Lampton's Guaranty Fund Protection Act Passes House

COLUMBUS – The Ohio House of Representatives joined State Representative Brian Lampton (R-Beavercreek) to vote in favor of House Bill 530. This legislation will enhance the overall stability of the insurance industry in Ohio for consumers. 

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. It is also important to note that the Guaranty Association receives no tax money, and it is 100% funded by insurance companies. 

When an insurance company insolvency occurs in the health or life industry, the Guaranty Association covers outstanding claims up to a certain amount. The Guaranty Association does this by assessing other insurance companies in the state that sell similar policies. Without this critical protection, one insolvency could destroy consumer confidence in the insurance industry. 

“Recent insolvencies in the long-term care insurance industry have strained the current Guaranty Association system nationwide,” said Lampton. “HB 530 does two things. First, it expands the base of insurance companies who contribute to an assessment by including health insuring corporations (HMOs) in the Guaranty Association. Second, it broadens the assessment base in the event of a long-term care insolvency by splitting the assessment equally between life and health insurance companies.”

HB 530 is the result of an agreement between life and health insurance companies on a national level. This legislation has passed in 34 other states in the Union and is supported by the National Association of Insurance Commissioners. 

HB 530 now heads to the Senate for consideration.