Maryland Life & Health Insurance Guaranty Corporation

Contact Information

Maryland Life & Health Insurance Guaranty Corporation
6210 Guardian Gateway, Suite 195 APG
Aberdeen, MD 21005
(p) 410.248.0407 (f) 410.248.0409
Association Web site: http://www.mdlifega.org
State Insurance Department: http://www.mdinsurance.state.md.us/

Law Summaries Report

[ Current as of January 01, 2020 ] ]

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, health, annuity, 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. (Amended effective 10/1/12)

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 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) 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 insurer to the 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 insurer without meeting applicable policy form filing or approval requirements; 3. misrepresentations of or regarding policy 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; or (xiii) 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 United States Code, commonly known as Medicare Part C & D, or any regulations adopted under it. (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. (Amended effective 10/1/12)

Non-Resident Coverage

§ 9-403(b)(1)(ii). Yes. Nonresidents will be covered if: 1. the 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 was not licensed in that state at the time specified in that state's guaranty corporation or association law. (Amended effective 10/1/12)

Benefit Limits

§ 9-407(j)(3) Benefits for which the Corporation may become liable may not exceed the lesser of: (i) the contractual obligations for which the 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. in health insurance benefits: A. $500,000 for basic hospital, medical, and surgical insurance or major medical insurance provided by health benefit plans, as defined in § 15–1301 of this article; 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 basic hospital, medical, and surgical insurance, or major medical insurance, or disability insurance 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 in basic hospital, medical, and surgical insurance or major medical insurance under paragraph (3)(ii)2A of this subsection. (Amended effective 10/1/12)

Triggers

Discretionary Triggers

§ 9-407(a). If a member insurer is an impaired insurer. (Amended effective 10/1/12)

Mandatory Triggers

§ 9-407(b). If a member insurer is an insolvent insurer. (Amended effective 10/1/12)

Foreign Triggers

No separate provision. (Amended effective 10/1/12)

"Impaired Insurer"

§9-401(g) “Impaired insurer” means an 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(i) “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 that writes a kind of insurance to which this subtitle applies. (2) “Member insurer” includes an insurer 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 health maintenance organization; (ii) a fraternal benefit society; (iii) a mandatory State pooling plan; (iv) a mutual assessment company or other entity that operates on an assessment basis; or (v) an insurance exchange. (Amended effective 10/1/12)

Account Structure

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

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: ClassA 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.

Interest Rate Adjustments

§ 59-403(b)(2)(iii). Guaranty Association 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.

Definition of Premium

§ 9-401 (l)(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.

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.

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National Organization of Life & Health Insurance Guaranty Associations
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Phone Number: 703.481.5206