Georgia Life & Health Insurance Guaranty Association

Contact Information

Georgia Life & Health Insurance Guaranty Association


3700 Crestwood Parkway, NW
Duluth, GA 30096
(p) 770.621.9835 (f) 770.938.3296
Association Web site: http://www.gaiga.org
State Insurance Department: https://www.oci.ga.gov/

Law Summaries Report

[ Current as of January 01, 2020 ] ]

Coverages

Covered Contracts

§ 33-38-2(a). This chapter shall provide coverage to the persons specified in subsection (b) of this Code section for direct, nongroup life, health, or annuity policies or contracts, 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, allocated funding agreements, structured settlement annuities, annuities issued to or in connection with government lotteries, and any immediate or deferred annuity contracts.(Amended effective 7/1/12)

Non-Covered Contracts

§ 33-38-2(c)This chapter shall not provide coverage to: (1) That portion or part of a policy or contract not guaranteed by an 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 policy, contract, certificate, or subscriber agreement issued by a nonprofit hospital service corporation referred to in Chapter 19 of this title, a health care plan referred to in Chapter 20 of this title, a nonprofit medical service corporation referred to in Chapter 18 of this title, a prepaid legal services plan, as defined in Code Section 33–35–2, and a health maintenance organization, as defined in Code Section 33–21–1; (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 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; (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, or any regulations issued pursuant thereto. (Amended effective 7/1/12)

Non-Resident Coverage

§ 33-38-2(b)(1)(B)(ii). Yes. Covers nonresidents when: the 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 article; and such 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 7/1/12)

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 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) In health insurance benefits, $300,000.00 for disability insurance; $300,000.00 for long-term care insurance; $300,000.00 for health insurance other than disability insurance as referenced above, long-term care insurance as referenced above, and basic hospital, medical, and surgical insurance or major medical insurance as referenced below, including any net cash surrender and net cash withdrawal values; and $500,000.00 for basic hospital, medical, and surgical insurance or major medical insurance; 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 sur-render 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 subparagraph (B) of this paragraph except with respect to benefits for basic hospital, medical, and surgical insurance and major medical insurance under division (ii) of this subparagraph, in which case the aggregate liability of the associ-ation 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 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 an-nuity 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, cov-erage 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 con-tracts; and (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. (Amended effective 7/1/12)

Triggers

Discretionary Triggers

§ 33-38-7 (a)(1). If a member insurer is an impaired insurer. (Amended effective 7/1/12)

Mandatory Triggers

§ 33-38-7 (a)(2). 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"

§ 33-38-4(11) ‘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. (Amended effective 7/1/12)

"Insolvent Insurer"

§ 33-38-4(12) ‘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. (Amended effective 7/1/12)

"Member Insurer"

§ 33-38-4(13) ‘Member insurer’ means any insurer which is licensed or which holds a certificate of authority to transact in this state any kind of insurance for which coverage is provided under Code Section 33–38–2 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: (A) A nonprofit hospital or medical service corporation , whether profit or nonprofit; (B) A health care corporation; (C) A health maintenance organization; (D) A fraternal benefit society; (E) A mandatory state pooling plan; (F) A mutual assessment company or any entity that operates on an assessment basis; (G) An insurance exchange; or (H) 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 (I) Any entity similar to those described in subparagraphs (A) through (H) of this paragraph. (Amended effective 7/1/12)

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. (Amended effective 7/1/12)

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)

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; (Amended effective 7/1/12)

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.

Definition of Premium

§ 33-38-4(18) ‘Premiums’ means direct gross insurance premiums and annuity amounts or considerations, by whatever name called, received on covered policies or contracts, less return returned premiums, and considerations and deposits thereon and less dividends paid or credited to policyholders on such direct business and experience credits. The term ‘premiums' does shall not include premiums and: (A) Amounts or considerations on received for policies or contracts between insurers and reinsurers. 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 contract owner; The term ‘premiums' does not include any premiums (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 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. (Amended effective 7/1/12)

Advertising Prohibition

§ 33-38-21 “References to the association in advertisements for insurance” (a) No person, including an insurer or 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 statement which uses the existence of the association for the purposes of sales, solicitation, or inducement to purchase any form of insurance covered by this chapter. This Code section shall not apply to the association or any other entity which does not sell or solicit insurance. (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. (Amended effective 7/1/12)

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