Alaska Life and Health Insurance Guaranty Association

The Alaska Life and Health Insurance Guaranty Association (ALHIGA) protects Alaska residents when life and health insurance companies become insolvent (unable to pay claims). ALHIGA was created in 1990 under AS 21.79.

Purpose and Function

ALHIGA is a statutory entity that:

• Protects policyholders of insolvent insurers
• Continues coverage or pays claims up to limits
• Is funded by assessments on member insurers
• Operates under state law supervision

How It Works

When an insurer becomes insolvent:

1. State takes over - Insurance Commissioner places insurer in liquidation
2. ALHIGA activates - Association takes responsibility for covered policies
3. Coverage continues - Up to statutory limits
4. Claims paid - Benefits paid to policyholders

Who Is Protected

Generally, an individual will be protected if:

• The individual lives in Alaska AND
• Holds a life or health insurance contract, annuity contract, or
• Is insured under a group insurance contract issued by a member insurer

The beneficiary, payee, or assignee of an insured person is protected as well, even if a non-resident of Alaska.

Membership

All insurance companies (with limited exceptions) licensed to write life and health insurance or annuities in Alaska are required, as a condition of doing business in the state, to be members of the guaranty association.

Coverage Limits (AS 21.79.025)

ALHIGA provides coverage up to specific limits:

Life Insurance

Annuities

Health Insurance

Unallocated Annuity Contracts

For plan sponsors (retirement plans):

• $5,000,000 limit in unallocated annuity contract benefits
• Irrespective of the number of contracts held by that contract owner or plan sponsor

What Is Covered

ALHIGA covers:

Covered Policies

• Individual life insurance
• Group life insurance (Alaska residents)
• Annuities
• Health insurance
• Disability income insurance
• Long-term care insurance

Not Covered

• Policies from insurers not licensed in Alaska
• Policies from insurers not members of ALHIGA
• Self-funded employer plans
• Government programs
• Surplus lines policies
• Amounts above coverage limits

Funding

ALHIGA is funded by assessments:

• Member insurers pay assessments when needed
• Assessments based on premium volume in Alaska
• May be passed through to policyholders in some cases
• Recouped through rate surcharges over time

Producer Restrictions

Advertising Prohibition

Producers cannot:

• Use ALHIGA coverage as a selling point
• Advertise ALHIGA protection
• Imply policies are "guaranteed" by the association
• Compare ALHIGA to FDIC insurance
• Use guaranty coverage to induce sales

Required Disclosures

• Cannot misrepresent guaranty association coverage
• Must provide accurate information if asked
• Cannot suggest coverage exceeds actual limits

Exam Tip: Remember that producers CANNOT use guaranty association coverage as a selling point. This is a frequently tested rule.

Claim Process

When an insurer becomes insolvent:

1. Policyholder notified by liquidator
2. Coverage assessed - ALHIGA reviews policies
3. Benefits continued or transferred to healthy insurer
4. Claims processed within coverage limits

Important Limitations

The limitations under AS 21.79.025 are on the benefits for which the association is obligated before taking into account:

• Subrogation and assignment rights
• Assets of the impaired or insolvent insurer attributable to covered policies

For questions about ALHIGA coverage, contact:

• Alaska Life & Health Insurance Guaranty Association
• Website: www.aklifega.org