Which organization protects insureds from insurance company insolvency?

• A. Louisiana Life and Health Insurance Guaranty Association
• B. National Association of Insurance Commissioners
• C. Federal Deposit Insurance Corporation
• D. Securities Investor Protection Corporation

Answer: (A)

Guaranty associations exist to protect policyholders when an insurance company fails. In Louisiana, the Louisiana Life and Health Insurance Guaranty Association provides this protection. If a licensed insurer becomes insolvent, the association steps in to pay covered claims and policy benefits up to statutory limits, funded by assessments on solvent member insurers. This helps ensure insureds don’t lose coverage due to a company’s failure.

The other organizations have different roles: the National Association of Insurance Commissioners coordinates regulation but doesn’t guarantee policyholder claims; the Federal Deposit Insurance Corporation protects bank deposits; the Securities Investor Protection Corporation protects securities accounts.