Idaho Life & Health Insurance Guaranty Association

Contact Information

Idaho Life & Health Insurance Guaranty Association
PO Box 441
Star, ID 83669-0441
(p) 208.378.9510 (f) not available
Association Web site: http://www.idlifega.org
State Insurance Department: http://www.doi.idaho.gov/

Law Summaries Report

[ Current as of January 01, 2020 ] ]

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.

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;

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.

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.

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.

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.

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.

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.

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