Pennsylvania Life & Health Insurance Guaranty Association

Contact Information

Pennsylvania Life & Health Insurance Guaranty Association
Radnor Station Building No. 2, Suite 218
290 King of Prussia Road
Radnor, PA 19087
(p) 610.975.0572 (f) 610.975.9348
Association Web site: http://www.palifega.org
State Insurance Department: https://www.insurance.pa.gov

Law Summaries Report

[ Current as of January 01, 2020 ] ]

Coverages

Covered Contracts

40 PS §991.1703(b)(1). Direct non group life, health, annuity and supplemental policies or contracts, for certificates under direct group policies and contracts, and unallocated annuity contracts issued by member insurers. 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

40 PS §991.1703(b)(2). Any portion of a policy or contract not guaranteed by the 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; a certificate, contract or subscriber agreement issued by an excluded organization; 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.

Non-Resident Coverage

40 PS §991.1703(a)(2)(ii). Yes.Covers nonresidents under the following conditions: (1) the insurers which issued such policies or contractsaredomiciledinthe ommonwealth;(2) such insurers never held a license or certificate of authority in the states in which such persons reside; (3) thesestateshave associations similarto the association created by this article; and (4) these persons are not eligible for coverage by those associations.

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 in 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) Three hundred thousand ($300,000) dollars in health insurance benefits, including any net cash surrender and net cash withdrawal values. (III) Three hundred thousand ($300,000) dollars in annuity benefits, including one hundred thousand ($100,000) dollars in net cash surrender and net cash withdrawal values. (IV) Three hundred thousand ($300,000) dollars in long-term care insurance benefits, as defined under section 1103, including any 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, three hundred thousand ($300,000) dollars in annuity benefits, including one hundred thousand ($100,000) dollars in net cash surrender and net cash withdrawal values. (C) With respect to any one contract holder covered by any unallocated annuity contract not included in clause (B), five million ($5,000,000) dollars in benefits, irrespective of the number of such contracts held by that contract holder. Amended effective 7.17.2007.

Triggers

Discretionary Triggers

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

Mandatory Triggers

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

Foreign Triggers

See Mandatory Triggers.

"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 licensed or which holds a certificate of authority to transact in this Commonwealth any kind of insurance for which coverage is provided under section 1703 and includes any insurer 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 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) Any entity similar to any of the above.

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. (iii) Unallocated annuity account which shall include contracts qualified under section 403(b) of the Internal Revenue Code of 1986. (2) The health insurance account.

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 made 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.

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: (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 the 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 (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 (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 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 tax liability for the year it ceases doing business. (b) The proportionate part of an assessment which may be offset against a member company’s premium tax liability to the Commonwealth shall be determined according to a fraction of which the denominator is the total premiums received by the company 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 of life or health and accident insurance in which the premium rates are guaranteed during the continuance of the respective policies without a right exercisable by the company to increase said premium rates. (c) 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 taxes as provided in this section and are not then needed for the purposes of this act, shall be paid by such 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. (d) No offset against premium 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.

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 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.).

Advertising Prohibition

40 PS § 991.1717 “Prohibited advertisement or Insurance Guaranty Association Act in insurance sales” (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 association 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 association or any other entity which does not sell or solicit insurance.

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