What is the Life and Health Insurance Guaranty Association funded by?

The Life and Health Insurance Guaranty Association is primarily funded through assessments imposed on admitted insurance companies. This mechanism ensures that there are funds available to protect policyholders when an insurance company becomes insolvent or unable to meet its financial obligations. The assessments are typically based on the market share of the insurance company in the state, allowing the association to gather resources that can be used to pay claims of policyholders of the failing insurer.

By requiring contributions from participating insurance companies rather than relying on donations, investment income, or government grants, the association maintains a system of accountability and sustainability. This structure helps to strengthen consumer confidence in the insurance industry, knowing there are protective measures in place.