Washington Life & Disability Insurance Guaranty Association

Covered Contracts

§48.32A. Section 3(2)(a). Direct, nongroup life, disability, or annuity policies or contracts and supplemental contracts to any of these, certificates under direct group policies and contracts, and unallocated annuity contracts issued by member insurers, except as limited by this chapter. Amended effective 7/22/01.

Non-Covered Contracts

§48.32A. Section 3(2)(b). (i) 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; (ii) A policy or contract of reinsurance, unless assumption certificates have been issued pursuant to the reinsurance policy or contract; (iii) 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; (iv) A portion of a policy or contract issued to a plan or program of an employer, association, or other person to provide life, disability, 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: (A) A multiple employer welfare arrangement as defined in 29 U.S.C. Sec. 1144; (B) A minimum premium group insurance plan; (C) A stop-loss group insurance plan; or (D) An administrative services only contract; (v) A portion of a policy or contract to the extent that it providesfor: (A) Dividends or experience rating credits; (B) Voting rights; or (C) 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; (vi) 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; (vii) An unallocated annuity contract issued to or in connection with a 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; (viii) A portion of an unallocated annuity contract that is not issued to or in connection with a specific employee, union, or association of natural persons benefit plan or a government lottery; (ix) A portion of a policy or contract to the extent that the assessments required by section 9 of this act with respect to the policy or contract are preempted by federal or state law; (x) An obligation that does not arise under the express written terms of the policy or contract issued by the insurer to the contract owner or policy owner; (xi) 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; or (xii) 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.

Non-Resident Coverage

§48.32A.Section (3)(1)(b)(2) Yes. Covers persons who are not residents, but only under all of the following conditions: (A) The insurer that issued the policies or contracts is 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 due to the fact that the insurer was not licensed in the state at the time specified in the state's guaranty association law; (Amended effective 7/22/2001)

§48.32A. Section 3(3)(b)(i) With respect to one life, regardless of the number of policies or contracts: (A) Five hundred thousand dollars in life insurance death benefits, but not more than five hundred thousand dollars in net cash surrender and net cash withdrawal values for life insurance; (B) In disability insurance benefits: (I) Five hundred thousand dollars for coverages not defined as disability income insurance or basic hospital, medical, and surgical insurance or major medical insurance including any net cash surrender and net cash withdrawal values; (II) Five hundred thousand dollars for disability income insurance; (III) Five hundred thousand dollars for basic hospital medical and surgical insurance or major medical insurance; or (C) Five hundred thousand dollars in the present value of annuity benefits, including cash surrender values; (ii) With respect to each individual participating in a governmental retirement benefit 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, one hundred thousand dollars in present value annuity benefits, including cash surrender values; (iii) With respect to each payee of a structured settlement annuity, or beneficiary or beneficiaries of the payee if deceased, five hundred thousand dollars in present value annuity benefits, in the aggregate, including net cash surrender and net cash withdrawal values, if any; (iv) However, in no event shall the association be obligated to cover more than: (A) An aggregate of five hundred thousand dollars in benefits with respect to any one life under (i), (ii), and (iii) of this subsection (3)(b) except with respect to benefits for basic hospital, medical, and surgical insurance and major medical insurance under (i)(B) of this subsection (3)(b), in which case the aggregate liability of the association shall not exceed five hundred thousand dollars with respect to any one individual; or (B) with respect to one owner of multiple nongroup policies of life insurance, whether the policy 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 in benefits, regardless of the number of policies and contracts held by the owner; (v) With respect to either: (A) One contract owner provided coverage under subsection (1)(d)(ii) of this section; or (B) one plan sponsor whose plans own directly or in trust one or more unallocated annuity contracts not included in (ii) of this subsection (3)(b), five million dollars in benefits, irrespective of the number of contracts with respect to the contract owner or plan sponsor. Amended effective 7/22/01.

Discretionary Triggers

§48.32A.075(1) If a member insurer is an impaired insurer.

Mandatory Triggers

§48.32A.075(2) If a member insurer is an insolvent insurer. Amended effective 7/22/01.

Foreign Triggers

No separate provision.

"Impaired Insurer"

§48.32A.045(10) A member insurer which, after the effective date of this section, is not an insolvent insurer, and is placed under an order of rehabilitation or conservation by a court of competent jurisdiction. Amended effective 7/22/01.

"Insolvent Insurer"

§48.32A.045(11) A member insurer which, after the effective date of this section, is placed under an order of liquidation by a court of competent jurisdiction with a find of insolvency. Amended effective 7/22/01.

"Member Insurer"

§48.32A.045(12) An insurer licensed, or that holds a certificate of authority, to transact in Washington any kind of insurance for which coverage is provided under RCW 48.32A.025, and includes an insurer 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 health care service contractor, whether profit or nonprofit; (b) A health maintenance organization; (c) A fraternal benefit society; (d) A mandatory state pooling plan; (e) A mutual assessment company or other person that operates on an assessment basis; (f) An insurance exchange; (g) An organization that has a certificate or license limited to the issuance of charitable gift annuities under RCW 48.38.010; or (h) An entity similar to (a) through (g) of this subsection.

§48.32A. Section 6.(1). Two accounts: (a) life insurance and annuity, which includes subaccounts: (i) Life insurance; (ii) Annuity which includes IRC §§ 401, 403(b), or 457, but otherwise excludes unallocated annuities; and (iii) unallocated annuity; and (b) disability insurance, which includes health benefit plans, disability benefit policies and contracts, and long- term care policies and contracts.

Assessment Limits

§48.32A. Section 9.(5)(a)(i) Two percent (2%) of the average premiums in state for policies covered by the account during the three calendar years preceeding the impairment or insolvency. Amended effective 7/22/01.

Assessment Classes

§48.32A. Section 9.(2) The amount of a class A assessment is determined by the board and may be authorized and called on a pro rata or nonpro rata basis. If pro rata, the board may provide that it be credited against future class B assessments. The amount of a class B assessment, except for assessments related to long-term care insurance, must be allocated for assessment purposes between the accounts and among the subaccounts of the life insurance and annuity accounts, pursuant to an allocation formula which may be based on the premiums or reserves of the impaired or insolvent insurer or any other standard determined by the board to be fair and reasonable under the circumstances. The amount of the class B assessment for long-term care insurance written by an impaired or insolvent insurer must be allocated according to a methodology included in the plan of operation and approved by the commissioner. The methodology must provide for 50 percent of the assessment to be allocated to disability and health member insurers and 50 percent to be allocated to life and annuity member insurers.

§48.32A.025 (2)(b)(iii) 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 changes in value: (A) 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 (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 three percentage points from Moody's corporate bond yield average as most recently available.

§48.32A. Section 13. Yes. Up to 20% of assessment amount may be offset for 5 years following payment; covers class B assessments only.

§ 48.32A.045 (17) “Premiums” means amounts or considerations, by whatever name called, received on covered policies or contracts less returned premiums, considerations, and deposits and less dividends and experience credits. “Premiums” does not include amounts or considerations received for policies or contracts or for the portions of policies or contracts for which coverage is not provided under RCW 48.32A.025(2), except that assessable premium shall not be reduced on account of RCW 48.32A.025(2)(b)(iii) relating to interest limitations and RCW 48.32A.025(3)(b) relating to limitations with respect to one individual, one participant, and one contract owner. “Premiums” does not include: (a) Premiums in excess of five million dollars on an unallocated annuity contract not issued under a governmental retirement benefit plan, or its trustee, established under section 401, 403(b), or 457 of the United States Internal Revenue Code; or (b) With respect to multiple nongroup policies of life insurance owned by one owner, whether the policy 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 five million dollars with respect to these policies or contracts, regardless of the number of policies or contracts held by the owner.

§48.32A.185 “Prohibited advertisement of insurance guaranty association act in insurance sales--Notice to policy owners” (1) No person, including an insurer, agent, or affiliate of an insurer may 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 covered by the Washington life and disability insurance guaranty association act. However, this § does not apply to the Washington life and disability insurance guaranty association or any other entity which does not sell or solicit insurance.