Louisiana Life & Health Insurance Guaranty Association

Covered Contracts

LSA-R.S. 22:2083.B(1). This Part shall provide coverage to the persons specified in Subsection A of this Section for policies or contracts of direct, non-group life insurance, health insurance including, for purposes of this Part, health maintenance organization subscriber contracts and certificates, or annuities, for certificates under direct group policies and contracts for supplemental contracts to any of these, and for unallocated annuity contracts, in each case issued by member insurers, except as limited by this Part.

Non-Covered Contracts

LSA-R.S. 22:2083.B(2). Except as otherwise provided in Paragraph (3) of this Subsection, this Part shall not provide coverage for any of the following: (a) Any portion of a policy or contract not guaranteed by the member insurer, or under which the risk is borne by the policy or contract holder. (b) Any policy or contract of reinsurance, unless assumption certificates have been issued. (c) Any portion 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: (i) Averaged over the period of four years prior to 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 two percentage points from Moody’s Corporate Bond Yield Average averaged for that same four-year period or for such lesser period if the policy or contract was issued less than four years before the member insurer becomes an impaired or insolvent insurer under this Part, whichever is earlier. (ii) 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 three percentage points from Moody’s Corporate Bond Yield Average as most recently available. (d) Any 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 such plan or program is self-funded or uninsured, including but not limited to benefits payable by an employer, association, or similar entity under: (i) A Multiple Employer Welfare Arrangement as defined in 29 U.S.C. § 1002(40) (the Employee Retirement Income Security Act of 1974) as amended. (ii) A minimum premium group insurance plan. (iii) A stop-loss group insurance plan. (iv) An administrative services only contract. (e) Any portion of a policy or contract to the extent that it provides dividends, premium refunds, or experience rating credits, or provides that any fees or allowances be paid to any person, including the policy or contract holder, in connection with the service to or administration of such policy or contract. (f) Any policy or contract issued in this state 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 state. (g) Any unallocated annuity contract except unallocated annuity contracts and defined contribution government plans qualified under Section 403(b) of the United States Internal Revenue Code (26 U.S.C. § 403(b)). (h) An obligation that does not arise under the express written terms of the policy or contract issued by the member insurer to the enrollee, certificate holder, contract owner, or policy owner, including, without limitations, any of the following: (i) Claims based upon marketing materials. (ii) Claims based on side letters, riders, or other documents that were issued by the member insurer without meeting applicable policy or contract form filing or approval requirements. (iii) Misrepresentations of or regarding policy or contract benefits. (iv) Extra-contractual claims. (v) A claim for penalties or consequential or incidental damages. (i) A policy or contract providing any hospital, medical, prescription drug, or other healthcare benefits pursuant to Part A, Part B, Part C, or Part D of Subchapter XVIII, Chapter 7 of Title 42 of the United States Code, commonly referred to as “Medicare Part A coverage”, “Medicare Part B coverage”, “Medicare Part C coverage”, and “Medicare Part D coverage”, or Subchapter XIX of Chapter 7 of Title 42 of the United States Code, commonly referred to as “Medicaid”, and any regulations issued pursuant to those parts or subchapters. (j) A portion of a policy or contract to the extent 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 or insolvent insurer under this Part, whichever is earlier. If a policy’s or contract’s interest or changes in value are credited less frequently than annually, then for purposes of determining the values that have been credited and are not subject to forfeiture under this Paragraph, the interest or change in value determined by using the procedures defined in the policy or contract shall be credited 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. (k) Structured settlement annuity benefits to which a payee or beneficiary has transferred his rights in a “structured settlement factoring transaction” as defined in 26 U.S.C. 5891(c)(3)(A), regardless of when the transaction occurred.

Non-Resident Coverage

LSA-R.S. 22:2083.A(2)(b) Yes. Covers nonresidents but only if all of the following conditions are satisfied (i) The member insurer which issued such policy or contract is domiciled in this state. (ii) The member insurer has never held a license or certificate of authority in the state in which such person resides. (iii) The state has an association similar to the association created by this Part. (iv) The person is not eligible for coverage by such association.

LSA-R.S. 22:2083.C. The benefits for which the association shall become liable shall in no event exceed the lesser of the following: (1) The contractual obligations for which the member insurer is liable or would have been liable if it were not an impaired or insolvent insurer. (2) With respect to any one life, regardless of the number of policies or contracts: (a) Three hundred thousand dollars in life insurance death benefits, but not more than one hundred thousand dollars in net cash surrender and net cash withdrawal values for life insurance. (b) Five hundred thousand dollars in health insurance benefits. (c) Two hundred fifty thousand dollars in the present value of annuity benefits, including net cash surrender and net cash withdrawal values. D. However, in no event shall the association be liable to expend more than five hundred thousand dollars in the aggregate with respect to any one individual under Subsection C of this Section.

Discretionary Triggers

LSA-R.S. 22:2087.A. If a member insurer is an impaired insurer. (Amended effective 8/1/2014)

Mandatory Triggers

LSA-R.S. 22:2087.B. If a member insurer is an insolvent insurer. (Amended effective 8/1/2014)

Foreign Triggers

No separate provision. (Amended effective 8/1/2014)

"Impaired Insurer"

LSA-R.S. 22:2084(6). "Impaired insurer" means a member insurer which, after September 30, 1991, is not an insolvent insurer, and is placed under an order of rehabilitation or conservation by a court of competent jurisdiction. (Amended effective 8/1/2014)

"Insolvent Insurer"

LSA-R.S. 22:2084(7). A member insurer which after September 30, 1991, is placed under an order by a court of competent jurisdiction with a finding of insolvency. Codified effective 6.21.2008.

"Member Insurer"

LSA-R.S. 22:2084(8) “Member insurer” means any insurer licensed or which holds a certificate of authority to transact in this state any kind of insurance for which coverage is provided by R.S. 22:2083, and includes any insurer whose license or certificate of authority in this state may have been suspended, revoked, not renewed, or voluntarily withdrawn, but shall not include any of the following: (a) Repealed by Acts 2018, No. 97, § 2, effective August 1, 2018. (b) A fraternal benefit society. (c) A mandatory state pooling plan. (d) A mutual assessment company or any entity that operates on an assessment basis. (e) An insurance exchange. (f) A hospital or medical service organization, whether operated for profit or as a nonprofit. (g) An organization that issues charitable gift annuities as is defined in R.S. 22:952(A)(3). (h) Any entity similar to any of the above.

LSA-R.S. 22:2085.A. For purposes of administration and assessment, the association shall maintain all of the following accounts: (1) The life insurance account. (2) The annuity account excluding unallocated annuity contracts and defined contribution government plans qualified under Section 403(b) of the United States Internal Revenue Code (26 U.S.C. 403(b)). (3) The defined contribution plan account, meaning defined contribution plans qualified under Section 403(b) of the United States Internal Revenue Code. (4) The health account.

Assessment Limits

LSA-R.S. 22:2088.E(1). (a) The total of all assessments upon an insurer for each account shall not in any one calendar year exceed two percent of such average premiums received of the insurers in this state on the policies and contracts covered by the account during the three calendar years preceding the year in which the member insurer became an impaired or insolvent insurer.

Assessment Classes

LSA-R.S. 22:2088.B. There shall be two assessments, as follows: (1) Class A assessments shall be made for the purpose of meeting administrative and legal costs and other expenses and examinations conducted under the authority of R.S. 22:2091. Class A assessments may be made whether or not related to a particular impaired or insolvent insurer and their administration thereof. (2) Class B assessments shall be made to the extent necessary to carry out the powers and duties of the association pursuant to R.S. 22:2087 with regard to an impaired or an insolvent insurer.

LSA-R.S. 22:2083.B(2)(c) 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, 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: (i) Averaged over the period of four years prior to 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 two percentage points from Moody’s Corporate Bond Yield Average averaged for that same four-year period or for such lesser period if the policy or contract was issued less than four years before the member insurer becomes an impaired or insolvent insurer under this Part, whichever is earlier. (ii) 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 three percentage points from Moody’s Corporate Bond Yield Average as most recently available.

LSA-R.S. 22:2092.A,B. Yes. A member insurer may offset up to 20% of the amount paid for next 5 years. Assessment amount may be reduced if the insurer has assets invested and maintained in qualifying Louisiana investments. Codified effective 6.21.2008.

§ 22:2084 (11) “Premiums” means amounts received on covered policies or contracts, less considerations, deposits, dividends, and experience credits thereon. “Premiums” shall 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 by R.S. 22:2083(B), except that accessible premiums shall not be reduced on account of R.S. 22:2083(B)(2)(c)(ii) relating to interest limitations with respect to any one individual, any one participant, and any one policyholder.

LSA-R.S. 22:2098 “Prohibited advertisement of Insurance Guaranty Association Act in insurance sales; notice to policyholders” A. No person, including a member insurer, agent, or affiliate of a member 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 Life and Health Insurance Guaranty Association of this state for the purpose of sales solicitation, or inducement to purchase any form of insurance or other coverage covered by the Louisiana Life and Health Insurance Guaranty Association Law. This Section shall not apply to the Louisiana Life and Health Insurance Guaranty Association or any other entity which does not sell or solicit insurance or coverage by a health maintenance organization.