SB375 Alabama 2012 Session

Summary

Primary Sponsor

Tammy Irons

Democrat

Session

Regular Session 2012

Title

Insurance, Alabama Life and Disability Insurance Guaranty Association scope and purpose, specify limits for certain policies, to conform Alabama law to model law, Secs. 27-44-2, 27-44-3, 27-44-5, 27-44-8, 27-44-9, 27-44-11, 27-44-18 am'd

Description

Under existing law, the Alabama Life and Disability Insurance Guaranty Association (ALDIGA) protects policyholders, insureds, beneficiaries, annuitants, payees, and the assignees of life insurance policies, disability insurance policies, annuity contracts, and supplemental contracts, subject to certain exceptions, against failure in the performance of contractual obligations due to the impairment or insolvency of the insurer that issued the policies or contracts.

This bill would conform Alabama law to be substantially similar to the current model law developed by the National Association of Insurance Commissioners by specifying the persons covered by the act and the policies and contracts covered. In particular, this bill would specify that payees under a structured settlement annuity would be covered based on the residency of the payee and not of the owner of the annuity. This bill would also seek to avoid duplication of coverage by coordinating with applicable guaranty association coverage in other states.

Under existing law, the limits of coverage provided by ALDIGA is $100,000 for cash benefits and $300,000 for all benefits.

This bill would specify that for life insurance policies, the coverage would be limited to $300,000 in death benefits and $100,000 in cash surrender values; for disability insurance benefits, the coverage would be limited to $300,000 for disability income and long-term care insurance, $500,000 for basic hospital, medical, and surgical insurance or major medical insurance, and $100,000 for any coverage other than disability income, long-term care, basic hospital, medical, and surgical insurance or major medical insurance; and $250,000 in the present value of annuity benefits.

Under existing law, the association has authority to make Class A assessments to cover the general expenses of operating the association, not to exceed $50 per year per member insurer.

This bill would increase Class A assessments to a maximum of $300 per year per member insurer.

Under existing law, a member insurer can appeal a decision of the association to the commissioner within 30 days.

This bill would increase the time period to appeal a decision of the association to the commissioner to 60 days.

Under existing law, all proceedings in which an insolvent insurer is a party are stayed for 60 days from the date of an order of liquidation, rehabilitation, or conservation to permit proper legal action by the association.

This bill would increase the number of days of the stay to 180.

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Subjects

Insurance