The National Organization of Life and Health Insurance Guaranty Associations (often abbreviated NOLHGA) is a voluntary, U.S. association made up of the life

Life insurance

Life insurance is a contract between an insurance policy holder and an insurer, where the insurer promises to pay a designated beneficiary a sum of money upon the death of the insured person. Depending on the contract, other events such as terminal illness or critical illness may also trigger...

 and health insurance

Health insurance in the United States

The term health insurance is commonly used in the United States to describe any program that helps pay for medical expenses, whether through privately purchased insurance, social insurance or a non-insurance social welfare program funded by the government...

 guaranty associations of all 50 states, the District of Columbia, and Puerto Rico

Puerto Rico

Puerto Rico , officially the Commonwealth of Puerto Rico , is an unincorporated territory of the United States, located in the northeastern Caribbean, east of the Dominican Republic and west of both the United States Virgin Islands and the British Virgin Islands.Puerto Rico comprises an...

. NOLHGA was founded in 1983 to coordinate the efforts of state guaranty associations to provide protection to policyholders when their multi-state life or health insurance company becomes insolvent

Insolvency

Insolvency means the inability to pay one's debts as they fall due. Usually used to refer to a business, insolvency refers to the inability of a company to pay off its debts.Business insolvency is defined in two different ways:...

. The organization is based in Herndon, Virginia

Herndon, Virginia

Herndon is a town in Fairfax County, Virginia, in the Washington, D.C. metropolitan area of the United States. The population was 21,655 at the 2000 census, which makes it the largest of three towns in the county.-History:...

.

Mechanism

When an insurance company reports to its state insurance regulator that it is in financial trouble, the state will first attempt to assist the company back toward financial stability. If the state insurance department determines the company cannot be saved, then the insurance commissioner

Insurance commissioner

Insurance commissioner is an executive office in many U.S. states, some in the state cabinet. The office differs state by state:...

 asks the state court to order the liquidation of the company. Once the order to liquidate a company that operates in multiple states is handed down, NOLHGA, on behalf of affected member state guaranty associations, assembles a task force of affected guaranty associations to analyze the company’s commitments to policyholders. Each affected state guaranty association pays out claims to the insurance company's policyholders in the state; in some instances, the associations arrange for policies to be transferred to a financially sound insurer. Each state guaranty association is governed by state law; most associations cover up to at least $300,000 for life insurance death benefits, $100,000 in cash surrender value

Cash surrender value

The sum of money an insurance company will pay to the policyholder or annuity holder in the event his or her policy is voluntarily terminated before its maturity or the insured event occurs. This cash value is the savings component of most permanent life insurance policies, particularly whole life...

for life insurance, $250,000 in withdrawal and cash values for annuities, and $100,000 in health insurance policy benefits.

Structure

The National Organization of Life and Health Insurance Guaranty Associations has four main departments: administrative services, communications, insurance services, and legal.

Administrative

The Administrative Services Department supports NOLHGA by providing services such as human resources, accounting, membership records, and general facilities management. The department also plans and coordinates the Annual Meeting and provides support services to other departments and to the NOLHGA Board of Directors.

Communications

The Communications Department develops the organization's outreach efforts to its members, state insurance departments, receivers, insurance companies, and the media. In addition, the department provides communications assistance to individual state guaranty associations, the NOLHGA Board of Directors, and handles all media and public information inquiries.

Insurance

The Insurance Services Department coordinates all insolvency task force activities, including meetings and negotiations with receivers and assumption reinsurance companies concerning life and health insurers in rehabilitation or liquidation. This can include securing and managing legal, actuarial, and/or administrative services; seeking bids and evaluating the financial soundness of potential reinsurers; and determining the most cost-effective and efficient manner to continue policyholders’ coverage. Insurance Services also provides financial information on insolvencies to NOLHGA members.

Legal

The Legal Department provides legal counsel to insolvency task forces, committees, and the NOLHGA Board of Directors. The department collects and distributes legal information to member state guaranty associations and serves as an information resource for case laws. The department also coordinates the efforts of NOLHGA’s Legal Committee, which addresses issues pertaining to the insolvency process and develops strategies for related lawsuits.

External links

• NOLHGA website
• Guaranty association laws by state