Florida 2-15 Life, Health and Variable Annuity AgentFlorida Laws and Regulations Common to Life and Health InsuranceMedium
A Florida-domiciled insurer becomes insolvent and is unable to pay its claims. Which entity is responsible for paying the covered claims of Florida residents, subject to certain limits, to minimize financial loss?
- AThe Florida Life and Health Insurance Guaranty Association (FLAHIGA)
- BThe National Organization of Life & Health Guaranty Associations (NOLHGA)
- CThe Florida Office of Insurance Regulation (OIR)
- DThe Department of Financial Services (DFS)
Show answer & explanationAnswer & explanation
Correct answer: A. The Florida Life and Health Insurance Guaranty Association (FLAHIGA)
The Florida Life and Health Insurance Guaranty Association (FLAHIGA) is the entity responsible for protecting Florida residents who are policyholders of an insolvent life or health insurer domiciled in Florida. It pays covered claims up to statutory limits, funded by assessments on other solvent insurers.
Why the other options are wrong
- B. NOLHGA is a national association that coordinates state guaranty associations but does not directly pay claims to policyholders.
- C. The OIR regulates insurers but does not pay claims for insolvent ones.
- D. The DFS licenses agents and oversees market conduct but is not the entity that pays claims in an insolvency.
Guaranty Association
A state-created entity that protects policyholders in the event of an insurer's insolvency by paying covered claims up to certain limits.
- Funded by assessments on solvent insurers.
- Not an agency of the state or federal government.
- Exists to minimize financial loss to policyholders.
Memory trick: Guaranty Association: Your safety net, financially set.