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The Ohio Insurance Guaranty Association

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What protection do I have if my life or health insurance company goes broke and is forced out of business?
You have limited protection through the Ohio Life and Health Insurance Guaranty Association (OLHIGA). OLHIGA is a private association established by state law.
What does the Guaranty Association do?
OLHIGA covers claims of people who are insured by a member company which has been or is about to be liquidated. For an insurance company, liquidation is similar to bankruptcy.
What companies belong to OLHIGA?
All insurance companies licensed by the state of Ohio to sell life, health, and annuity policies must belong to the Guaranty Association.
What kinds of policies does OLHIGA protect?
The association protects life insurance and health insurance policies as well as annutiy contracts.
Where does the Guaranty Association get money to pay claims?
From its members. OLHIGA assesses member companies whenever money is needed. It receives no tax money and has no other funding.
When does OLHIGA become involved with a company?
The Guaranty Association can get involved anytime a member company is in danger of not meeting its financial obligations or when a court has ordered a company to be liquidated.
What does the state do when a company is in financial trouble?
The Ohio Department of Insurance can take various regulatory
actions to preserve the company’s financial strength. Depending
on how severe the problem is, the Insurance Department may:
• Place a limit on new sales in Ohio
• Order the company to stop selling in Ohio
• Prohibit the company from renewing policies unless they are
“guaranteed renewable”
• Declare the company insolvent — a court can then order the company to liquidate its assets
Other state insurance departments have similar authority in their states.
Why would a company be liquidated?
If a company cannot pay claims, it is unable to serve its primary
purpose. Liquidation is similar to bankruptcy. The company is forced to go out of business, sell all its assets, and use the cash it
collects to pay creditors and insureds.
Would I get the same amount of money from the Guaranty Association that my insurance company would have paid?
Maybe. It depends on the kind of policy and the amount involved. But no matter how many policies you may have with the company, OLHIGA will pay you no more than $300,000.
Are life and health policies protected for their full amounts?
No, different kinds of policies have different limits.
• Annuity $100,000 • Life (death benefit) $300,000
• Health $100,000 • Life (cash surrender) $100,000
I have three annuities worth $100,000 each. How much is protected by the Guaranty Association?
Only $100,000 — that’s the maximum OLHIGA can pay you for all the annuity contracts you bought from the same company.
My annuity is supposed to pay 10% interest. Will I be paid the same rate if the company is liquidated?
No. Interest payments are not based on your contract. They are
based on a discounted market rate at the time payments are made.
Are only Ohioans protected by OLHIGA?
The association protects you only if you are an Ohio resident
when the insurance company is liquidated. It doesn’t matter
where the company is or where you were when you bought the
policy. Your beneficiaries are covered, no matter where they live.
What if I bought the policy in Ohio, but now live in another state?
Each state has its own association. You are usually protected by
the state where you live at the time the company is liquidated.
OLHIGA does NOT protect:
• Non-guaranteed policy benefits or benefits for which the
insured has assumed risk
• Reinsurance policies (unless an assumption certificate was issued)
• Interest rate yields that exceed an average rate
• Dividends
• Credits associated with the administration of a policy by a group
contract holder
• Self-insured employer plans
• People eligible for protection under the laws of another state
• Policies sold by companies not licensed to do business in Ohio
• Policies issued by medical, health, or dental care corporations
• Managed care companies (HMO, PPO, etc.)
• Fraternal benefit societies
• Mutual protective associations & similar plans which subject the
policyholder to future assessments
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Comments

My mother has recieved her long term care insurance through Penn Treaty. It is likely that they will be liquidated. She is currently in a long term care facility. She has apolicy that covers $90 per day for care, and she is likely to need continuing care for the remainder of her life.  
 
 
 
1. What can we expect to happen with her claim reimbursement if the company is liquidated? 
 
 
 
@. What is the maximum amount that we would expect to be reimbursed through the state insurance guarentee program if the company liquidates? 
 
 
 
3. Is there something that I should be doing now to make this transition shorter and smoother? 
 
 
 
Thank You
Posted @ Wednesday, October 28, 2009 1:33 PM by sandra wisebaker
Hey Sandra, 
 
 
 
Thanks for contacting us. We're speaking with the Ohio Department of Insurance and will get you an answer ASAP.
Posted @ Thursday, October 29, 2009 10:47 AM by John Power
Hey Sandra, 
When Penn Treaty goes into liquidation, the Ohio Guarantee Trust becomes the administrator. At that time your mother will continue to receive her benefits up to a maximum of $100,000 from the point that the administrator takes over. Her previous claims do not count against the $100,000 except as stated by what the original policy maximum benefit is. 
You do not need to prepare for this since it is a transaction initiated by the administrator as they take over for the liquidator (Penn Treaty). If you have any further questions call the Ohio Guarantee Trust Office at 614-442-6601. Good Luck!
Posted @ Thursday, October 29, 2009 3:50 PM by John Power
My husband and I also have policies thru Penn Treaty. We are currently paying premiums monthly and have not used any benefits to date. Our health is good and we don't expect to need the benefits for many years but as we all know we could need it tomorrow. If Ohio only covers $100,000 this will be far below the coverage we have in our contract. Do we need to continue the exact policy we have or can it be modified during this time? How does the Penn Treaty liquidation affect our premiums and future coverage?
Posted @ Tuesday, November 10, 2009 2:57 PM by Shirley Koth
Hey Shirley, 
Thanks for contacting us. We're speaking with the Ohio Department of Insurance and will get you an answer ASAP.
Posted @ Tuesday, November 10, 2009 5:35 PM by John Power
Also, if you want more updates on the Ohio Insurance Guaranty Association, Penn Treaty, or more, follow us on twitter. Username: insuranceandann
Posted @ Tuesday, November 10, 2009 5:38 PM by John Power
Hey Sandra, 
When Penn Treaty goes into liquidation, which sounds like a 100% possibility, Ohio Guaranty Association will cover the policy up to a total of $100,000 in benefits. What this means is that you can keep your policy at the same rates but your total coverage (if over $100,000) will reduce.  
Once the liquidation court makes their final decision about the liquidation, they will decide how if any over limit (over $100,000) policies will be handled. In simple words it may take a while to find out what happens to your policy, but you will at least have the $100,000 limits. 
 
If you'd like to speak further with an insurance agent, fill out the form on the home page. 
 
Let me know if there's anything else we can do for you. 
 
-John
Posted @ Wednesday, November 11, 2009 10:43 PM by John Power
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