Guaranty Fund Protection Act Signed into Law

COLUMBUS – The Guaranty Fund Protection Act, championed by State Representative Brian Lampton (R-Beavercreek) was signed into law Tuesday. The legislation will enhance the overall stability of the insurance industry in Ohio for consumers.

House Bill 530 is a companion bill to SB 273, which the Governor signed into law today.

State law created the Ohio Life and Health Insurance Guaranty Association in 1989. All insurance companies licensed by the State of Ohio to sell life, health and annuity policies must belong to Ohio’s Guaranty Association. The Guaranty Association protects Ohioans when a health or life insurance company is deemed insolvent by a court. 

The Guaranty Association receives no tax money. It is 100% funded by insurance companies. 

“This legislation will allow health insuring corporations (HMOs) to contribute to an assessment in the guaranty association,” Lampton said. “It will also broaden the assessment base in the event of a long-term care insolvency by splitting the assessment equally between life and health insurance companies. This will allow for more stability in the insurance industry and help provide assured coverage for consumers when faced with an insolvency.”

When an insurance company insolvency occurs in the health or life industry, the Guaranty Association covers outstanding claims up to a certain amount. Without this critical consumer protection, one insolvency could destabilize the insurance industry. 

This legislation has passed in 34 other states in the Union and is supported by the National Association of Insurance Commissioners.