District of Columbia Life & Health Insurance Guaranty Association

Covered Contracts

§31-5402(b)(1). Coverage shall be provided to the persons specified in subsection (a) of this section for direct, non-group life, health, annuity, and supplemental policies or contracts, and for certificates under direct group policies or contracts, except as limited by this chapter. Annuity contracts and certificates under group annuity contracts include, but are not limited to, allocated funding agreements, structured settlement annuities, lottery contracts, and any immediate or deferred annuity contracts.

Non-Covered Contracts

§31-5402(b)(2) (A) Any portion of a policy or contract not guaranteed by the insurer, or under which the risk is borne by the owner of the policy, contract, or certificate; (B) Any policy or contract of reinsurance, unless assumption certificates have been issued and delivered pursuant to the reinsurance policy or contract; (C) Any portion of a policy, contract, or certificate, to the extent of the rate of interest on which it is based, or the interest rate, crediting rate, or similar factor determined by the 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 4-year period prior to the date on which the Association becomes obligated with respect to the policy, contract, or certificate, 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 a lesser period if the policy, contract, or certificate was issued and delivered less than 4 years before the Association became obligated; and (ii) On and after the date on which the Association becomes obligated with respect to the policy, con-tract, or certificate, exceeds the rate of interest determined by subtracting 3 percentage points from the most recent Moody's Corporate Bond Yield Average; (D) Any portion of a policy or contract issued to a 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: (i) A Multiple Employer Welfare Arrangement as defined in section 514 of the Employee Retirement Income Security Act of 1974 (29 U.S.C. § 1144), as amended; (ii) A minimum premium group insurance plan; (iii) A stop-loss group insurance plan; or (iv) An administrative services only contract; (E) Any portion of a policy or contract that provides for: (i) Dividends or experience rating credits; (ii) Voting rights; or (iii) Payment of fees or allowances to any person, including the policy or contract owner, in connection with the service or administration of the policy or contract; (F) Any policy, contract, or certificate issued and delivered in the District of Columbia by a member in-surer at a time when it was not licensed or did not have a certificate of authority to issue and deliver the policy, contract, or certificates in the District of Columbia; (G) Any unallocated annuity contract; (H) Any portion of a policy or contract to the extent the assessments required by § 31-5406 with respect to the policy or contract are preempted by federal or state law; (I) Any 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, including: (i) Claims based on marketing materials; (ii) Claims based on side letters, riders, or other documents that were issued by the insurer without meeting applicable policy form filing or approval requirements; (iii) Misrepresentations of or regarding policy benefits; (iv) Extra-contractual claims; or (v) A claim for penalties or consequential or incidental damages; (J) Any 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; (K) Any portion of a policy or contract that provides for interest or other changes in value to be deter-mined by the use of an index or other external reference stated in the policy or contract, but 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 or con-tract's interest or changes in value are credited less frequently than annually, then for purposes of determining the values that has been credited and are not subject to forfeiture under this subsection, 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 will not be subject to forfeiture; or (L) Any policy or contract providing any hospital, medical, prescription drug, or other health care benefits pursuant to the Balanced Budget Act of 1997, approved August 11, 1997 (111 Stat. 251; 42 U.S.C. §§ 1395w-21 et seq.), and the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, approved December 8, 2003 (117 Stat. 2066; 42 U.S.C. §§ 1395w-101 et seq.) (referred to as "Medicare Parts C & D" respectively), or any regulations issued pursuant to those acts. (Amended effective 7/23/2014)

Non-Resident Coverage

§31-5402(a)(2)(B). Yes. Coverage shall be provided for persons who are not residents, subject to the following conditions: (i) The insurers which issued and delivered the policies or contracts are domiciled in the District of Columbia; (ii) The states in which the persons reside have associations similar to the Association created by this chapter; and (iii) 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 7/23/2014)

§31-5402(c) (2) (A) With respect to any 1 life, regardless of the number of policies, contracts, or certificates: (i) $ 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; (ii) In health insurance benefits: (I) $ 100,000 for coverage not defined as disability insurance or basic hospital, medical, and surgical insurance or major medical insurance or long- term care insurance, including any net cash surrender and net cash withdrawal values; (II) $ 300,000 for disability insurance; (III) $ 300,000 for long-term care insurance; and (IV) $ 500,000 for basic hospital, medical, and surgical insurance or major medical insurance; or (iii) $ 300,000 in the present value of annuity benefits, including net cash surrender and net cash withdrawal values. (A-i) With respect to each payee of a structured settlement annuity (or beneficiary or beneficiaries of the payee if deceased), $ 300,000 in present value annuity benefits, in the aggregate, including net cash surrender and net cash withdrawal values, if any. (A-ii) The Association shall not be obligated to cover: (i) More than an aggregate of $ 300,000 in benefits with respect to any one life under subparagraphs (A) and (A-i) of this paragraph except with respect to benefits for basic hospital, medical, and surgical insurance and major medical insurance under subparagraph (A)(ii) of this paragraph, in which case the aggregate liability of the Association shall not exceed $ 500,000 with respect to any one individual; or (ii) With respect to one owner of multiple non-group 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 $ 5,000,000 in benefits, regardless of the number of policies and contracts held by the owner; (A-iii) (i) The limitations set forth in this subsection are limitations on the 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. (ii) The costs of the Association's obligations under this chapter may be met by the use of assets attributable to covered policies or reimbursed to the Association pursuant to its subrogation and assignment rights. (Amended effective 7/23/2014)

Discretionary Triggers

§31-5405(a). If a member insurer is an impaired domestic insurer.

Mandatory Triggers

§31-5405(b). 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. §31-5405(c). If a member insurer is insolvent.

Foreign Triggers

See Mandatory Triggers.

"Impaired Insurer"

§31-5401(5). A member insurer which is not an insolvent insurer and (a) is deemed by the Mayor 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 jurisdication.

"Insolvent Insurer"

§31-5401(6). A member insurer which is placed under an order of liquidation by a court of competent jurisdiction with a finding of insolvency.

"Member Insurer"

§31-5401(8) "Member insurer" means any insurer licensed or holding a certificate of authority after July 22, 1992, in the District of Columbia to sell any kind of insurance for which coverage is provided under § 31-5402. The term "member insurer" shall include Group Hospitalization and Medical Services, Inc., as well as any insurer whose license or certificate of authority in the District of Columbia may have been suspended, revoked, not renewed, or voluntarily withdrawn, but does not include: (A) A nonprofit hospital or medical service organization; (B) A health maintenance organization; (C) A fraternal benefit society; (D) A mandatory state pooling plan; (E) A mutual assessment company or any entity that operates on an assessment basis; (F) A risk retention group; (G) An insurance exchange; (H) An organization that has a certificate or license limited to the issuance of charitable gift annuities; or (I) Any entity similar to any of the above. (Amended effective 7/23/2014)

§31-5403. Two accounts: (1) life insurance and annuity account with sub accounts (a) life insurance and ( b) annuity; and (2) health insurance account.

Assessment Limits

§31-5406(e)(1). Two percent (2%) of the average premiums received on business in the state covered by each account during the three calendar years preceding the year in which the insurer is declared impaired or insolvent.

Assessment Classes

§31-5406(b). Two classes of assessments: Class A for administrative and legal costs and other expenses; Class B to carry out the powers and duties of the association with regard to an impaired or insolvent insurer.

§31-5402(b)(2)(C) Guaranty Association excludes from coverage: Any portion of a policy, contract, or certificate, to the extent of the rate of interest on which it is based, or the interest rate, crediting rate, or similar factor determined by the 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 4-year period prior to the date on which the Association becomes obligated with respect to the policy, contract, or certificate, 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 a lesser period if the policy, contract, or certificate was issued and delivered less than 4 years before the Association became obligated; and (ii) On and after the date on which the Association becomes obligated with respect to the policy, con-tract, or certificate, exceeds the rate of interest determined by subtracting 3 percentage points from the most recent Moody's Corporate Bond Yield Average; (Amended effective 7/23/2014)

§31-5410. Yes. Up to 10% of amount assessed may be offset, spread over 10 years following payment; covers all assessments but administrative expenses.

§ 31-5401 (11) "Premiums" means amounts (or consideration by whatever name called) received on covered policies or contracts, or for the portions of policies or contracts, less premiums, considerations, deposits returned, dividends, and experience credits. The term "premiums" shall not include: (A) Any amounts received for policies or contracts for which coverage is not provided under § 31-5402(b), except that assessable premiums shall not be reduced on account of § 31-5402(b)(2)(C) relating to interest limitations, and § 31-5402(c)(2) relating to limitations with respect to any one individual, any one participant, and any one contract holder; or (B) With respect to multiple non-group 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, em-ployees 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. (Amended effective 7/23/2014)

§31-5416. Prohibited advertisement of Association act in insurance sale; notice to policyholders. (a)(1) No person, including an insurer, agent, or affiliate of an 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 District of Columbia Life and Health Insurance Guaranty Association for the purpose of sales, solicitation, or inducement to purchase any form of insurance covered by this chapter. (2) This subsection shall not apply to the Association or any other entity which does not sell or solicit insurance.