Florida Life & Health Insurance Guaranty Association

Covered Contracts

§631.713(1). This part shall apply to direct life insurance policies, health insurance policies, annuity contracts, and supplemental contracts with or without life contingencies issued by persons licensed to transact such insurance in this state.

Non-Covered Contracts

§631.713(3) This part does not apply to: (a) That portion or part of a variable life insurance contract or variable annuity contract not guaranteed by an insurer. (b) That portion or part of any policy or contract under which the risk is borne by the policyholder. (c) Any policy or contract or part thereof assumed by the impaired or insolvent insurer under a contract of reinsurance, other than reinsurance for which assumption certificates have been issued. (d) Fraternal benefit societies as defined in s. 632.601. (e) Health maintenance organizations, except for assessments levied pursuant to ss. 631.715(2)(a)1., 631.718(3)(b), and 631.819(2)(c) for long-term care insurer impairments or insolvencies. (f) Dental service plan insurance. (g) Pharmaceutical service plan insurance. (h) Optometric service plan insurance. (i) Ambulance service association insurance. (j) Preneed funeral merchandise or service contract insurance. (k) Prepaid health clinic insurance. (l) Any annuity contract or group annuity contract that is not issued to and owned by an individual, except to the extent of any annuity benefits: 1. Guaranteed directly and not through an intermediary to an individual by an insurer under such contract or certificate; 2. Under an annuity issued by an insurer under 26 U.S.C. s. 408(b); or 3. Under an annuity issued by an insurer and held by a custodian or trustee in accordance with 26 U.S.C. s. 408(a). This paragraph applies to every insolvency regardless of its date of inception, and an assessment base may not include premiums for such excluded products. (m) Any federal employees’ group policy or contract that, under 5 U.S.C. s. 8909(f), is prohibited from being subject to an assessment under s. 631.718. (n) Except as provided in this paragraph, a portion of a policy or contract, to the extent that the rate of interest on which the policy or contract 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 immediately preceding the date on which the member insurer becomes an impaired or insolvent insurer under this part, whichever is earlier, exceeds the rate of interest determined by subtracting 2 percentage points from Moody’s Corporate Bond Yield Average averaged for that same 4-year period or for such lesser period if the policy or contract was issued less than 4 years before the member insurer becomes an impaired or insolvent insurer under this part, whichever is earlier; and 2. On and after the date on which the member insurer becomes an impaired or insolvent insurer under this part, whichever is earlier, exceeds the rate of interest determined by subtracting 3 percentage points from the most current version of Moody’s Corporate Bond Yield Average. This paragraph does not apply to any portion of a policy or contract, including a rider, which provides long-term care or any other health insurance benefit. (o) A portion of a policy or contract to the extent the policy or contract 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 has 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 this part. However, if the interest or change in value is credited less frequently than annually as determined by using the procedures defined in the policy or contract, interest or change in value shall be credited by using the procedure defined in the policy or contract as if the contractual date of crediting interest or changing values was the date of impairment or insolvency, whichever is earlier, and shall not be subject to forfeiture. (p) A policy or contract providing any hospital, medical, prescription drug, or other health care benefits pursuant to Title XVIII (Medicare), Title XIX (Medicaid), or Title XXI (the Children’s Health Insurance Program) of the Social Security Act or any regulations promulgated thereunder. (q) Structured settlement annuity benefits to which a payee, or a beneficiary if the payee is deceased, has transferred his or her rights in a structured settlement factoring transaction, as that term is defined in 26 U.S.C. s. 5891(c)(3)(A).

Non-Resident Coverage

§631.713(2)(b)2. Yes. Covers residents of other states, but only if: a. The insurers which issued such policies or contracts are domiciled in this state; b. Such insurers were not licensed in the states in which such persons reside at the time specified in a state’s guaranty association law as necessary for coverage by that state’s association; c. Such other states have associations similar to the association created by this part; and d. Such persons are not eligible for coverage by such associations.

§631.717(12) The association’s liability for the contractual obligations of the insolvent insurer must be as great as, but no greater than, the contractual obligations of the insurer in the absence of such insolvency, unless such obligations are reduced as permitted by subsection (4), but the aggregate liability of the association with respect to one life shall not exceed the following: (a) For life insurance, $100,000 in net cash surrender and net cash withdrawal values. (b) For deferred annuity contracts, $250,000 in net cash surrender and net cash withdrawal values. (c) For all other benefits, including in long-term care policies, $300,000, including cash values, except as provided in paragraph (d). (d) Effective January 1, 2020, for basic hospital expense health insurance policies, basic medical-surgical health insurance policies, or major medical expense health insurance policies, but not including long-term care policies, $500,000. In no event is the association liable for any penalties or interest.

Discretionary Triggers

§631.717(1). When domestic insurer is impaired.

Mandatory Triggers

§631.717(2). If a domestic insurer is insolvent. §631.717(3). If a foreign or alien insurer is an insolvent insurer. However, this subsection does not apply when the department has determined that the foreign or alien insurer's domiciliary jurisdiction or state of entry provides, by statute, protection substantially similar to that provided by this part for residents of this state.

Foreign Triggers

See Mandatory Triggers.

"Impaired Insurer"

§631.714(5) A member insurer deemed by the department to be potentially unable to fulfill its contractual obligations and not an insolvent insurer.

"Insolvent Insurer"

§631.714(6). (6) “Insolvent insurer” means a member insurer authorized to transact insurance in this state, either at the time the policy was issued or when the insured event occurred, and against which an order of liquidation with a finding of insolvency has been entered by a court of competent jurisdiction. Amended effective 7.1.2010.

"Member Insurer"

§631.714(7). Any person licensed to transact in Florida any kind of insurance as set out in §631.713.

§631.715(2)(a).Three accounts :health insurance; life insurance; and annuity.

Assessment Limits

§631.718(5)(a) 1. The total of all assessments upon a member insurer for each account may not in any one calendar year exceed 1 percent of the sum of the insurer’s premiums written in this state regarding business covered by the account received during the 3 calendar years preceding the year in which the assessment is made, divided by three. If premium information for the 3-year period is not reasonably available for each member insurer, the association may use any reasonably available premium information. 2. For long-term care insurer impairments and insolvencies only, the total assessments upon a member insurer or member health maintenance organization of the Florida Health Maintenance Organization Consumer Assistance Plan may not, in any one calendar year, exceed 0.5 percent of the sum of the member insurer’s or member health maintenance organization’s premiums written in this state regarding business covered by the account received during the calendar year preceding the year in which the assessment is made. If premium information is not reasonably available for each member insurer or member health maintenance organization of the Florida Health Maintenance Organization Consumer Assistance Plan, the association or the Florida Health Maintenance Organization Consumer Assistance Plan may use any reasonably available premium information. (b) The provisions of this subsection apply to any assessments made on or after October 1, 1995, without regard to the date of the impairment or insolvency.

Assessment Classes

§631.718(2). There shall be two classes of assessments, as follows: (a) Class A assessments shall be made by the board of directors for the purpose of meeting administrative costs and other general expenses and for examinations conducted under the authority of s. 631.723(3) which are not related to a particular impaired or insolvent insurer. (b) Class B assessments shall be made by the board of directors for the purpose of carrying out the powers and duties of the association under s. 631.717 relating to an impaired or insolvent domestic, foreign, or alien insurer.

§631.713(3)(n) Except as provided in this paragraph, a portion of a policy or contract, to the extent that the rate of interest on which the policy or contract 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 immediately preceding the date on which the member insurer becomes an impaired or insolvent insurer under this part, whichever is earlier, exceeds the rate of interest determined by subtracting 2 percentage points from Moody’s Corporate Bond Yield Average averaged for that same 4-year period or for such lesser period if the policy or contract was issued less than 4 years before the member insurer becomes an impaired or insolvent insurer under this part, whichever is earlier; and 2. On and after the date on which the member insurer becomes an impaired or insolvent insurer under this part, whichever is earlier, exceeds the rate of interest determined by subtracting 3 percentage points from the most current version of Moody’s Corporate Bond Yield Average. This paragraph does not apply to any portion of a policy or contract, including a rider, which provides long-term care or any other health insurance benefit.

§631.72. For assessments levied before Jan. 1, 1997 member insurers may offset 0.1% of the assessment, less any refunds, for each year following the year in which the assessment was paid until the total of all offsets claimed for a given year's assessment equals the amount of the assessment paid in that year. For assessments levied or paid after Dec. 31, 1996, member insurers may offset 5% of the amount of the assessment, less any refunds, for 20 years following the year the assessment was paid. Member insurers may not offset both premium taxes and corporate income taxes for the same assessment amount. Tax returns covering tax year 1997 will be the first on which member insurers may claim a credit. (Eff. 10/1/96)

§ 631.714 (8) “Premium” means any direct gross insurance premium and any annuity consideration written on covered policies, less return premium and consideration thereon and dividends paid or credited to policyholders on such direct business. “Premium” does not include premium and consideration on contracts between insurers and reinsurers.

§ 631.735 “Prohibited advertisement of Florida Life and Health Insurance Guaranty Association Act in sale of insurance” A person may not 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 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 Florida Life and Health Insurance Guaranty Association Act. However, this section does not apply to the Florida Life and Health Insurance Guaranty Association or any other entity that does not sell or solicit insurance. This section also does not prohibit the furnishing of written information that is in a form prepared by the association, that summarizes the claim, cash value, and annuity cash value limits of the association, upon request of the policyholder or applicant for insurance.