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Bureau of Insurance
OTHER PFR AGENCIES
Maine Insurance Guaranty Association
The information below contains general responses to questions which the Maine Bureau of Insurance is frequently asked regarding protections that insurance purchasers have in the event their insurer becomes insolvent. These responses are not intended to address either all or specific situations nor is it intended to provide specific legal advice.
Yes. For many lines of insurance, policyholder protection is provided through either the Maine Insurance Guaranty Association or the Maine Life and Health Insurance Guaranty Association.
These are private associations to which all insurers authorized to transact insurance in Maine are required to belong as a condition of their licensure. In the event of the insolvency of a member insurer, the associations become responsible for covered claims to the extent required by Maine law. Generally, the Maine Insurance Guaranty Association responds in the case of insolvencies of insurers writing Maine property and casualty insurance business while the Maine Life and Health Insurance Guaranty Association responds to insolvencies of insurers having Maine life or health insurance or annuity business.
Yes. Both associations have residency requirements. All 50 U.S. states and the District of Columbia have similar associations however, so if you do not meet Maine’s residency requirement, you may qualify for protection elsewhere.
The guaranty associations are responsible for policy obligations which the insolvent insurer would have been responsible for if it had not become insolvent subject to the limitations set forth in the following tables:
Maine Insurance Guaranty Association limits of protection
1 No coverage available for first party claims of insureds whose net worth exceeds $25 million.
Maine Life and Health Insurance Guaranty Association limits of protection
3 Maine law provides 13 exceptions to the definition of “covered claim”. Key exceptions that are the subject of many queries to the Bureau of Insurance are exceptions for portions of a policy or contract not guaranteed by an insurer and for elements of a policy or contract where risk is borne by the policy or contractholder. This means that there is no Association protection for non-guaranteed elements of variable annuities or for fixed annuity interest which had been projected by the insolvent insurer, but neither guaranteed nor credited prior to insolvency.
No. The Maine Insurance Guaranty Association will become possessed of your claim file directly from the insolvent insurer and promptly assume claims administration. With respect to life or health insurance or annuities, frequently blocks of business of financially troubled or insolvent insurers are sold to other insurers. If that should happen, that purchasing insurer will assume your coverage. In the event, that the Maine Life and Health Insurance Guaranty Association became directly involved for policy administration, it would gain access to the insurer’s records and it would not be necessary for you to initiate contact.
No, however your HMO’s provider agreements should contain “hold harmless” agreements that protect you from liability to participating providers for covered services should the HMO fail to pay them due to its insolvency.
You will likely become a creditor in the receivership or liquidation proceeding of the insurer and will receive notices from the court-appointed receiver.
Both guaranty associations have access to short-term financing as well as the ability to levy assessments on their remaining solvent members in order to raise funds to meet their obligations.
Information regarding the Maine Insurance Guaranty Association can be found on the website of its administrator, Guaranty Fund Management Services, at www.gfms.org. Information regarding the Maine Life and Health Insurance Guaranty Association can be found on its website, www.melifega.org. Attorney Tom Record at the Maine Bureau of Insurance may be contacted by mail at 34 State House Station, Augusta, ME 04333 or by telephone at 1-800-300-5000.
Last Updated: August 5, 2014
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