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Brief Description of the Texas Life, Accident, Health and Hospital Service Insurance Guaranty Association | |
The Texas Life, Accident, Health and Hospital Service Insurance Guaranty Association (“Association”) is a non-profit legal entity created by the Texas legislature in 1973 to protect Texas resident policyholders in the event of an insolvency of a member insurance company. To provide this protection, the Association continues insurance policy coverage while paying the claims and other policy benefits under life, annuity, accident and health insurance policies. When the Texas Commissioner of Insurance designates an insurance company to be an “impaired” insurer, he/she takes over the insurer and, acting through a special deputy receiver under court supervision, processes the assets and liabilities through liquidation, except that the task of servicing the insurance policies is the responsibility of the Association. The Association in turn becomes one of the claimants against the estate of the insolvent insurance company, to be reimbursed for the association’s statutory liabilities to the extent of available assets. To the extent that funds are not available from the estate of the insolvent insurance company, the Association’s Board determines the amount needed to service that company’s policies and assesses all member insurance companies licensed in Texas (some 1,100) to collect the required funds. The Association has a nine member Board of Directors. It is governed by Chapter 463 of the Texas Insurance Code. Directors are appointed by the Commissioner of Insurance. Five of the directors are officers or employees of member insurance companies licensed in Texas, and three of these five must be officers or employees of a company that is among the top fifty premium writers in Texas. Four directors are “public” who must be independent of the insurance industry. There are regular quarterly meetings of the Board each year in Austin, plus special meetings as required. Meetings are noticed and held in compliance with applicable open meetings law. A director receives no compensation but is entitled to receive reimbursement of expenses related to Association activities. A financial statement must be filed annually by each director with the Secretary of State on a prescribed form. The Board and the Association are governed by statute, its Plan of Operation and its Bylaws. | |
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