Scope

  1. Law
  2. Georgia Code
  3. Insurance
  4. Georgia Life and Health Insurance Guaranty Association
  5. Scope

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  1. This chapter shall provide coverage to the persons specified in subsection (b) of this Code section for policies or contracts of direct, nongroup life insurance; health insurance which for the purposes of this chapter includes health maintenance organization subscriber contracts and certificates and health care plans issued by health care corporations; annuities; for certificates under direct group policies and contracts and supplemental contracts to any of these; and for unallocated annuity contracts, in each case 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.
    1. Coverage under this chapter shall be provided only:
      1. To persons who, regardless of where they reside, except for nonresident certificate holders under group policies or contracts, are the beneficiaries, assignees, or payees, including health care providers rendering services covered under health insurance policies or certificates, of the persons covered under subparagraph (B) of this paragraph; and
      2. To persons who are owners of or certificate holders or enrollees under such policies or contracts, other than unallocated annuity contracts and structured settlement annuities, to the persons who are the contract holders and who:
        1. Are residents; or
        2. Are not residents, but the member insurers which issued such policies or contracts are domiciled in this state; the states in which such persons reside have associations similar to the association created by this chapter; and such persons are not eligible for coverage by an association in any other state due to the fact that the insurer, health maintenance organization, or health care corporation was not licensed in the state at the time specified in the state's guaranty association law.
    2. For unallocated annuity contracts specified in subsection (a) of this Code section, subparagraphs (A) and (B) of paragraph (1) of this subsection shall not apply, and this chapter shall, except as provided in paragraphs (4) and (5) of this subsection, provide coverage to:
      1. Persons who are the owners of the unallocated annuity contracts if the contracts are issued to or in connection with a specific benefit plan whose plan sponsor has its principal place of business in this state; and
      2. Persons who are owners of unallocated annuity contracts issued to or in connection with government lotteries if the owners are residents.
    3. For structured settlement annuities specified in subsection (a) of this Code section, subparagraphs (A) and (B) of paragraph (1) of this subsection shall not apply, and this chapter shall, except as provided in paragraphs (4) and (5) of this subsection, provide coverage to a person who is a payee under a structured settlement annuity, or beneficiary of a payee if the payee is deceased, if the payee:
      1. Is a resident, regardless of where the contract owner resides; or
      2. Is not a resident, but only under both of the following conditions:
        1. (I) The contract owner of the structured settlement annuity is a resident; or
      3. The contract owner of the structured settlement annuity is not a resident, but the insurer that issued the structured settlement annuity is domiciled in this state and the state in which the contract owner resides has an association similar to the association created by this chapter; and
        1. Neither the payee or beneficiary nor the contract owner is eligible for coverage by the association of the state in which the payee or contract owner resides.
    4. This chapter shall not provide coverage to:
      1. A person who is a payee or beneficiary of a contract owner who is a resident of this state, if the payee or beneficiary is afforded any coverage by the association of another state;
      2. A person covered under paragraph (2) of this subsection, if any coverage is provided by the association of another state to that person; or
      3. A person who acquires rights to receive payments through a structured settlement factoring transaction, as such term is defined in 26 U.S.C. Section 5891(c)(3)(A) as such term existed on January 23, 2002, regardless of whether the transaction occurred before or after such date.
    5. This chapter is intended to provide coverage to a person who is a resident of this state and, in special circumstances, to a nonresident. In order to avoid duplicate coverage, if a person who would otherwise receive coverage under this chapter is provided coverage under the laws of any other state, the person shall not be provided coverage under this chapter. In determining the application of the provisions of this subsection in situations where a person could be covered by the association of more than one state, whether as an owner, payee, enrollee, beneficiary, or assignee, this chapter shall be construed in conjunction with other state laws to result in coverage by only one association.
  3. Except as otherwise provided in subsection (d) of this Code section, this chapter shall not provide coverage to:
    1. That portion or part of a policy or contract not guaranteed by a member insurer, or under which the risk is borne by the policy or contract owner;
    2. A policy or contract of reinsurance or any policy or contract or part thereof assumed by the impaired or insolvent insurer under a contract of reinsurance, unless assumption certificates have been issued pursuant to the reinsurance policy or contract;
    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 changes in value:
      1. Averaged over the period of four years prior to 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 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 chapter, whichever is earlier; and
      2. 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 three percentage points from Moody's Corporate Bond Yield Average as most recently available;
    4. Any prepaid legal services plan, as defined in Code Section 33-35-2;
    5. Any policy, contract, or certificate issued by a fraternal benefit society, as defined in Code Section 33-15-1;
    6. Accident and sickness insurance as defined in Code Section 33-7-2 when written by a property and casualty insurer as part of an automobile insurance contract;
    7. A portion of a policy or contract issued to a plan or program of an employer, association, or other person to provide life, health, or annuity benefits to its employees, members, or others, 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 other person under:
      1. A multiple employer welfare arrangement as defined in 29 U.S.C. Section 1002(40);
      2. A minimum premium group insurance plan;
      3. A stop-loss insurance policy; or
      4. An administrative services only contract;
    8. A portion of a policy or contract to the extent that it provides for:
      1. Dividends or experience rating credits;
      2. Voting rights; or
      3. Payment of any fees or allowances to any person, including the policy or contract owner, in connection with the service to or administration of the policy or contract;
    9. A 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;
    10. Any unallocated annuity contract issued to an employee benefit plan protected under the federal Pension Benefit Guaranty Corporation, regardless of whether the federal Pension Benefit Guaranty Corporation has yet become liable to make any payments with respect to the benefit plan;
    11. 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;
    12. A portion of a policy or contract to the extent that the assessments required by Code Section 33-38-15 with respect to the policy or contract are preempted by federal or state law;
    13. 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 limitation:
      1. Claims based on marketing materials;
      2. 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;
      3. Misrepresentations of or regarding policy or contract benefits;
      4. Extra-contractual claims; or
      5. A claim for penalties or consequential or incidental damages;
    14. A contractual agreement that establishes the member insurer's obligations to provide a book value accounting guaranty for defined contribution benefit plan participants by reference to a portfolio of assets that is owned by the benefit plan or its trustee, which in each case is not an affiliate of the member insurer;
    15. 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 paragraph, the interest or change in value determined by using the procedures defined in the policy or contract will be credited as if the contractual date of crediting interest or changing values was the date of impairment or insolvency, whichever is earlier, and will not be subject to forfeiture;
    16. 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 & D, Subchapter XIX, Chapter 7 of Title 42 of the United States Code (commonly known as Medicaid), or any regulations issued pursuant thereto; or
    17. Structured settlement annuity benefits to which a payee or beneficiary has transferred his or her rights in a structured settlement factoring transaction, as such term is defined in 26 U.S.C. Section 5891(c)(3)(A) as such term existed on January 23, 2002, regardless of whether the transaction occurred before or after such date.
  4. The exclusion from coverage referenced in paragraph (3) of subsection (c) of this Code section shall not apply to any portion of a policy or contract, including a rider, that provides long-term care for any other health insurance benefit.
  5. The provisions of this Code section shall apply only to coverage the Georgia Life and Health Insurance Guaranty Association provides in connection with any member insurer that is placed under an order of liquidation with a finding of insolvency on or after July 1, 2020.

(Code 1933, § 56-2202, enacted by Ga. L. 1981, p. 1336, § 1; Ga. L. 1984, p. 1080, § 5; Ga. L. 1988, p. 1900, § 1; Ga. L. 1995, p. 1348, § 5; Ga. L. 2012, p. 701, § 1/HB 786; Ga. L. 2017, p. 164, § 51/HB 127; Ga. L. 2019, p. 386, § 141/SB 133; Ga. L. 2019, p. 1056, § 33/SB 52; Ga. L. 2020, p. 113, § 2/HB 1050.)

The 2019 amendments. The first 2019 amendment, effective July 1, 2019, substituted "on or after July 1, 2012" for "after the effective date of this Code section" at the end of subsection (d). The second 2019 amendment, effective May 12, 2019, part of an Act to revise, modernize, and correct the Code, in paragraph (c)(4), deleted "a" preceding "health care plan" and preceding "prepaid legal services plan" and substituted "or health maintenance organization" for "and a health maintenance organization".

The 2020 amendment, effective July 1, 2020, in the first sentence of subsection (a), substituted "policies or contracts of direct, nongroup life insurance; health insurance which for the purposes of this chapter includes health maintenance organization subscriber contracts and certificates and health care plans issued by health care corporations; annuities;" for "direct, nongroup life, health, or annuity policies or contracts,", deleted "for" preceding "supplemental", and added a semicolon; inserted "including health care providers rendering services covered under health insurance policies or certificates," in subparagraph (b)(1)(A); inserted "or enrollees" in in subparagraph (b)(1)(B); in division (b)(1)(B)(ii), inserted "member", substituted "chapter" for "article", and inserted ", health maintenance organization, or health care corporation"; deleted "or" at the end of subparagraph (b)(4)(A); substituted "; or" for the period at the end of subparagraph (b)(4)(B); and added subparagraph (b)(4)(C); inserted "enrollee," in the last sentence of paragraph (b)(5); substituted "Except as otherwise provided in subsection (d) of this Code section, this" for "This" at the beginning of subsection (c); substituted "a member insurer" for "an insurer" in paragraph (c)(1); in paragraph (c)(4), deleted "policy, contract, certificate, health care plan referred to in Chapter 20 of this title," preceding "prepaid legal" and deleted ", or health maintenance organization, as defined in Code Section 33-21-1" following "Code Section 33-35-2"; in paragraph (c)(13), inserted "member" and "enrollee, certificate holder,"; inserted "member" in subparagraph (c)(13)(B); inserted "or contract" in subparagraphs (c)(13)(B) and (c)(13)(C); deleted "or" at the end of paragraph (c)(15); in paragraph (c)(16), inserted "Subchapter XIX, Chapter 7 of Title 42 of the United States Code (commonly known as Medicaid)," and substituted "; or" for the period at the end; added paragraph (c)(17); added subsection (d); redesignated former subsection (d) as present subsection (e); and, in subsection (e), substituted "Georgia Life and Health Insurance Guaranty Association" for "guaranty association" and substituted "July 1, 2020" for "July 1, 2012" at the end.

Law reviews.

- For article, "Insurance," see 53 Mercer L. Rev. 281 (2001).

JUDICIAL DECISIONS

An unallocated annuity contract held by a non-resident trustee was excluded from coverage under O.C.G.A. § 33-38-2(b)(2). Ga. Life & Health Ins. Guar. Ass'n v. Gilman Paper Co. Deferred Comp. Sav. & Inv. Plan, 249 Ga. App. 767, 549 S.E.2d 751 (2001).

OPINIONS OF THE ATTORNEY GENERAL

Liability for claims when foreign life insurer in liquidation.

- Georgia Life and Health Insurance Guaranty Association is liable for claims by insureds of a foreign life insurer now in liquidation in its domiciliary state, if the insurer was authorized to transact business in this state at the time it wrote the policies, although it does not have a certificate of authority in this state at the time the claims against the Guaranty Association are made. 1987 Op. Att'y Gen. No. 87-22. (See paragraph (b)(2), added by the 1988 amendment.)

Liability for obligations of insolvent foreign insurer.

- When courts of a foreign state cancel the certificates, policies and other obligations of an insolvent insurer domiciled in that state, which obligations fall within the scope of this chapter, the Georgia Life and Health Insurance Guaranty Association must meet the obligations of that insurer as provided by law and may not cancel coverage to eligible Georgia residents other than as provided in the certificates, policies, or other obligations. 1989 Op. Att'y Gen. 89-42.


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