PocketLaw | Oklahoma Statutes | Oklahoma Life and Health Insurance

Oklahoma Life and Health Insurance Guaranty Association Act - Coverage - Liability.

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A. For the policies and contracts specified in subsection B of this section, the Oklahoma Life and Health Insurance Guaranty Association Act shall provide coverage:

1.a.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,

b.To persons who are owners of or certificate holders or enrollees under the policies or contracts, other than structured settlement annuities, and in each case who:

(1)are residents, or
(2)are not residents, but only under all of the following conditions:

(a)the member insurer that issued the policies or contracts are domiciled in this state,
(b)the states in which the persons reside have associations similar to the Oklahoma Life and Health Insurance Guaranty Association created by this act, and the persons are not eligible for coverage by an association in any other state due to the fact that the insurer or health maintenance organization was not licensed in the state at the time specified in the guaranty association law of the state;

2. Subparagraphs a and b of paragraph 1 of this subsection shall not apply to structured settlement annuities specified in subsection B of this section and in the Oklahoma Life and Health Insurance Guaranty Association Act shall, except as provided in paragraphs 3 and 4 of this subsection, provide coverage to a person who is a payee under a structured settlement annuity or a beneficiary of a payee if the payee is deceased, if the payee:

a.is a resident, regardless of where the contract owner resides, or
b.is not a resident, but only under both of the following conditions:

(1)(a)the contract owner of the structured settlement annuity is a resident, or
(b)the contract owner of the structured settlement annuity is not a resident but:

i.the insurer that issued the structured settlement annuity is domiciled in this state, and
ii.the state in which the contract owner resides has an association similar to the association created by the Oklahoma Life and Health Insurance Guaranty Association Act, and

(2)neither the payee nor beneficiary nor the contract owner is eligible for coverage by the association of the state in which the payee or contract owner resides;

3. The Oklahoma Life and Health Insurance Guaranty Association Act shall not provide coverage to a person who is a payee or beneficiary of a contract owner resident of this state, if the payee or beneficiary is afforded coverage by the association of another state; and

4. The Oklahoma Life and Health Insurance Guaranty Association Act 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 the Oklahoma Life and Health Insurance Guaranty Association Act is provided coverage under the laws of any other state, the person shall not be provided coverage under the Oklahoma Life and Health Insurance Guaranty Association Act. In determining the application of the provisions of this paragraph to situations where a person could be covered by the association of more than one state, whether as an owner, payee, enrollee, beneficiary or assignee, the Oklahoma Life and Health Insurance Association Act shall be construed in conjunction with the laws of other states to result in coverage by only one association.

B. 1. The Oklahoma Life and Health Insurance Guaranty Association Act 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, which for the purposes of this act includes health maintenance organization subscriber contracts and certificates, or annuities and supplemental policies or contracts to any of these, and for certificates under direct group policies and contracts, except as limited by the Oklahoma Life and Health Insurance Guaranty Association Act. Annuity contracts and certificates under group annuity contracts include allocated funding agreements, structured settlement annuities and any immediate or deferred annuity contracts.

2. Except as provided in paragraph 3 of this subsection, the Oklahoma Life and Health Insurance Guaranty Association Act shall not provide coverage for:

a.a portion of a policy or contract not guaranteed by the insurer, or under which the risk is borne by the policy or contract owner,
b.a policy or contract of reinsurance, unless assumption certificates have been issued pursuant to the reinsurance policy or contract,
c.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 (4) years prior to the date on which the Association becomes obligated with respect to the policy or contract, exceeds a rate of interest determined by subtracting two (2) 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 (4) years before the Association became obligated, and
(2)on and after the date on which the Association becomes obligated with respect to the policy or contract, exceeds the rate of interest determined by subtracting three (3) percentage points from Moody's Corporate Bond Yield Average as most recently available,

d.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 1144,
(2)a minimum premium group insurance plan,
(3)a stop-loss group insurance plan, or
(4)an administrative services only contract,

e.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,

f.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,
g.a portion of a policy or contract to the extent that the assessments required by Section 2030 of this title with respect to the policy or contract are preempted by federal or state law,
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 or contract 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,

i.a contractual agreement that establishes the obligations of the member insurer 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,
j.an unallocated annuity contract,
k.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 the Oklahoma Life and Health Insurance Guaranty Association Act, 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 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, or
l.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 or Part D, or Subchapter XIX, Chapter 7 of Title 42 of the United States Code or any regulations issued pursuant thereto.

3. The exclusion from coverage in this section shall not apply to any portion of a policy or contract, including a rider that provides long-term care or any other health insurance benefits.

C. The benefits that the Association may become obligated to cover shall in no event exceed the lesser of:

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; or

2.a.with respect to any one life, regardless of the number of policies or contracts:

(1)Three Hundred Thousand Dollars ($300,000.00) in life insurance death benefits, but not more than One Hundred Thousand Dollars ($100,000.00) in net cash surrender and net cash withdrawal values for life insurance,
(2)for health insurance benefits:

(a)One Hundred Thousand Dollars ($100,000.00) for coverages not defined as disability income insurance or health benefit plans or long-term care insurance as defined in Section 4424 of this title, including any net cash surrender and net cash withdrawal values,
(b)Three Hundred Thousand Dollars ($300,000.00) for insurance providing income payments to an insured wage earner when income is interrupted or terminated because of illness, sickness or accident, commonly known as disability income insurance and Three Hundred Thousand Dollars ($300,000.00) for long-term care insurance as defined in Section 4424 of this title, and
(c)Five Hundred Thousand Dollars ($500,000.00) for health benefit plans, or

(3)Three Hundred Thousand Dollars ($300,000.00) in the present value of annuity benefits, including net cash surrender and net cash withdrawal values, or

b.with respect to each payee of a structured settlement annuity or beneficiary or beneficiaries of the payee if the payee is deceased, Three Hundred Thousand Dollars ($300,000.00) in present value annuity benefits, in the aggregate, including net cash surrender and net cash withdrawal values,
c.however, in no event shall the Association be obligated to cover more than:

(1)an aggregate of Three Hundred Thousand Dollars ($300,000.00) in benefits with respect to any one life under this subparagraph and subparagraphs a and b of this paragraph except with respect to health benefit plans under division (2) of subparagraph a of this paragraph, in which case the aggregate liability of the Association shall not exceed Five Hundred Thousand Dollars ($500,000.00) with respect to any one individual, or
(2)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 Five Million Dollars ($5,000,000.00) in benefits, regardless of the number of policies and contracts held by the owner,

d.the limitations set forth in this subsection are limitations on benefits for which the Association is obligated before taking into account either its subrogation and assignment rights or the extent to which those benefits could be provided out of the assets of the impaired or insolvent insurer attributable to covered policies. The costs of the obligations of the Association under the Oklahoma Life and Health Insurance Guaranty Association Act may be met by the use of assets attributable to covered policies or reimbursed to the Association pursuant to its subrogation and assignment rights,
e.for purposes of the Oklahoma Life and Health Insurance Guaranty Association Act, benefits provided by a long-term care rider to a life insurance policy or annuity contract shall be considered the same type of benefits as the base life insurance policy or annuity contract to which it relates.

D. In performing its obligations to provide coverage under Section 2028 of this title, the Association shall not be required to guarantee, assume, reinsure, reissue or perform, or cause to be guaranteed, assumed, reinsured, reissued or performed, the contractual obligations of the insolvent or impaired insurer under a covered policy or contract that do not materially affect the economic values or economic benefits of the covered policy or contract.

Added by Laws 1981, c. 133, § 5. Amended by Laws 1987, c. 177, § 3, eff. Nov. 1, 1987; Laws 2010, c. 145, § 2, eff. Nov. 1, 2010; Laws 2019, c. 384, § 4, eff. Nov. 1, 2019.

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