3. WHO IS PROTECTED UNDER THE ACT?
You are covered by the Act if you are an owner of or certificate holder under a policy or contract
(other than an unallocated annuity contract or structured settlement annuity), and:
You are a Washington resident; or
You are not a Washington resident, but only if: the insurer is domiciled in Washington; there
is an association similar to the Washington Association in your state of residency; and you are
not covered in your state of residency, because the insurer was not licensed in that state; or
You are a beneficiary, assignee, or payee of one of the above, regardless of where you reside
(except for nonresident certificate holders under group policies).
Owners of unallocated annuity contracts are covered if the contract was issued to or in connection
with a specific benefit plan whose plan sponsor has its principal place of business in Washington,
or the contract was issued to or in connection with a government lottery and the owner is a
Washington resident.
4. HOW DOES THE ASSOCIATION PROTECT COVERED PERSONS AGAINST LOSS?
After an order of liquidation is entered against a company, the Association begins its work of carrying
out the purpose of the Act, which is to assure the performance of insurance obligations of that
company. The Association is authorized to carry out its duties by working with insurance companies
in good standing to assume or take over the covered policies. The association may also directly
provide benefits and coverage as authorized by the Act. The Association has the authority to collect
the funds necessary to provide protection to covered persons against losses on their covered policies.
5. WHERE DOES THE ASSOCIATION GET THE MONEY TO PROVIDE THIS PROTECTION?
The Association is authorized to collect money from all life and disability insurance companies doing
business in Washington. The funds collected from an assessment are used to pay claims to covered
persons and/or to fund the assumption of covered policies by another insurer.
6. DOES THE ASSOCIATION PAY OUT THE MONEY IT COLLECTS RIGHT AWAY OR DO COVERED
PERSONS HAVE TO WAIT?
The Association generally cannot make an assessment for covered policies issued by a company
until after an order of liquidation has been entered against the company, and a reasonable
estimate can be made of the amount of money needed. Insurance companies receiving an
assessment notice must make their payments within thirty days.
Because it takes time for an action to be commenced against a financially impaired insurer, for a
Court to issue an order, and for funds to be collected to satisfy the obligations of that insurer,
some delay, hopefully short, is unavoidable before payments can be made. Although it is
impossible to predict how long this process will take in any given case, an average time period of
twelve to eighteen months is not unusual.
When necessary, the Association may borrow money to make payments more promptly, particularly
in cases that will take an unusual amount of time to be resolved.
7. WHAT IS THE AMOUNT OF PROTECTION PROVIDED BY THE ACT?
The Act provides the following maximum amounts of protection:
Life Insurance Death Benefits ............................................................................. $500,000
Disability Benefits and Health Benefits
(including Long Term Care Benefits) .............................................................. $500,000
Present Value of Individual Annuities .................................................................. $500,000
Unallocated Annuity Contracts,
other than certain government retirement plans
(limit is per contract owner or plansponsor) ................................................... $5,000,000