, whichever is earlier, and (ii) on and after the date on which the member insurer becomes an impaired or insolvent insurer under sections 38a-858 to 38a-875, inclusive, whichever is earlier, exceeds the rate of interest determined by subtracting three percentage points from Moody’s corporate bond yield average as most recently available;

Tax Offsets

§38a-866(h). Yes. 100% of assessment amount may be offset for 5 years following payment at the rate of 20% per year.

Triggers

Discretionary Triggers

§38a-865(a). If a member insurer is an impaired insurer.

Mandatory Triggers

§38a-865(b). If a member insurer is an insolvent insurer.

Foreign Triggers

No separate provision.

“Impaired Insurer”

§38a-862(11). A member insurer that, after 10/1/72, is not an insolvent insurer, and is placed under an order of rehabilitation or conservation by a court of competent jurisdiction.

“Insolvent Insurer”

§38-862(12). A member insurer that, after 10/1/72, is placed under an order of liquidation by a court of competent jurisdication with a finding of insolvency.

“Member Insurer”

§38-862(13). any insurer or health care center licensed or holding a certificate of authority to issue in this state any kind of insurance or conduct any health care center business to which sections 38a-858 to 38a-875, inclusive, apply under section 38a-860, and may include an insurer or health care center whose license in this state has been suspended, revoked or voluntarily withdrawn;

Arkansas

Account Structure

§23-96-109(a)(5). Two accounts: (A) The life insurance and annuity account, which includes the following subaccounts: (i) Life insurance account; (ii) Annuity account, which shall include annuity contracts owned by a governmental retirement plan, or its trustee, established under section 401(k), section 403(b), or section 457 of the Internal Revenue Code, but shall otherwise exclude unallocated annuities; and (iii) Unallocated annuity account, which shall exclude contracts owned by a governmental retirement benefit plan, or its trustee, established under section 401(k), section 403(b), or section 457 of the Internal Revenue Code; and (B) The health account. (Amended effective 07/24/19)

Advertising Prohibition

§ 23-96-105 “Advertisement of association act in insurance sales — Notice to policy owners” (A) No person, including an insurer, agent, or affiliate of an 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, written or oral, which uses the existence of the Arkansas Life and Health Insurance Guaranty Association for the purpose of sales, solicitation, or inducement to purchase any form of insurance covered by this chapter, except in conformity with the rules and regulations of the commissioner. In adopting such rules and regulations, the commissioner, in consultation with the board of directors of the Association, shall take into consideration the following factors: the need of the public to have confidence in the financial soundness of insurance products offered for sale in this state, the financial integrity of member insurers doing business in this state, and the role of the Association in serving as a safety net for policyowners, contract owners, insureds and beneficiaries of impaired or insolvent insurers in this state. Provided, however, that this § shall not apply to the Arkansas Life and Health Insurance Guaranty Association or any other entity which does not sell or solicit insurance.

Assessments

Assessment Limits

§23-96-115(f)(1)(A). Total of all assessments authorized by the association with respect to a member insurer for each sub account of the life insurance and annuity account and for the health account shall not in any one calendar year exceed 2% of that member insurers average annual premiums received in this state on the policies and contracts covered by the sub account or account during the 3 calendar years preceding the year in which the insurer became an impaired or insolvent insurer. §23-96-115(F)(1)(B). If two or more assessments are authorized in one calendar year with respect to insurers that become impaired or insolvent in different calendar years, the average annual premiums for purposes of the aggregate assessment percentage limitation referenced in subparagraph (a) shall be equal and limited to the higher of the three-year average annual premiums for the applicable sub account or account as calculated pursuant to this section. (Amended effective 8/1/97)

Assessment Classes

§23-96-115(b). Two classes of assessments: (1) (A) Class A assessments shall be authorized and called for the purpose of meeting administrative and legal costs and other expenses. (B) Class A assessments may be authorized and called whether or not related to a particular impaired insurer or insolvent insurer; and (2) Class B assessments shall be authorized and called to the extent necessary to carry out the powers and duties of the association under § 23-96-106(b), §§ 23-96-110 — 23-96-114, and 23-96-120 with regard to an impaired insurer or an insolvent insurer.

Benefit Limits

§23-96-114 A. 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 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 (1) life, regardless of the number of policies or contracts: (i) Three hundred thousand dollars ($300,000) in life insurance death benefits or net cash surrender and net cash withdrawal values for life insurance; (ii) Five hundred thousand dollars ($500,000) in accident and health insurance benefits, including any net cash surrender and net cash withdrawal values, provided coverage for disability insurance benefits and long term care insurance benefits shall not exceed three hundred thousand dollars ($300,000); (iii) Three hundred thousand dollars ($300,000) in the present value of annuity benefits, including net cash surrender and net cash withdrawal values; (b) With respect to each individual participating in a governmental retirement benefit plan established under section 401(k), section 403(b), or section 457, of the United States Internal Revenue Code covered by an unallocated annuity contract or the beneficiaries of each such individual if deceased, in the aggregate three hundred thousand dollars ($300,000) in present value annuity benefits, including net cash surrender and net cash withdrawal values; (c) With respect to each payee of a structured settlement annuity, or beneficiary or beneficiaries of the payee if deceased, three hundred thousand dollars ($300,000) in present value annuity benefits, in the aggregate, including net cash surrender and net cash withdrawal values, if any. B. (1) Provided, however, that in no event shall the Association be obligated to cover more than (i) three hundred thousand dollars ($300,000) in benefits in the aggregate with respect to any one life under §§ 23–96–106, 23–96–107, and this section except with respect to benefits for basic hospital, medical and surgical insurance and major medical insurance under paragraph (A)(2)(a)(ii) of this section, in which case the aggregate liability of the Association shall not exceed five hundred thousand dollars ($500,000) with respect to any one individual, or (ii) with respect to one owner of multiple non-group policies of life insurance, whether the policy owner is an individual, firm, corporation or other person, and whether the persons insured are officers, managers, employees or other persons, more than one million dollars ($1,000,000) in benefits, regardless of the number of policies and contracts held by the owner; (2) With respect to either (i) one (1) contract owner provided coverage under § 23–96–107 (A)(3)(b); or (ii) one (1) plan sponsor whose plans own directly or in trust one or more unallocated annuity contracts not included in paragraph (A)(2)(b) of this section, one million dollars ($1,000,000) in benefits, irrespective of the number of contracts with respect to the contract owner or plan sponsor. However, in the case where one or more unallocated annuity contracts are covered contracts under this chapter and are owned by a trust or other entity for the benefit of two (2) or more plan sponsors, coverage shall be afforded by the Association if the largest interest in the trust or entity owning the contract or contracts is held by a plan sponsor whose principal place of business is in this state and in no event shall the Association be obligated to cover more than one million dollars ($1,000,000) in benefits with respect to all of these unallocated contracts. (Amended effective 5/7/2013).

Coverages

Covered Contracts

§23-96-107(b) (1) This chapter shall provide coverage to the persons specified in subsection (a) of this section for policies or contracts of direct, nongroup life insurance, health insurance that, for the purposes of this chapter, includes health maintenance organization subscriber contracts and certificates, or annuities for certificates under direct group policies and contracts, and for supplemental contracts to any of these, and for unallocated annuity contracts, in each case issued by member insurers, except as limited by this chapter. (Amended effective 07/24/19)

Non-Covered Contracts

§23-96-106(a) This chapter shall not provide coverage for: (1) A portion of a policy or contract not guaranteed by the member insurer, or under which the risk is borne by the policy owner or contract owner; (2) A portion of a policy or contract of reinsurance, unless assumption certificates have been issued under the reinsurance policy or contract; (3) 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: (A) Averaged over the period of four (4) years before the date on which the member insurer becomes an impaired or insolvent insurer under this chapter, whichever is earlier, 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 member insurer becomes an impaired insurer or insolvent insurer under this chapter, whichever is earlier; and (B) On and after the date on which the Arkansas Life and Health Insurance Guaranty Association becomes obligated with respect to such 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; (4) 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 without limitation benefits payable by an employer, association, or other person under: (A) A multiple employer welfare arrangement as defined in section 514 of the Employee Retirement Income Security Act of 1974, as amended; (B) A minimum premium group insurance plan; (C) A stop-loss group insurance plan; or (D) An administrative services only contract; (5) A portion of a policy or contract to the extent that it provides for dividends or experience rating credits, voting rights, or payment of any fees or allowances to any person, including the policy owner or contract owner, in connection with the service to or administration of such policy or contract; (6) 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 such policy or contract in this state; (7) An unallocated annuity contract issued to or in connection with a benefit plan protected under the Pension Benefit Guaranty Corporation regardless of whether the Pension Benefit Guaranty Corporation has yet become liable to make any payments with respect to the benefit plan; (8) A portion of an unallocated annuity contract that is not owned by a benefit plan, directly or in trust, or a government lottery or issued to a collective investment trust or similar pooled fund offered by a bank or other financial institution; (9) Any policy or contract written on the mutual assessment plan or stipulated premium plan prior to January 1, 1968, for which no statutory legal reserves are required; (10) A portion of a policy or contract to the extent that the assessments required by § 23-96-115 with respect to the policy or contract are preempted by federal or state law; (11) An obligation that does not arise under the express written terms of the policy or contract issued by the member insurer to the contract owner, policy owner, certificate holder, or enrollee, including without limitation: (A) Claims based on marketing materials; (B) 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; (C) Misrepresentations of or regarding policy or contract benefits; (D) Extra-contractual claims; or (E) A claim for penalties or consequential or incidental damages; (12) A contractual agreement that establishes the member insurer’s obligations 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 trustees, which in each case is not an affiliate of the member insurer; (13) (A) 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 has not been credited to the policy or contract, or as to which the policy owner’s or contract owner’s rights are subject to forfeiture, as of the date the member insurer becomes an impaired or insolvent insurer under this chapter, whichever is earlier. (B) 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 subdivision (a)(13), 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; (14) A policy or contract providing any hospital, medical, prescription drug, or other healthcare benefits pursuant to Part C or Part D of Subchapter XVIII, Chapter 7, Title 42 of the United States Code, 42 U.S.C. §§ 1395 — 1395kkk-1, commonly known as “Medicare Parts C and D”, or Title XIX of the Social Security Act, 42 U.S.C. §§ 1396 — 1396w5, commonly referred to as Medicaid, or any regulations issued pursuant thereto; and (15) Structured settlement annuity benefits to which a payee, or beneficiary, has transferred his or her rights under a structured settlement factoring transaction as defined in 26 U.S.C. §? 5891(c)(3)(A), regardless of whether or not the structured settlement factoring transaction occurred before or after the section became effective. (Amended effective 07/24/2019)

Non-Resident Coverage

§23-96-107(a)(2)(B) Yes. Covers non-residents, but only under all of the following conditions: (i) The member insurer that issued the policies or contracts is domiciled in this state; (ii) The states in which the persons reside have associations similar to the Arkansas Life and Health Insurance Guaranty Association created by this chapter; and (iii) The persons are not eligible for coverage by an association in any other state because the insurer or the health maintenance organization was not licensed in the state at the time specified in the state’s guaranty association law; (Amended effective 07/24/19)

Definition Of Premium

§ 23-96-104(18) (A) “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. (B) (i) “Premiums” does not include amounts or considerations received for any policies or contracts or for the portions of policies or contracts for which coverage is not provided under § 23-96-106, except that assessable premiums shall not be reduced on account of § 23-96-106(a)(3), relating to interest limitations and § 23-96-114(a)(2), relating to limitations with respect to one (1) individual, one (1) participant, and one (1) policy or contract owner. (ii) However, “premiums” does not include: (a) Any premiums in excess of one million dollars ($1,000,000) on an unallocated annuity contract not issued under a governmental retirement benefit plan, or its trustee, established under section 401(k), section 403(b), or section 457 of the Internal Revenue Code; or (b) With respect to multiple nongroup policies of life insurance owned by one (1) 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, premiums in excess of one million dollars ($1,000,000) with respect to these policies or contracts, regardless of the number of policies or contracts held by the owner;

Interest Rate Adjustments

§23-96-106(a)(3). Guaranty Association excludes from coverage: 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: (A) Averaged over the period of four (4) years before the date on which the member insurer becomes an impaired or insolvent insurer under this chapter, whichever is earlier, 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 member insurer becomes an impaired insurer or insolvent insurer under this chapter, whichever is earlier; and (B) On and after the date on which the Arkansas Life and Health Insurance Guaranty Association becomes obligated with respect to such 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;

Tax Offsets

§23-96-115(j)(1)(A). Yes. Up to 20% of assessment amount may be offset for 5 years after payment; covers all assessments but administrative expenses.

Triggers

Discretionary Triggers

§23-96-111. If a member insurer is an impaired insurer.

Mandatory Triggers

§23-96-112(a). If a member insurer is an insolvent insurer. (Amended effective 8/1/97).

Foreign Triggers

No separate provision under Act.

“Impaired Insurer”

§23-96-104(11). A member insurer which, after March 9, 1989, is not insolvent and is placed under an order of rehabilitation or conservation by a court of competent jurisdiction. (Amended effective 07/24/19)

“Insolvent Insurer”

§23-96-104(12). A member insurer which, after March 9, 1989, is placed under an order of liquidation by a court of competent jurisdiction with a finding of insolvency. (Amended effective 07/24/19)

“Member Insurer”

§23-96-104(13). any insurer or health maintenance organization licensed or which 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 § 23-96-107, 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 hospital or medical service organization, whether profit or nonprofit; (B) A fraternal benefit society; (C) A mandatory state pooling plan; (D) A burial association; (E) An insurance exchange; (F) Prepaid funeral trusts; (G) An organization that has a certificate or license limited to the issuance of charitable gift annuities; or (H) Any entity similar to any of those listed in subdivisions (13)(A)-(G) of this section; (Amended effective 07/24/19)

Colorado

Account Structure

§10-20-106. Three accounts: (a) The life insurance account; (b) The health insurance account; and (c) The annuity account.

Advertising Prohibition

§10-20-119 A person, including a member insurer and any 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, any advertisement, announcement, or statement, written or oral, that uses the existence of the life and health insurance protection association for the purpose of sales, solicitation, or inducement to purchase any form of insurance or other coverage covered by this article 20. However, this section does not apply to the association or any other entity that does not sell or solicit insurance or coverage by a health maintenance organization.

Assessments

Assessment Limits

§10-20-109(5)(a). Two percent (2%)of the average premiums received by the insurer in this state on the policies and contracts covered by the account during the three calendar years preceding the year in which the insurer became impaired or insolvent.

Assessment Classes

§10-20-109. Two classes of assessments: Class A for meeting administrative and legal costs and other expenses and examinations; and Class B to carry out the powers and duties of the association with regard to an impaired or insolvent insurer.

Benefit Limits

§10-20-104(3). 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 (b) (I) With respect to any one life, regardless of the number of policies or contracts with that member insurer: (A) Three hundred thousand dollars in net life insurance death benefits, and no more than one hundred thousand dollars in net cash surrender and net cash withdrawal values for life insurance; (B) For health insurance benefits or coverage received under health maintenance organization contracts: One hundred thousand dollars for coverages not defined as disability, coverage or services under health benefit plans, or long-term care insurance, including any net cash surrender and net cash withdrawal values; three hundred thousand dollars for disability insurance; three hundred thousand dollars for long-term care insurance; or five hundred thousand dollars for coverage or services under health benefit plans; (C) Two hundred fifty thousand dollars in the present value of annuity benefits, including net cash surrender and net cash withdrawal values; or (D) With respect to each payee of a structured settlement annuity, two hundred fifty thousand dollars in present-value annuity benefits, in the aggregate, including net cash surrender and net cash withdrawal values. (E) (Deleted by amendment, L. 2013.) (II) The association is not obligated to cover: (A) More than three hundred thousand dollars in benefits, in the aggregate, with respect to any one life under subsection (3)(b)(I) of this section; except that, with respect to benefits for coverage or services under health benefit plans under subsection (3)(b)(I)(B) of this section, the aggregate liability of the association must not exceed five hundred thousand dollars with respect to any one life; or (B) More than five million dollars in benefits with respect to an owner of multiple nongroup policies of life insurance, regardless of whether the policy owner is an individual, firm, corporation, or other person; whether the persons insured are officers, managers, employees, or other persons; or the number of policies and contracts held by the owner.

Coverages

Covered Contracts

§10-20-104(2)(a). This article 20 provides coverage to the persons specified in subsections (1) and (1.3) of this section for direct, nongroup life insurance, health insurance, health maintenance organization, annuity, and supplemental policies or contracts and for certificates under direct group life insurance, health insurance, health maintenance organization, or annuity policies or contracts, and for supplemental contracts to any of these, issued by member insurers pursuant to article 7 and parts 1, 2, and 4 of article 16 of this title 10, except as limited by this article 20. 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

§10-20-104(2)(b). Except as otherwise provided in subsection (2)(c) of this section, this article 20 does not provide coverage for: (I) Any portion of a policy or contract not guaranteed by the member insurer, or under which the risk is borne by the policy or contract owner; (II) Any policy or contract of reinsurance, unless assumption certificates have been issued under the reinsurance policy or contract; (III) Any 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 other factor determined by use of an index or other external reference stated in the policy or contract employed in calculating returns and changes in value: (A) When averaged over the period of four years prior to the date on which the association became obligated with respect to the policy or contract, exceeds a rate of interest determined by subtracting two 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 years before the association became obligated; and (B) On and after the date on which the association became obligated with respect to the policy or contract, exceeds the rate of interest determined by subtracting three percentage points from Moody’s corporate bond yield average as most recently available; (IV) Any portion of a policy, contract, 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 such plan or program is self-funded or uninsured, including but not limited to benefits payable by an employer, association, or other person under: (A) A multiple employer welfare arrangement, as defined in section 1002 of title 29 of the United States Code; (B) A minimum premium group insurance plan; (C) A stop-loss group insurance plan; or (D) An administrative services only contract; (V) Any portion of a policy or contract to the extent that it provides dividends or experience rating credits, voting rights, or that any fees or allowances be paid to any person, including the policy or contract holder, in connection with the service to or administration of such policy or contract; (VI) Any 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 such policy or contract in this state; (VII) Any unallocated annuity contract; (VIII) Any annuity contract or group annuity certificate which is used by a nonprofit insurance company exclusively for the benefit of nonprofit educational institutions and their employees for the purpose of providing retirement benefits; (IX) Any policy, contract, certificate, or subscriber agreement issued by a prepaid dental care plan as defined in parts 1 and 5 of article 16 of this title; (X) Services covered under a policy of sickness and accident insurance as defined in section 10-16-102 (50) when written by a property and casualty insurer as part of an automobile insurance contract; (XI) Repealed. (XII) Any member insurer that was insolvent or unable to fulfill its contractual obligations as of July 1, 1991; except that an annuity contract issued or assumed by such a member insurer shall be covered under this article 20 if the member insurer was ordered into liquidation between July 1, 1991, and August 31, 1991; (XIII) Repealed. (XIV) Any 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 such changes have not been credited to the policy or contract, or to the extent 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 this article. 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 section, the interest or change in value determined by using the procedures defined in the policy or contract shall be credited as if the contractual date of crediting interest or changing values was the date of insolvency, and such interest or changes shall not be subject to forfeiture. (XV) Repealed. (XVI) Any policy or contract providing hospital, medical, prescription drug, or other health-care benefits under: (A) Part C or part D of subchapter XVIII, chapter 7 of title 42, United States Code, or any regulation issued under those parts C or D; or (B) Subchapter XIX, chapter 7 of title 42, United States Code, or any regulation issued under Title XIX; (XVII) Any portion of a policy or contract to the extent that the assessment required by this article with respect to the policy or contract are preempted or otherwise not allowed by federal or state law; (XVIII) Any obligation that does not arise under the expressed written terms of the policy or contract issued by the member insurer to the owner, certificate holder, or enrollee, including: (A) Claims based on marketing materials, brochures, illustrations, advertisements, or oral statements by agents, brokers, or others used or made in connection with the sale of covered policies and contracts; (B) Claims based on side letters, riders, or other documents that were issued by the member insurer without meeting applicable policy I form filing or approval requirements; (C) Misrepresentations of, or regarding, policy or contract benefits; (D) Extracontractual claims; and (E) Claims for penalties, interest, or consequential or incidental damages; (XIX) Any contractual agreement that establishes the member insurer’s obligations to provide a book value accounting guaranty for defined contribution benefit plan participants by reference to a portfolio of assets that is owned by a benefit plan or trustee that is not an affiliate of the member insurer. (XX) Structured settlement annuity benefits to which a payee or beneficiary has transferred the payee’s or beneficiary’s rights in a structured settlement factoring transaction, as defined in 26 U.S.C. sec. 5891 (c)(3)(A), regardless of whether the transaction occurred before, on, or after the effective date of 26 U.S.C. sec. 5891 (c)(3)(A).

Non-Resident Coverage

§10-20-104(1)(a). Yes. Covers nonresidents, but only under all of the following conditions: (A) The member insurer that issued the policies or contracts is domiciled in this state; (B) The member insurer never held a license or certificate of authority in the states in which such persons reside; (C) Such states have associations similar to the association created by this article; and (D) Such persons are not eligible for any amount of coverage by such associations;

Definition Of Premium

§ 10-20-103(12) (a) “Premiums” means the amount of money or other consideration, however designated, received on covered policies or contracts less returned premiums, returned consideration, and returned deposits, and less dividends and experience credits. (b) “Premiums” does not include: (I) Any amount of money or other consideration received for any policies or contracts or for the portions of any policies or contracts for which coverage is not provided under section 10-20-104 (2); except that assessable premiums shall not be reduced on account of section 10-20-104 (2)(b)(III) relating to interest limitations and section 10-20-104 (3)(b) relating to limitations with respect to any one life; (II) Premiums on an unallocated annuity contract; or (III) Premiums in excess of five million dollars with respect to multiple nongroup policies of life insurance owned by one owner, regardless of: (A) Whether the policy owner is an individual, firm, corporation, or other person; (B) Whether the persons insured are officers, managers, employees, or other persons; or (C) The number of policies or contracts held by the owner.

Interest Rate Adjustments

§10-20-104(2)(b)(III). Guaranty Association excludes from coverage: Any 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 other factor determined by use of an index or other external reference stated in the policy or contract employed in calculating returns and changes in value: (A) When averaged over the period of four years prior to the date on which the association became obligated with respect to the policy or contract, exceeds a rate of interest determined by subtracting two 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 years before the association became obligated; and (B) On and after the date on which the association became obligated with respect to the policy or contract exceeds the rate of interest determined by subtracting three percentage points from Moody’s corporate bond yield average as most recently available.

Tax Offsets

§10-20-113. Yes. 100% of Class B assessment amount made on life and annuity accounts may be offset for 5 years following payment at the rate of 20% per year. The total amount of all offsets for all member insurers cannot exceed $4 million per year. Offsets will be prorated if the total amount of offset would exceed $4 million in any year. Carry forward of offset is permitted when cap is exceeded. Colorado’s tax offset provision does not apply to health insurance assessments, however, member insurers writing health insurance may recoup the health insurance assessment through policyholder surcharge on premiums charged for health policies.

Triggers

Discretionary Triggers

§10-20-108(1). If a member insurer is an impaired insurer.

Mandatory Triggers

§10-20-108(2). If a member insurer is an insolvent insurer.

Foreign Triggers

No separate provision.

“Impaired Insurer”

§10-20-103(6.7) “Impaired insurer” means a member insurer that is not an insolvent insurer and is placed under an order of rehabilitation or conservation by a court of competent jurisdiction.

“Insolvent Insurer”

§10-20-103(7). A member insurer which is placed under an order or liquidation by a court of competent jurisdiction with a finding of insolvency.

“Member Insurer”

§10-20-103(8). Member insurer” means any insurer or health maintenance organization that is licensed or holds a certificate of authority in this state to write any kind of insurance or health maintenance organization business for which coverage is provided pursuant to section 10-20-104 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. “Member insurer” does not include: (a) A nonprofit hospital or medical service organization; (b) Repealed. (c) A fraternal benefit society; (d) A mandatory state pooling plan; (e) Repealed. (f) A stipulated premium insurance company; (g) A local mutual burial association; (h) A mutual assessment company or any entity that operates on an assessment basis; (i) An interinsurance exchange; (i.5) A health-care coverage cooperative with a certificate of authority issued and operating under part 10 of article 16 of this title 10; or (j) Any entity similar to those specified subsections (8)(a) to (8)(i.5) of this section.

California

Account Structure

§1067.05: Two accounts: (1) The life insurance and annuity account which includes both of the following subaccounts: (A) The life insurance account. (B) The annuity account, which shall include annuity contracts owned by a governmental retirement plan, or its trustee, established under Section 401, 403(b), or 457 of the Internal Revenue Code. (2) The health insurance account. Amended effective 9.27.2010.

Advertising Prohibition

§ 1067.17 “Use of existence of association for purpose of sales, solicitation, or inducement to purchase insurance; summary document; disclaimer; contracts not covered by association”(a) No person, including an insurer, agent, or affiliate of an 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, written or oral, which uses the existence of the California Life and Health Insurance Guarantee Association for the purpose of sales, solicitation, or inducement to purchase any form of insurance covered by the California Life and Health Insurance Guarantee Association Act. Provided, however, that this section shall not apply to the California Life and Health Insurance Guarantee Association or any other entity which does not sell or solicit insurance. (b)(1) The association shall prepare a summary document describing the general purposes and current limitations of the article and complying with subdivision (c). This document shall be submitted to the commissioner for approval. Sixty days after receiving approval, no insurer may deliver a policy or contract described in paragraph (1) of subdi-vision (b) of Section 1067.02 to a policyholder or contractholder unless the document is delivered to the policy or contractholder prior to or at the time of delivery of the policy or contract except if subdivision (d) applies. The document should also be available upon request by the policyholder. The distribution, delivery, or contents or inter-pretation of this document shall not mean that either the policy or the contract or the holder thereof would be covered in the event of the impairment or insolvency of a member insurer. The description document shall be revised by the association as amendments to the article may require. Failure to receive this document does not give the policyholder, contractholder, certificate holder, or insured any greater rights than those stated in this article. This paragraph shall remain operative only until paragraph (2) becomes operative. (2) Within 180 days of the effective date of the act that amended this section in the 2009-10 Regular Session, [FN1] the association shall prepare a summary document describing the general purposes and current limitations of the article and complying with subdivision (c). This document shall be submitted to the commissioner for approval. At the expiration of the 60th day after the date on which the commissioner approves the document, an insurer may not deliver a policy or contract described in paragraph (1) of subdivision (b) of Section 1067.02 to a policy or contract owner unless the summary document is delivered to the policy or contract owner at the time of delivery of the policy or contract. The document shall also be available upon request by a policy owner. The distribution, delivery, or contents or interpretation of this document does not guarantee that either the policy or the contract or the owner of the policy or contract is covered in the event of the impairment or insolvency of a member insurer. The description document shall be revised by the association, as amendments to the article may require. Failure to receive this document does not give the policy owner, contract owner, certificate holder, or insured any greater rights than those stated in this article. (c) The document prepared under subdivision (b) shall contain a clear and conspicuous disclaimer on its face. The commissioner shall promulgate a rule establishing the form and content of the disclaimer. The disclaimer shall do all of the following: (1) State the name and address of the life and health insurance guarantee association and insurance department. (2) Prominently warn the policy owner or contract owner that the California Life and Health Insurance Guarantee Association may not cover the policy or, if coverage is available, it will be subject to substantial limitations and ex-clusions and conditioned on continued residence in the state. (3) State that the insurer and its agents are prohibited by law from using the existence of the California Life and Health Insurance Guarantee Association for the purpose of sales, solicitation, or inducement to purchase any form of insurance. (4) State that the policy owner or contract owner should not rely on coverage under the California Life and Health Insurance Guarantee Association when selecting an insurer. (5) Provide other information as directed by the commissioner. Amended effective 9.27.2010.

Assessments

Assessment Limits

§1067.08(e)(1): the total of all assessments authorized by the association with respect to a member insurer for each subaccount of the life insurance and annuity account and for the health account shall not in one calendar year exceed 2 percent of that member insurer’s average annual premiums received in this state on the policies and contracts covered by the subaccount or account during the three calendar years preceding the year in which the insurer became an impaired or insolvent insurer. Amended effective 9.27.2010.

Assessment Classes

§1067.08(b). Two assessment classes: (1) Class A assessments shall be authorized and called for the purpose of meeting administrative and legal costs and other expenses and examinations conducted under the authority of subdivision (e) of Section 1067.11. Class A as-sessments may be authorized and called whether or not related to a particular impaired or insolvent insurer. (2) Class B assessments shall be authorized and called to the extent necessary to carry out the powers and duties of the association under Section 1067.07 with regard to an impaired or an insolvent insurer.

Benefit Limits

§ 1067.02(c). The benefits for which the association may become liable for life insurance and annuity policies shall in no event exceed the lesser of the following: (1) Eighty percent of the contractual obligations for each policy or contract as modified pursuant to subparagraph (C) of paragraph (2) of subdivision (b), for which the insurer is liable or would have been liable if it were not an impaired or insolvent insurer. (2)(A) With respect to any one life, regardless of the number of policies or contracts: (i) Three hundred thousand dollars ($300,000) in life insurance death benefits, but not more than one hundred thou-sand dollars ($ 100,000) in net cash surrender and net cash withdrawal values for life insurance. (ii) Two hundred fifty thousand dollars ($250,000) in the present value of annuity benefits, including net cash sur-render and net cash withdrawal values. (B) With respect to each payee of a structured settlement annuity, or beneficiaries of the payee if deceased, two hundred fifty thousand dollars ($250,000) in present value annuity benefits, in the aggregate, including net cash surrender and net cash withdrawal values. (C) Notwithstanding subparagraphs (A) and (B), in no event shall the association be obligated to cover more than an aggregate of three hundred thousand dollars ($300, 000) in benefits with respect to any one life under subparagraphs (A) and (B). (D) Notwithstanding subparagraphs (A), (B), and (C), with respect to one owner of multiple nongroup policies of life insurance, whether the policy owner is an individual, firm, corporation, or other person, and whether the persons insured are officers, managers, employees, or other persons, in no event shall the association be obligated to cover more than five million dollars ($5,000,000) in benefits, regardless of the number of policies and contracts held by the owner. (d) The health insurance benefits for which the association may become liable shall in no event exceed the lesser of the following: (1) The contractual obligations for which the insurer is liable or for which the insurer would have been liable if it were not an impaired or insolvent insurer. (2) With respect to any one individual receiving health care benefits, regardless of the number of policies or contracts, two hundred thousand dollars ($200,000) in health insurance benefits; an amount that shall increase or decrease based upon changes in the health care cost component of the consumer price index from January 1, 1991, to the date on which the insurer becomes an insolvent insurer. Amended effective 9.27.2010.

Coverages

Covered Contracts

§1067.02(b)(1): for direct, nongroup life, health, or annuity policies or contracts, and supplemental contracts to any of these, and for certificates under direct group policies and contracts, except as limited by this article. Annuity contracts and certificates under group annuity contracts include allocated funding agreements, structured settlement annuities, and any immediate or deferred annuity contracts. The health policies and contracts covered under this article include, but are not limited to, basic hospital, medical, and surgical insurance, major medical insurance, disability income insurance, disability insurance, including insurance appertaining to injury, disablement, or death resulting to the insured from accidents, and appertaining to disablements resulting to the insured from sickness, and long-term care insurance, including any net cash surrender and net cash withdrawal values. Amended effective 9.27.2010.

Non-Covered Contracts

§1067.02(b)(2): (A) Any portion of a policy or contract not guaranteed by the insurer, or under which the risk is borne by the policy owner or contract owner. (B) Any 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 the use of an index or other external reference which is stated in the policy or contract and employed in calculating returns or changes in value does both of the following: (i) Averaged over the period of four years prior to the date on which the member insurer becomes an impaired or insolvent insurer under this article exceeds the rate of interest determined by subtracting two percentage points from Moody’s Corporate Bond Yield Average averaged for that same four-year period or for the lesser period if the policy or contract was issued less than four years before the member insurer becomes an impaired or insolvent insurer under this article, not to go below a minimum of 0 percent. (ii) On and after the date on which the member insurer becomes an impaired or insolvent insurer under this article exceeds the rate of interest determined by subtracting three percentage points from Moody’s Corporate Bond Yield Average as most recently available, not to go below a minimum of 0 percent. (D) An unallocated annuity contract. (E) 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 any of the following: (i) A multiple employer welfare arrangement as defined in Section 1144 of Title 29 of the United States Code. (ii) A minimum premium group insurance plan. (iii) A stop-loss group insurance plan. (iv) An administrative services only contract. (F) A portion of a policy or contract to the extent that it provides for any of the following: (i) Dividends or experience rating credits. (ii) Voting rights. (iii) 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. (G) Any 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. (H) Any annuity issued by a charitable organization that is duly qualified as such under applicable provisions of the Internal Revenue Code [FN1], and that is not engaged in the business of insurance as its primary business. (I) A portion of a policy or contract to the extent that the assessments required by Section 1067.08 with respect to the policy or contract are preempted or otherwise not permitted by federal or state law. (J) An obligation that does not arise under the express written terms of the policy or contract issued by the insurer to the contract owner or policy owner, including without limitation, any of the following: (i) Claims based on marketing materials. (ii) Claims based on side letters, riders, or other documents that were issued by the insurer without meeting applicable policy form filing or approval requirements. (iii) Misrepresentations of, or regarding, policy benefits. (iv) Extracontractual claims. (v) A claim for penalties or consequential or incidental damages. (K) A contractual agreement that establishes the member insurer’s obligations 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. (L) 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 this article, 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 pursuant to this subparagraph, the interest or change in value determined by using the procedures defined in the policy or contract shall be credited as if the contractual date of crediting interest or changing values was the date of impairment or insolvency, whichever is earlier, and shall not be subject to forfeiture. (M) A policy or contract providing any hospital, medical, prescription drug, or other health care benefits pursuant to Part C of Title XVIII of the Social Security Act (42 U.S.C. Sec. 1395w-21 et seq.) or Part D of Title XVIII of the Social Security Act (42 U.S.C. Sec. 1395w-101 et seq.), commonly known as Medicare Parts C and D, or any regulations issued pursuant thereto. Amended effective 9.27.2010.

Non-Resident Coverage

§1067.02(a)(2)(B). Yes. The act covers nonresidents, but only under all of the following conditions: (i) The insurer that issued the policies or contracts is domiciled in this state; (ii) The states in which the persons reside have associations similar to the association created by this Act; (iii) The persons are not eligible for coverage by an association in any other State due to the fact that the insurer was not licensed in the state at the time specified in the state’s guaranty association law. (Amended effective 9/27/2010)

Definition Of Premium

§ 1067.04(q)(1) “Premiums” means amounts or considerations, by whatever name called, received on covered policies or con-tracts less returned premiums, considerations, and deposits and less dividends and experience credits. (2) “Premiums” does not include amounts or considerations received for * * *policies or contracts or for the portions of policies or contracts for which coverage is not provided under subdivision (b) of Section 1067.02, except that assessable premium shall not be reduced on account of subparagraph (C) of paragraph (2) of subdivision (b) of Section 1067.02 relating to interest limitations and paragraph (2) of subdivision (c) of Section 1067.02 relating to limitations with respect to one individual, one participant, and one contract owner. (3) “Premiums” does not include any of the following: (A) Premiums on an unallocated annuity contract. (B) With respect to multiple nongroup policies of life insurance owned by one owner, whether the policy owner is an individual, firm, corporation, or other person, and whether the persons insured are officers, managers, employees, or other persons, premiums in excess of five million dollars ($5, 000,000) with respect to these policies or contracts, regardless of the number of policies or contracts held by the owner.

Interest Rate Adjustments

§1067.02(b)(2)(C): Guarantee Association excludes from coverage: 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 the use of an index or other external reference which is stated in the policy or contract and employed in calculating returns or changes in value does both of the following: (i) Averaged over the period of four years prior to the date on which the member insurer becomes an impaired or insolvent insurer under this article exceeds the rate of interest determined by subtracting two percentage points from Moody’s Corporate Bond Yield Average averaged for that same four-year period or for the lesser period if the policy or contract was issued less than four years before the member insurer becomes an impaired or insolvent insurer under this article, not to go below a minimum of 0 percent. (ii) On and after the date on which the member insurer becomes an impaired or insolvent insurer under this article exceeds the rate of interest determined by subtracting three percentage points from Moody’s Corporate Bond Yield Average as most recently available, not to go below a minimum of 0 percent. Amended effective 9.27.2010.

Tax Offsets

§1067.08(i)(1). Yes. No tax offset provided by law; however, a health insurance assessment recoupment is permitted by way of policyholder surcharge. Member insurers are required to recoup over a reasonable length of time a sum reasonably calculated to recoup the assessments with respect to the health insurance account paid by the member insurer under this article by way of a surcharge on premiums charged for health insurance policies. Amounts recouped shall not be considered premiums for any other purpose, including the computation of gross premium tax or agent’s commission.

Triggers

Discretionary Triggers

§1067.07(a). If a member insurer is an impaired insurer. Amended effective 9.27.2010.

Mandatory Triggers

§1067.07(b). If a member insurer an insolvent insurer. Amended effective 9.27.2010.

Foreign Triggers

No separate provision. Amended effective 9.27.2010.

“Impaired Insurer”

§1067.04(j) “Impaired insurer” means a member insurer which, after the effective date of this article, is not an insolvent insurer, and is placed under an order of rehabilitation or conservation by a court of competent jurisdiction. Amended effective 9.27.2010.

“Insolvent Insurer”

§1067.04(k) “Insolvent insurer” means a member insurer that, after October 1, 1990, is placed under an order of liquidation by a court of competent jurisdiction with a finding of insolvency. Amended effective 9.27.2010.

“Member Insurer”

§1067.04(l) “Member insurer” means any insurer licensed or which holds a certificate of authority to transact in this state any kind of insurance for which coverage is provided under Section 1067.02 and includes any insurer whose license or certificate of authority in this state may have been suspended, revoked, not renewed, or voluntarily withdrawn, but does not include any of the following: (1) A hospital or medical service organization, whether for profit or nonprofit. (2) A health maintenance organization. (3) A fraternal benefit society. (4) A mandatory state pooling plan. (5) A mutual assessment company or other person that operates on an assessment basis. (6) An insurance exchange. (7) An organization that has a certificate or license limited to the issuance of charitable gift annuities. (8) A grants and annuities society holding a certificate of authority under Section 11520. (9) An entity similar to any of the above. Amended effective 9.27.2010.

Arizona

Account Structure

§20-683A. Three accounts: 1. The disability insurance account. 2. The life insurance account. 3. The annuity account.

Advertising Prohibition

§20-443 “Misrepresentations and false advertising of policies” A person shall not make, issue or circulate, or cause to be made, issued or circulated, any estimate, illustration, circular, sales material or statement: …(6) Referring to the coverage or any of the provisions of chapter 3, article 6 or 7 of this title (guaranty association statutes) in connection with the sale or attempted sale of any policy of insurance, except in connection with the notice prescribed in § 20-400.10 (industrial insureds), subsection E, § 20-410, subsection B (surplus lines) and § 20-422, subsection C (alien insurance for coverage in Mexico).

Assessments

Assessment Limits

§20-686C(5) 5. The total of all assessments on a member insurer for each account shall not in any one calendar year exceed two percent of that member insurer’s average annual premiums received in this state on the policies and contracts covered by the account during the three calendar years preceding the year in which the member insurer became an impaired insurer or insolvent insurer. If two or more assessments are authorized in one calendar year with respect to member insurers that become impaired or insolvent in different calendar years, the average annual premiums for purposes of the aggregate assessment percentage limitation shall be limited to the greater of the three year average annual premiums for the applicable account as calculated pursuant to this subsection. (Amended effective 12/31/2018)

Assessment Classes

§20-686B. Two classes of assessments: Class A for administrative costs and general expenses; and Class B to carry out the powers and duties of the fund with regard to an impaired insurer or insolvent insurer. (Amended effective 9/12/2013)

Benefit Limits

§20-682 E. The benefits that the fund becomes or may become obligated to cover shall not exceed the lesser of: 1. The contractual obligations for which the impaired insurer or insolvent insurer is liable or would have been liable if it were not an impaired insurer or insolvent insurer. 2. With respect to one life, regardless of the number of policies or contracts: (a) three hundred thousand dollars in life insurance death benefits, but not more than one hundred thousand dollars in net cash surrender and net cash withdrawal values for life insurance. (b) in disability insurance benefits: (i) one hundred thousand dollars for coverages not defined as disability income insurance or basic hospital, medical and surgical insurance or major medical insurance or long-term care insurance. (ii) three hundred thousand dollars for disability income insurance and three hundred thousand dollars for long-term care insurance. (iii) five hundred thousand dollars for basic hospital medical and surgical insurance or major medical insurance. (c) two hundred fifty thousand dollars in the present value of annuity benefits, including net cash surrender and net cash withdrawal values. 3. With respect to each payee of a structured settlement annuity, or the beneficiary of a deceased payee, an aggregate of two hundred fifty thousand dollars in present value annuity benefits, including net cash surrender and net cash withdrawal values, if any. F. Notwithstanding subsection E of this section, the fund is not obligated to cover more than either: 1. An aggregate of three hundred thousand dollars in benefits with respect to any one individual under subsection E of this section except with respect to benefits for basic hospital, medical and surgical insurance and major medical insurance under subsection E, paragraph 2, subdivision (b) of this section, in which case the aggregate liability of the fund shall not exceed five hundred thousand dollars with respect to any one individual. 2. With respect to one owner of multiple nongroup policies of life insurance, whether the policy 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 in benefits, regardless of the number of policies and contracts held by the owner. (Amended effective 9/12/13).

Coverages

Covered Contracts

§20-682B. This article provides coverage to the persons specified in subsection A of this section for direct nongroup life, disability or annuity policies or contracts, and for certificates under direct group policies and contracts, and for supplemental contracts to any of these, that are issued by member insurers, except as limited by this article. Annuity contracts and certificates under group annuity contracts include allocated funding agreements, structured settlement annuities and any immediate or deferred annuity contracts. (Amended effective 9/12/2013)

Non-Covered Contracts

§20-682D. Except as otherwise provided in paragraph 14 of this subsection, this article does not provide coverage for: 1. Any policy or contract, or any part of any policy or contract, not guaranteed by the member insurer or under which the risk is borne by the policyholder or contract owner. 2. Any policy or contract, or any part of any policy or contract, assumed by the impaired insurer or insolvent insurer under a contract of reinsurance other than bulk reinsurance or reinsurance for which assumption certificates have been issued. 3. Any policy or contract issued by mutual assessment companies or other persons that operate on an assessment basis, fraternal benefit societies, hospital, medical, dental and optometric service corporations or plans, prepaid dental plan organizations, mandatory state pooling plans, a reciprocal insurance exchange and any entity similar to any of the entities described in this paragraph. 4. A part 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: (a) Averaged over the period of four years before the date on which the member insurer becomes an impaired insurer or insolvent insurer under this article, whichever is earlier, exceeds the rate of interest determined by subtracting two percentage points from Moody’s corporate bond yield average averaged for that same four-year period or for a lesser period if the policy or contract was issued less than four years before the member insurer becomes an impaired insurer or insolvent insurer under this article, whichever is earlier. (b) On and after the date on which the member insurer becomes an impaired insurer or insolvent insurer under this article, whichever is earlier, exceeds the rate of interest determined by subtracting three percentage points from Moody’s corporate bond yield average as most recently available. 5. A part of a policy or contract issued to a plan or program of an employer, association or other person to provide life, disability or annuity benefits to its employees, members or others, to the extent that the plan or program is self-funded or uninsured, including benefits payable by an employer, association or other person under any of the following: (a) A multiple employer welfare arrangement as defined in section 3(40) of the employee retirement income security act of 1974. (b) A minimum premium group insurance plan. (c) A stop-loss group insurance plan. (d) An administrative services only contract. 6. A part of a policy or contract to the extent that it provides for dividend or experience rating credits, voting rights or payment of any fees or allowances to any person, including the policy or contract owner, in connection with the service or administration of the policy or contract. 7. A policy or contract issued in this state by a member insurer at a time when it did not have a certificate of authority to issue the policy or contract in this state. 8. A part of a policy or contract to the extent that the assessments required by section 20-686 with respect to the policy or contract are preempted or prohibited by federal or state law. 9. 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, contract owner or policy owner, including: (a) Claims based on marketing materials. (b) 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. (c) Misrepresentations of or regarding policy or contract benefits. (d) Extra-contractual claims, including claims relating to bad faith in the payment of claims, punitive or exemplary damages or attorney fees and costs. (e) Claims for penalties or consequential or incidental damages. 10. A contractual agreement that establishes the member insurer’s obligations 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. 11. An unallocated annuity contract. 12. A part 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 insurer or insolvent insurer under this article, whichever is earlier. If a policy’s or contract’s interest or changes in value are credited less frequently than annually, for purposes of determining the values that have been credited and are not subject to forfeiture under this subsection, 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. 13. A policy or contract providing any hospital, medical, prescription drug or other health care benefits pursuant to 42 United States Code chapter 7, subchapter XVIII, part C or part D or 42 United States code chapter 7, subchapter XIX, or any applicable regulations. 14. Structured settlement annuity benefits to which a payee or beneficiary has transferred the payee’s or beneficiary’s rights in a structured settlement factoring transaction as defined in 26 United States code section 5891(c)(3)(A), regardless of whether the transaction occurred before or after that section became effective. 15. The exclusion from coverage referenced in paragraph 4 of this subsection does not apply to any portion of a policy or contract, including a rider, that provides long-term care or any other health insurance benefits. (Amended effective 12/31/2018)

Non-Resident Coverage

§20-682A(2)(b) Yes. Covers nonresidents if all of the following conditions are met: (i) The member insurer that issued the policy or contract is domiciled in this state. (ii) The state in which the person resides has a fund similar to the fund established under this article. (iii) The person is not eligible for coverage by a fund in any other state because the insurer or health care services organization was not licensed in that state at the time required by the applicable law. (Amended effective 12/31/2018)

Definition Of Premium

§ 20-681.12. “Premiums”: (a) Means amounts or considerations by whatever name called that are received on covered policies or con-tracts less returned premiums, considerations and deposits and less dividends and experience credits. (b) Does not include: (i) Amounts or consideration received for policies or contracts or for parts of policies or contracts for which coverage is not provided under section 20-682, subsection C, except that assessable premium shall not be reduced under section 20-682, subsection D, paragraph 4, relating to interest limitations, and section 20-682, subsection E, paragraph 2, relating to limitations with respect to one individual, one participant and one contract owner. (ii) Amounts in excess of five million dollars with respect to multiple nongroup policies of life insurance owned by one owner, regardless of the number of policies or contracts held by the owner. (Amended effective 9/12/13)

Interest Rate Adjustments

§ 20–682 D.4. Guaranty Association excludes from coverage: A part 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: (a) averaged over the period of four years before the date on which the member insurer becomes an impaired insurer or insolvent insurer under this article, whichever is earlier, exceeds the rate of interest determined by subtracting two percentage points from moody’s corporate bond yield average averaged for that same four-year period or for a lesser period if the policy or contract was issued less than four years before the member insurer becomes an impaired insurer or insolvent insurer under this article, whichever is earlier. (b) on and after the date on which the member insurer becomes an impaired insurer or insolvent insurer under this article, whichever is earlier, exceeds the rate of interest determined by subtracting three percentage points from moody’s corporate bond yield average as most recently available. (Added effective 9/12/13).

Tax Offsets

§20-692. Yes. Beginning in 1995 (see statute for pre-1995 guidance), member insurers may offset 20% of the assessment for the year of assessment, and 20% of the assessment per year for the succeeding four years. The total amount of the offset may not exceed 100% of the assessment.

Triggers

Discretionary Triggers

§20-685A. If a member insurer is an impaired insurer. (Amended effective 9/12/2013)

Mandatory Triggers

§20-685B. If a member insurer is an insolvent insurer. (Amended effective 9/12/2013)

Foreign Triggers

No separate provision. (Amended effective 9/12/2013)

“Impaired Insurer”

§20-681(8) “Impaired insurer” means a member insurer that is not an insolvent insurer and that is placed under an order of rehabilitation or conservation by a court of competent jurisdiction. Amended effective 9/12/13.

“Insolvent Insurer”

§20-681(9) “Insolvent insurer” means a member insurer that is placed under an order of liquidation with a finding of insolvency by a court of competent jurisdiction. Amended effective 9/12/13.

“Member Insurer”

§20-681(10) “Member insurer” means an insurer or health care services organization that holds a certificate of authority to transact in this state any kind of insurance or health care services organization business to which this article applies and includes an insurer or health care services organization whose license or certificate of authority in this state may have been suspended, revoked, not renewed or voluntarily withdrawn. Member insurer does not include: (a) A fraternal benefit society licensed under chapter 4, article 4 of this title. (b) A hospital, medical, dental or optometric service corporation licensed under chapter 4, article 3 of this title. (c) A prepaid dental plan organization licensed under chapter 4, article 7 of this title. (d) A mandatory state pooling plan. (e) A mutual assessment company or other person that operates on an assessment basis. (f) A reciprocal insurance exchange licensed under chapter 4, article 2 of this title. (g) An entity that is similar to any of the entities described in this paragraph. (Amended effective 12/31/18)

Alaska

Account Structure

§21.79.040(a) Two accounts: For purposes of administration and assessment, the association shall maintain the following accounts: (1) the health insurance account; and (2) the life insurance and annuity account, including the following subaccounts: (A) life insurance account; (B) annuity account that must include annuity contracts owned by a governmental retirement benefit plan, or its trustee, qualified under 26 U.S. C. 401, 26 U.S.C. 403(b), or 26 U.S.C. 457 (Internal Revenue Code), but that otherwise excludes unallocated annuities; and (C) unallocated annuity account that must exclude contracts owned by a governmental retirement benefit plan, or its trustee, qualified under 26 U.S. C. 401, 26 U.S.C. 403(b), or 26 U.S.C. 457 (Internal Revenue Code). (Amended effective 9/9/96; 9/4/00)

Advertising Prohibition

§ 21.79.160 “Prohibited advertisement of insurance sales; required notice” (a) A person, including a member insurer, agent, or affiliate of a member insurer, may 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, announcement, or statement, written or oral, that uses the existence of the association for the purpose of sales, solicitation, or inducement to purchase any form of insurance or other coverage covered by the association. However, this section does not apply to the association or any other entity that does not sell or solicit insurance, coverage by a hospital or medical service corporation, or coverage by a health maintenance organization. (Amended effective 07/01/18)

Assessments

Assessment Limits

§21.79.070(f). Except as provided in this subsection, the total of all assessments on a member insurer for each subaccount of the life and annuity account and for the health account may not in any one calendar year exceed two percent of the member insurer’s average annual premiums received in this state on policies or contracts covered by the account or subaccount during the three calendar years preceding the year in which the member insurer became an impaired or insolvent insurer. If two or more assessments are authorized in one calendar year with respect to member insurers that become impaired or insolvent in different calendar years, the average annual premiums for purposes of the aggregate assessment percentage limitation imposed under this subsection shall be limited to the highest of the average annual premiums during the preceding three calendar years for the applicable subaccount or account as calculated under this section. If the maximum assessment, together with the other assets of the association in an account, does not provide in any one year in either account an amount sufficient to carry out the responsibilities of the association, the necessary additional funds shall be assessed as soon as permitted by this chapter. (Amended effective 07/01/18)

Assessment Classes

§21.79.070(b). Two classes of assessments: (1) Class A for administrative and legal costs, other expenses and examinations; (2) Class B to carry out the powers and duties of the association with regard to an impaired or insolvent insurer.

Benefit Limits

§21.79.025. (a) The benefits for which the association may become liable may not 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; (2) with respect to any one life, regardless of the number of policies or contracts, (A) $300,000 in life insurance death benefits, but not more than $100,000 in net cash surrender and net cash withdrawal values for life insurance; (B) for health insurance benefits, (i) $100,000 for coverage not defined as disability income insurance, health benefit plans, or long-term care insurance, including any net cash surrender and net cash withdrawal values; (ii) $300,000 for disability income insurance as defined in AS 21.12.052 and $300,000 for long-term care insurance as defined in AS 21.53.200; (iii) $500,000 for health benefit plans; (C) $250,000 in the present value of annuity benefits, including net cash surrender and net cash withdrawal values; (3) with respect to either one contract owner provided coverage under AS 21.79.020(d)(2) or one plan sponsor whose plan owns directly or in trust one or more unallocated annuity contracts not included in (4) of this subsection, $5,000,000 in unallocated annuity contract benefits, irrespective of the number of contracts held by that contract owner or plan sponsor except that, in the case of one or more unallocated annuity contracts that are covered under this chapter and that are owned by a trust or other entity for the benefit of two or more plan sponsors, coverage shall be provided by the association if the largest interest in the trust or entity owning the contract is held by a plan sponsor whose principal place of business is in this state; however, the association is not liable to cover more than $5,000,000 in benefits, regardless of the number of policies and contracts held by the owner; (4) with respect to an individual participating in a governmental retirement benefit plan established under 26 U.S.C. 401, 26 U.S.C. 403(b), or 26 U.S.C. 457 and covered by an unallocated annuity contract, or to a beneficiary of the individual if the individual is deceased, in the aggregate, $250,000 in present-value annuity benefits, including net cash surrender and net cash withdrawal values; or (5) with respect to each payee of a structured settlement annuity, or beneficiary of the payee if the payee is deceased, $250,000 in present-value annuity benefits in the aggregate, including net cash surrender and net cash withdrawal values, if any. (b) The limitations imposed under this section are limitations on the benefits for which the association is obligated before taking into account either its subrogation and assignment rights or the extent to which those benefits could be provided out of the assets of an impaired or insolvent insurer attributable to covered policies. The costs of the association’s obligations under this chapter may be met by the use of assets attributable to covered policies or reimbursed to the association under its subrogation and assignment rights. (c) In providing coverage required under AS 21.79.060, the association may not be required to guarantee, assume, reissue, reinsure, or perform, or cause to be guaranteed, assumed, reissued, reinsured, or performed, the contractual obligations of an insolvent or impaired insurer under a covered policy or contract when the obligations do not materially affect the economic values or economic benefits of the covered policy or contract. (d) The association may not be required to cover more than (1) an aggregate of $300,000 in benefits with respect to any one life under (a)(2), (4), and (5) of this section, except that, with respect to benefits for health benefit plans under (a)(2)(B) of this section, the aggregate liability of the association may not exceed $500,000 for any one individual; or (2) $5,000,000 in benefits with respect to one owner of multiple nongroup 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, regardless of the number of policies and contracts held by the owner. (Amended effective 07/01/18)

Coverages

Covered Contracts

§21.79.020(b). This chapter applies to a person specified in (a) of this section for a policy or contract of direct, nongroup life insurance, health insurance, annuity, and supplemental policy or contract, to a certificate under a direct group life, health, annuity, or supplemental policy or contract, to a subscriber’s contract issued by a hospital or medical service corporation under AS 21.87, to a subscriber’s contract issued by a health maintenance organization under AS 21.86, and to an unallocated annuity contract issued by a member insurer, except as otherwise limited by this chapter. (Amended effective 07/01/18)

Non-Covered Contracts

§21.79.020(c). This chapter does not apply to (1) that part of a policy or contract that is not guaranteed by the member insurer; (2) that part of the risk borne by the policy or contract owner; (3) a policy or contract of reinsurance, unless an assumption certificate has been issued; (4) that part of a policy or contract, except for part of a policy or contract, including a rider, that provides long-term care or other health insurance benefits, 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, (A) averaged over the period of four years before the date on which the member insurer becomes an impaired or insolvent insurer under this chapter, whichever occurs first, exceeds the rate of interest determined by subtracting two percentage points from the published monthly average for that same four-year period or for a lesser period if the policy or contract was issued less than four years before the member insurer becomes an impaired or insolvent insurer under this chapter, whichever occurs first; and (B) on and after the date on which the member insurer becomes an impaired or insolvent insurer under this chapter, whichever occurs first, exceeds the rate of interest determined by subtracting three percentage points from the most recent published monthly average; (5) a portion of a policy or contract issued to a plan or program of an employer, association, or similar entity to provide life, health, or an annuity benefit to an employee, member, or other person, to the extent that the plan or program is self-funded or uninsured, including a benefit payable by the employer, association, or similar entity under (A) a multiple employer welfare arrangement as defined in 29 U.S.C. 1002 (Employee Retirement Income Security Act of 1974); (B) a minimum premium group insurance plan; (C) a stop-loss group insurance plan; or (D) an administrative services only contract; (6) that part of a policy or contract that provides a dividend or experience rating credit or voting rights, or provides that a fee or allowance be paid to a person, including the policy or contract owner, in connection with the service to or administration of the policy or contract; (7) 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; (8) a person who is a payee or beneficiary of a contract owner who is a resident of this state if the payee or beneficiary is provided coverage by the association of another state; (9) a person covered under (d) of this section if any coverage is provided by the association of another state to that person; (10) an unallocated annuity contract issued to or in connection with a benefit plan protected under the United States Pension Benefit Guaranty Corporation, regardless of whether the United States Pension Benefit Guaranty Corporation has become liable to make any payments with respect to the benefit plan; (11) that part of an unallocated annuity contract that is not issued to or in connection with a specific employee, union, or association of natural persons benefit plan or a government lottery; (12) that part of a policy or contract to the extent that assessments required by AS 21.79.070 with respect to the policy or contract are preempted by law; (13) 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, contract owner, or policy owner, including, without limitation, (A) a claim based on marketing materials; (B) a claim based on a side letter or other document that was issued by the member insurer without meeting applicable policy or contract form filing or approval requirements; (C) a misrepresentation of or regarding policy or contract benefits; (D) an extra contractual claim; or (E) a claim for penalties or consequential or incidental damages; (14) a contractual agreement that establishes the member insurer’s obligations 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; (15) that part of a policy or contract to the extent the part of the policy or contract 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 that 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 this chapter, 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 paragraph, the interest or change in value determined by using the procedures defined in the policy or contract shall 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; (16) a policy or contract providing a hospital, medical, prescription drug, or other health care benefit in accordance with 42 U.S.C. 1395w-21 — 1395w-154 or federal regulations adopted under those sections; (17) a person who acquires rights to receive payments through a structured settlement factoring transaction as defined in 26 U.S.C. 5891(c)(3)(A), regardless of whether the transaction occurred before, on, or after 26 U.S.C. 5891(c)(3)(A) became effective; or (18) structured settlement annuity benefits to which a payee or beneficiary has transferred the payee’s or beneficiary’s rights in a structured settlement factoring transaction as defined in 26 U.S.C. 5891(c)(3)(A), regardless of whether the transaction occurred before, on, or after 26 U.S.C. 5891(c)(3)(A) became effective. (Amended effective 07/01/18)

Non-Resident Coverage

§21.79.020(a) The Act covers nonresidents under the following conditions: (i) the member insurer that issued the policy or contract is domiciled in this state; (ii) the state in which the person resides has an association similar to the association created by this chapter; and (iii) the person is not eligible for coverage by an association in any other state due to the fact that the insurer, hospital or medical service corporation, or health maintenance organization was not licensed at the time specified in the guaranty association law of that state. (Amended effective 07/01/18)

Definition Of Premium

§ 21.79.900(18) “premium” means the amounts or considerations, by whichever name called, received on a covered policy or contract less a premium, consideration, and deposit returned, and less a dividend and experience credit; “premium” does not include (A) amounts or considerations charged for an assessment or an amount received for a policy or contract or for the portions of a policy or contract for which coverage is not provided under AS 21.79.020(b) and (c), except that assessable premium may not be reduced on account of AS 21.79.020(c)(4) relating to interest limitations and AS 21.79.025(a)(2) — (5), (b), and (d) relating to limitations with respect to one individual, one participant, and one policy or contract owner; (B) premiums in excess of $5,000,000 on an unallocated annuity contract not issued under a governmental retirement benefit plan or its trustee established under 26 U.S.C. 401, 26 U.S.C. 403(b), or 26 U.S.C. 457; or (C) with respect to multiple nongroup 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, premiums in excess of $5,000,000 with respect to those policies or contracts, regardless of the number of policies or contracts held by the owner; (Amended effective 07/01/18)

Interest Rate Adjustments

§21.79.020(c)(4). Guaranty Association excludes from coverage: that part 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, (A) averaged over the period of four years before the date on which the member insurer becomes an impaired or insolvent insurer under this chapter, whichever occurs first, exceeds the rate of interest determined by subtracting two percentage points from the published monthly average for that same four-year period or for a lesser period if the policy or contract was issued less than four years before the member insurer becomes an impaired or insolvent insurer under this chapter, whichever occurs first; and (B) on and after the date on which the member insurer becomes an impaired or insolvent insurer under this chapter, whichever occurs first, exceeds the rate of interest determined by subtracting three percentage points from the most recent published monthly average.

Tax Offsets

No provision.

Triggers

Discretionary Triggers

§21.79.060(a) If a member insurer is an impaired insurer. (Amended effective 07/01/18)

Mandatory Triggers

§21.79.060(b) If a member insurer is an insolvent insurer. (Amended effective 07/01/18)

Foreign Triggers

No separate provision. (Amended effective 07/01/18)

“Impaired Insurer”

§21.79.900(12). A member insurer that is not an insolvent insurer and that is placed under an order of rehabilitation or conservation by a court of competent jurisdiction. (Amended effective 07/01/18)

“Insolvent Insurer”

§21.79.900 (13). A member insurer that is placed under an order of liquidation by a court of competent jurisdiction with a finding of insolvency. (Amended effective 07/01/18)

“Member Insurer”

§21.79.900(14). An insurer licensed to transact insurance in the state, a hospital or medical service corporation licensed under AS 21.87, or a health maintenance organization licensed under AS 21.86, for which coverage is provided in AS 21.79.020 and includes an insurer, a hospital or medical service corporation licensed under AS 21.87, or a health maintenance organization licensed under AS 21.86, whose license or certificate of authority in this state may have been suspended, revoked, not renewed, or voluntarily withdrawn; “member insurer” does not include (A) a fraternal benefit society licensed under AS 21.84; (B) a mandatory state pooling plan; (C) a mutual assessment company or an entity that operates on an assessment basis; (D) an insurance exchange licensed under AS 21.75; (E) an organization that has a license or certificate limited to the issuance of charitable gift annuities; or (F) an entity similar to one described under (A) — (E) of this paragraph (Amended effective 07/01/18)

Alabama

Account Structure

§27-44-6. Three accounts: disability insurance account, life insurance account and annuity account.

Advertising Prohibition

No provision. § 27-44-19 entitled “Prohibited advertisement of chapter in insurance sales” was repealed in 1983.

Assessments

Assessment Limits

§27-44-9(e). One percent (1%) of premiums received during the calendar year preceding the assessment in state for policies covered by the account.

Assessment Classes

§27-44-9(b) There shall be two classes of assessments, as follows: (1) Class A assessments shall be authorized and called for the purpose of meeting administrative and legal costs and other expenses . Class A assessment may be authorized and called whether or not related to a particular impaired or insolvent insurer. (2) Class B assessments shall be authorized and called to the extent necessary to carry out the powers and duties of the association under Section 27–44–8 with regard to an impaired or insolvent insurer. (Amended effective 1/1/13)

Benefit Limits

§27-44-3(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 insurer is liable or would have been liable if it were not an impaired or insolvent insurer. “ (2) a. With respect to one life, regardless of the number of policies or contracts: “ 1. 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 for life in-surance. “ 2. In disability insurance benefits: “ (i) One hundred thousand dollars ($100,000) for coverages not defined as disability income insurance or basic hospital, medical, and surgical insurance or major medical insurance or long-term care insurance including any net cash surrender and net cash withdrawal values. “ (ii) Three hundred thousand dollars ($300,000) for disability income insurance and three hundred thousand dollars ($300,000) for long-term care insurance. “ (iii) Five hundred thousand dollars ($500,000) for basic hospital, medical, and surgical in-surance or major medical insurance. “ 3. Two hundred fifty thousand dollars ($250,000) in the present value of annuity benefits, in-cluding net cash surrender and net cash withdrawal values. “ b. With respect to each payee of a structured settlement annuity (or beneficiary or beneficiaries if the payee is deceased), two hundred fifty thousand dollars ($250,000) in present value annuity benefits, in the aggregate, including net cash surrender and net cash withdrawal values, if any. “ c. However, in no event shall the association be obligated to cover more than either of the following: “ 1. An aggregate of three hundred thousand dollars ($300,000) in benefits with respect to any one life under paragraphs a. and b. except with respect to benefits for basic hospital, medical, and surgical insur-ance and major medical insurance under paragraph a.2., in which case the aggregate liability of the association shall not exceed five hundred thousand dollars ($500,000) with respect to any one individual. “ 2. With respect to one owner of multiple non-group policies of life insurance, whether the policy 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) in benefits, regardless of the number of policies and contracts held by the owner. “ d. The limitations set forth in this subsection are limitations on the benefits for which the association is obligated before taking into account either its subrogation and assignment rights or the extent to which those benefits could be provided out of the assets of the impaired or insolvent insurer attributable to covered policies. The costs of the association’s obligations under this chapter may be met by the use of assets attributable to covered policies or reimbursed to the association pursuant to its subrogation and assignment rights. (Amended effective 1/1/13)

Coverages

Covered Contracts

§27-44-3(b)(1) This chapter shall provide coverage to the persons specified in subsection (a) for direct, non-group life, disability, or annuity policies or contracts, and for certificates under direct group policies and contracts, and for supplemental contracts to any of these, in each case issued by member insurers, except as limited by this chapter. Annuity contracts and certificates under group annuity contracts include allocated funding agree-ments, structured settlement annuities, and any immediate or deferred annuity contracts. (Amended effective 1/1/13)

Non-Covered Contracts

§27-44-3(b)(2) This chapter shall not provide coverage for any of the following: “ 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 years prior to the date on which the member insurer be-comes an impaired or insolvent insurer under this chapter, whichever is earlier, exceeds the rate of interest determined by subtracting two 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 years before the member insurer becomes an impaired or insolvent insurer under this chapter, whichever is earlier. “ 2. On and after the date on which the member insurer becomes an impaired or insolvent insurer under this chapter, whichever is earlier, exceeds the rate of interest determined by subtracting three 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, disability, 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 any of the following: “ 1. A multiple employer welfare arrangement as defined in Section 3(40) of the Employee Re-tirement Income Security Act of 1974 (29 U.S.C. Section 1002(40)). “ 2. A minimum premium group insurance plan. “ 3. A stop-loss group insurance plan. “ 4. An administrative services only contract. “ e. A portion of a policy or contract to the extent that it provides for any of the following: “ 1. Dividends or experience rating credits. “ 2. Voting rights. “ 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 27–44–9 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 insurer to the contract owner 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 insurer without meeting applicable policy form filing or approval requirements. “ 3. Misrepresentations of or regarding policy benefits. “ 4. Extra-contractual claims, including, without limitation, claims relating to bad faith in the payment of claims, punitive or exemplary damages or attorneys’ fees and costs. “ 5. A claim for penalties or consequential or incidental damages. “ i. A contractual agreement that establishes the member insurer’s obligations 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 this chapter, 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 subsection, 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. “ l. A policy or contract providing any hospital, medical, prescription drug, or other health care ben-efits 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 and D) or any regulations issued pursuant thereto. (Amended effective 1/1/13)

Non-Resident Coverage

§27-44-3(a)(2). The Act covers nonresidents under all the following conditions: 1. The insurer that issued the policies or contracts is domiciled in this state. 2. The states in which the persons reside have associations similar to the association created by this chapter. 3. The persons are not eligible for coverage by an association in any other state due to the fact the insurer was not licensed in the state at the time specified in the state’s guaranty association law. (Amended effective 1/1/13)

Definition Of Premium

§ 27–44–5(15) PREMIUMS. Direct gross insurance premiums and annuity considerations received on covered policies or contracts, less returned premiums and considerations thereon and dividends paid or credited to policyholders on such direct business. “Premiums” do not include premiums and considerations on contracts between insurers and reinsurers. (Amended effective 1/1/13)

Interest Rate Adjustments

§ 27–44–3 c.1. Guaranty Association excludes from coverage: 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 years prior to the date on which the member insurer becomes an impaired or insolvent insurer under this chapter, whichever is earlier, exceeds the rate of interest determined by subtracting two 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 years before the member insurer becomes an impaired or insolvent insurer under this chapter, whichever is earlier. 2. On and after the date on which the member insurer becomes an impaired or insolvent insurer under this chapter, whichever is earlier, exceeds the rate of interest determined by subtracting three percentage points from Moody’s Corporate Bond Yield Average as most recently available. (Added effective 1/1/13).

Tax Offsets

§27-44-13(a). Yes. Up to 20% of assessment amount may be offset for 5 years after payment. Covers all assessments but administrative expenses.

Triggers

Discretionary Triggers

§27-44-8(a) If a member insurer is an impaired insurer. (Amended effective 1/1/13)

Mandatory Triggers

§27-44-8(b). If a member insurer is an insolvent insurer. (Amended effective 1/1/13)

Foreign Triggers

No separate provision. (Amended effective 1/1/13)

“Impaired Insurer”

§27-44-5(9) 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. (Amended effective 1/1/13)

“Insolvent Insurer”

§27-44-5(10) INSOLVENT INSURER. 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. (Amended effective 1/1/13)

“Member Insurer”

§27-44-5(11) MEMBER INSURER. An insurer licensed or that holds a certificate of authority to transact in this state any kind of insurance to for which coverage is provided under Section 27–44–3, and includes an insurer whose license or certificate of authority in this state may have been suspended, revoked, not renewed, or voluntarily withdrawn, but does not include any of the following: a. A hospital or medical service organization, whether profit or non-profit. b. A health care services plan. c. A cooperative hospital association. d. A health maintenance organization. e. A fraternal benefit society. f. A mandatory state pooling plan. g. A mutual assessment company or other person that operates on an assessment basis. h. An insurance exchange. i. An organization that has a certificate or license limited to the issuance of charitable gift annuities. j. An entity substantially similar to any of the above. (Amended effective 1/1/13).

These “Law Summaries” are provided to NOLHGA’s members and other authorized NOLHGA Website users solely for general reference purposes. This compilation of statutory provisions, although believed to be correct as of the date indicated, is comprised of the most current statutory materials available on-line to NOLHGA and is not intended as legal advice; no liability is assumed in connection with its use. Users should seek advice from a qualified attorney and should not rely on this compilation when considering any questions relating to guaranty association coverage or any other related legal matter. For further information regarding the intended distribution of this information, or any other information appearing on the NOLHGA Website, please see the “Terms of Use” on NOLHGA’s home page.

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