What is the purpose of the Louisiana Life and Health Insurance guaranty association?

• A. Sets premium rates for insurers
• B. Ensures that claims filed against insolvent insurance companies will be paid
• C. Regulates insurer solvency
• D. Audits insurer financial statements

Answer: (B)

These associations exist to protect policyholders when an insurer becomes insolvent. If a life or health insurer fails, the guaranty association pays covered claims against that insolvent company, up to statutory limits for each type of policy and per claimant. Funding comes from assessments on solvent member insurers, not from policyholders directly, and there are exclusions and limits. This is why the option describing payment of claims filed against insolvent companies is the best answer. The other functions listed—setting premium rates, regulating insurer solvency, or auditing insurer financial statements—are handled by regulators and not by the guaranty association.