New Hampshire Life and Health Insurance Guaranty Association

Covered Contracts

§408-F:5.II(a). This chapter shall provide coverage to the persons specified in paragraph I for policies and contracts of direct, non-group life insurance, health insurance, including health maintenance organization subscriber contracts and certificates, or annuities, and supplemental contracts to any of these, for certificates under direct group policies and contracts, and for supplemental contracts to any of these, and for unallocated annuity contracts issued by member insurers, except as limited by this chapter. 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 annuities, annuities issued to or in connection with government lotteries and any immediate or deferred annuity contracts.

Non-Covered Contracts

§408-F:5.II(b) Except as otherwise provided in subparagraph (c), this chapter shall not provide coverage for: (1) A portion of a policy or contract not guaranteed by the member insurer, or under which the risk is borne by the policy or contract owner; (2) Any policy or contract of reinsurance, unless assumption certificates have been issued; (3) A 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 change in value: (A) Averaged over the period of 4 years prior to the date on which the member insurer becomes an impaired or insolvent insurer under this chapter, whichever is earlier, exceeds a 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 chapter, whichever is earlier; and (B) On and after the date on which the member insurer becomes an impaired or insolvent insurer under this chapter, whichever is earlier, exceeds the rate of interest determined by subtracting 3 percentage points from Moody’s Corporate Bond Yield Average as most recently available; (4) 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 the plan or program is self-funded or uninsured, including, but not limited to, benefits payable by an employer, association, or similar entity under: (A) A multiple-employer welfare arrangement as defined in 29 U.S.C. section 1002(40); (B) A minimum premium group insurance plan; (C) A stop-loss group insurance plan; or (D) An administrative services only contract; (5) Any portion of a policy or contract to the extent that it provides dividends 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 the policy or contract; (6) 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 the policy or contract in this state; (7) Any unallocated annuity contract issued to an employee benefit plan protected under the federal Pension Benefit Guaranty Corporation; (8) Any portion of 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; (9) Any portion of a policy or contract to the extent that the assessments required by RSA 408-F:9 with respect to the policy or contract are preempted by federal or state law; (10) 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 chapter, 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 subparagraph, 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 the crediting interest or changing values was the date of impairment or insolvency, whichever is earlier, and shall not be subject to forfeiture; (11) A policy or contract providing any hospital, medical, prescription drug or other health care benefits pursuant to Part C or Part D of subchapter XVIII, chapter 7 of Title 42 of the United States Code, commonly known as Medicare Part C and D, or subchapter XIX, chapter 7 of Title 42 of the United States Code (commonly known as Medicaid), or any regulations issued pursuant thereto; and (12) Structured settlement annuity benefits to which a payee or beneficiary has transferred his or her rights in a structured settlement factoring transaction as defined in 26 U.S.C. section 5891(c)(3)(A), regardless of whether the transaction occurred before or after such section became effective.

Non-Resident Coverage

§408-F:5.I. Yes. Covers nonresidents, but only under all of the following conditions: (A) The member insurers that issued the policies or contracts are domiciled in this state; (B) The states in which the persons reside have associations similar to the association created by this chapter; and (C) The persons are not eligible for coverage by an association in any other state because the insurer or health maintenance organization was not licensed in the state at the time specified in the state’s guaranty association law.

§408-F:5.III. The benefits for which the association may become liable shall in no event exceed the lesser of: (a) The contractual obligations for which the insurer is liable or would have been liable if it were not an impaired or insolvent insurer; or (b) (1) With respect to any one life, regardless of the number of policies or contracts: (A) $300,000 in life insurance death benefits, but not more than $100,000 in net cash surrender and net cash withdrawal values for life insurance; (B) For health insurance benefits: (i) $100,000 for coverages not defined as disability income insurance or health benefit plans or long-term care insurance, as defined in RSA 415-D, including any net cash surrender and net cash withdrawal values; (ii) $300,000 for disability income insurance, and $300,000 for long-term care insurance, as defined in RSA 415-D; or (iii) $500,000 for health benefit plans; (C) $250,000 in the present value of annuity benefits, including net cash surrender and net cash withdrawal values; or (2) With respect to each individual participating in a governmental retirement plan established under Section 401, 403(b) or 457 of the United States Internal Revenue Code covered by an unallocated annuity contract or the beneficiaries of each such individual if deceased, in the aggregate, $250,000 in present value annuity benefits, including net cash surrender and net cash withdrawal values; or (3) With respect to each payee of a structured settlement annuity or beneficiary or beneficiaries of the payee if deceased, $250,000 in present value annuity benefits, in the aggregate, including net cash surrender and net cash withdrawal value, if any. (4) However, in no event shall the association be obligated to cover more than: (A) An aggregate of $300,000 in benefits with respect to any one life under subparagraphs (b)(1), (2) and (3) except with respect to benefits for health benefit plans under subparagraph (b)(1)(B)(iii), in which case the aggregate liability of the association shall not exceed $500,000 with respect to any one individual; or (B) With respect to one owner of multiple, non-group policies of life insurance, whether the policy or contract owner is an individual, firm, corporation or other person, and whether the persons insured are officers, managers, employees, or other persons, more than $5,000,000 in benefits, regardless of the number of policies and contracts held by the owner. (5) With respect to either one contract owner provided coverage under subparagraph I(c)(2); or one plan sponsor whose plans own directly or in trust one or more unallocated annuity contracts not included in subparagraph (b)(2) of this paragraph, $5,000,000 in benefits, irrespective of the number of contracts with respect to the contract owner or plan sponsor. However, in the case where one or more unallocated annuity contracts are covered contracts under this chapter and are owned by a trust or other entity for the benefit of 2 or more plan sponsors, coverage shall be afforded by the association if the largest interest in the trust or entity owning the contract or contracts is held by a plan sponsor whose principal place of business is in this state and in no event shall the association be obligated to cover more than $5,000,000 in benefits with respect to all these unallocated contracts.

Discretionary Triggers

§408-F:8.I. If a member insurer is an impaired domestic insurer.

Mandatory Triggers

§404-F:8.II. 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. §404-B:8.III. If a member insurer is insolvent. Amended effective 1/1/96.

Foreign Triggers

See Mandatory Triggers.

"Impaired Insurer"

§408-F:4.VII. “Impaired insurer” means a member insurer which, on or after January 1, 2020, is not an insolvent insurer; and (a) Is deemed by the commissioner to be potentially unable to fulfill its contractual obligations; or (b) Is placed under an order of rehabilitation or conservation by a court of competent jurisdiction.

"Insolvent Insurer"

§408-F:4.VIII. “Insolvent insurer” means a member insurer which on or after January 1, 2020, is placed under an order of liquidation by a court of competent jurisdiction with a finding of insolvency.

"Member Insurer"

§408-F:4.IX. “Member insurer” means any insurer or health maintenance organization licensed or which holds a certificate of authority to transact in this state any kind of insurance or health insurance organization business for which coverage is provided under RSA 408-F:5, and includes any insurer or health maintenance organization whose license or certificate of authority in this state may have been suspended, revoked, not renewed or voluntarily withdrawn, but does not include: (a) A nonprofit hospital or medical service organization. (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) An organization that has a certificate or license limited to the issuance of charitable gift annuities under RSA 403-E. (g) Any entity similar to any of the above.

§408-F:6.I. For purposes of administration and assessment, the association shall maintain 2 accounts: (a) The life insurance and annuity account which includes the following subaccounts: (1) Life insurance account; (2) Annuity account, which shall include annuity contracts owned by a governmental retirement plan (or its trustee) established under section 401, 403(b) or 457 of the United States Internal Revenue Code, but shall otherwise excluded unallocated annuities; and (3) Unallocated annuity account which shall exclude contracts owned by a governmental retirement benefit plan, or its trustee established under section 401, 403(b), or 457 of the United States Internal Revenue Code. (b) The health account.

Assessment Limits

§408-F:9.V.(a). Subject to the provisions of subparagraph (b), the total of all assessments authorized by the association with respect to a member insurer for each subaccount of the life insurance and annuity account and for the health account shall not in any one calendar year exceed 2 percent of that member insurer’s average annual premiums received in this state on the policies and contracts covered by the subaccount or account during the 3 calendar years preceding the year in which the member insurer became an impaired or insolvent insurer. If the maximum assessment, together with the other assets of the association in any account, does not provide in any one year in either account an amount sufficient to carry out the responsibilities of the association, the necessary additional funds shall be assessed as soon thereafter as permitted by this chapter.

Assessment Classes

§408-F:9.II There shall be 2 assessments, as follows: (a) 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 RSA 408-F:12, V. Class A assessments may be made whether or not related to a particular impaired or insolvent insurer. (b) Class B assessments shall be made to the extent necessary to carry out the powers and duties of the association under RSA 408-F:8 with regard to an impaired or an insolvent insurer.

§408-F:5.II(b)(3) Guaranty Association excludes from coverage: A 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 change in value: (A) Averaged over the period of 4 years prior to the date on which the member insurer becomes an impaired or insolvent insurer under this chapter, whichever is earlier, exceeds a 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 chapter, whichever is earlier; and (B) On and after the date on which the member insurer becomes an impaired or insolvent insurer under this chapter, whichever is earlier, exceeds the rate of interest determined by subtracting 3 percentage points from Moody’s Corporate Bond Yield Average as most recently available;

§408-F:13.I. Yes. A member insurer may offset against its tax liability assessments for the life insurance and annuity account, and for the health account for guaranteeing the performance of contractual obligations of an impaired or insolvent insurer in regard to disability income coverages only, to the extent of 20% of the amount of the assessment for each of the 5 calendar year s following the year in which the assessment was paid. If a member insurer ceases doing business, all uncredited assessments may be credited against it tax liability for the year it ceases doing business. (Amended effective 1/1/97).

§ 408-F:4 XII. “Premiums” means amounts received on covered policies or contracts less premiums, considerations, and deposits returned on such policies or contracts and less dividends and experience credits on such policies or contracts. “Premiums” 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 RSA 408-F:5, II, except that assessable premium shall not be reduced on account of RSA 408-F:5, II(b)(3) relating to interest limitations and RSA 408-F:5, III(b) relating to limitations with respect to any one individual, any one participant and any one policy or contract holder; provided that “premiums” shall not include: (a) Any premiums in excess of $5,000,000 on any unallocated annuity contract not issued under a governmental retirement plan established under section 401, 403(b) or 457 of the United States Internal Revenue Code; or (b) With respect to multiple non-group policies of life insurance owned by one owner, whether the policy or contract owner is an individual, firm, corporation, or other person, and whether the persons insured are officers, managers, employees or other persons, premiums in excess of $5,000,000 with respect to these policies or contracts, regardless of the number of policies or contracts held by the owner.

§408-F:19 “Prohibited Advertisement of Insurance Guaranty Association Act in Insurance Sales; Notice to Policyholders” I. 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 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 New Hampshire life and health insurance guaranty association act. Provided, however, that this paragraph shall not apply to the New Hampshire life and health insurance guaranty association or any other entity which does not sell or solicit insurance or coverage by a health maintenance organization. The use of the protection afforded by this chapter, other than as provided by this paragraph, by any person in the sale, marketing, or advertising of insurance constitutes unfair competition and unfair practices under the New Hampshire unfair trade practices act, and is subject to sanctions imposed in that chapter.