The National Association of Insurance Commissioners (NAIC) amended its Life and Health Guaranty Association Model Act at an executive session meeting last week.
The act is designed to protect insurance policyholders against failure in the performance of contractual obligations.
“These model act amendments reflect our continued commitment to protecting policyholders from loss due to insolvency,” NAIC President and Wisconsin Insurance Commissioner Ted Nickel said. “State insurance regulators acted quickly to identify and address issues potentially affecting consumers should there be any future health or long-term care solvency issues, underscoring our commitment to supporting a healthy state-based guaranty association system.”
The amendments address a number of areas, including issues arising out of long-term care insurance (LTCI) insolvencies. The amendment would expand the assessment base for LTCI insolvencies to include both the life and annuity account and the health account. Also, the amendments focus on more equitably allocating the assessments for LTCI insolvencies. They currently fall on member guaranty association insurers that write lines–including LTCI–that are considered health insurance coverage in insolvency.
In addition, it would add health maintenance organizations (HMOs) as members of the guaranty association to provide coverage for HMO insolvencies similar to all other health insurers.
The changes went through NAIC’s Financial Condition (E) Committee at the NAIC Fall 2017 National Meeting and the Receivership and Insolvency (E) Task Force and the Receivership Model Law (E) Working Group during a joint session on Nov. 29.
Throughout the process, feedback was considered from regulators as well as industry and consumer representatives.