Key Takeaways
- The Florida Insurance Guaranty Association (FIGA) protects Florida policyholders when property/casualty insurers become insolvent
- The Florida Life and Health Insurance Guaranty Association (FLAHIGA) covers life and health insurance insolvencies
- FLAHIGA provides up to $300,000 for life insurance death benefits and $100,000 for cash surrender values
- Health insurance coverage is limited to $500,000 per individual
- Producers cannot use guaranty association coverage as a selling point
Florida Insurance Guaranty Association
Florida has two separate guaranty associations to protect policyholders when insurers become insolvent.
Two Guaranty Associations
FIGA (Property/Casualty)
The Florida Insurance Guaranty Association (FIGA) covers:
- Auto insurance
- Homeowners insurance
- Other property/casualty lines
- Workers' compensation
FLAHIGA (Life & Health)
The Florida Life and Health Insurance Guaranty Association (FLAHIGA) covers:
- Life insurance
- Annuities
- Health insurance
- Disability insurance
- Long-term care insurance
Exam Tip: For the Life & Health exam, focus on FLAHIGA coverage limits and rules.
FLAHIGA Purpose and Function
FLAHIGA is a nonprofit association that:
- Protects policyholders of insolvent life and health insurers
- Continues coverage or pays claims up to limits
- Is funded by assessments on member insurers
- Operates under Florida Statutes Chapter 631
How It Works
When an insurer becomes insolvent:
- Court orders liquidation - Insurer placed in receivership
- FLAHIGA activates - Association takes responsibility
- Coverage continues - Up to statutory limits
- Claims paid - Benefits paid to policyholders
FLAHIGA Coverage Limits
FLAHIGA provides coverage up to specific limits:
Life Insurance
| Benefit Type | Maximum Coverage |
|---|---|
| Death Benefit | $300,000 per life |
| Cash Surrender Value | $100,000 per policy |
| Present Value of Benefits | $300,000 per life |
Annuities
| Benefit Type | Maximum Coverage |
|---|---|
| Present Value | $250,000 per contract |
| Multiple Annuities | $250,000 total per owner |
Health Insurance
| Coverage Type | Maximum Coverage |
|---|---|
| Health Benefits | $500,000 per individual |
| Disability Income | $300,000 per individual |
| Long-Term Care | $300,000 per individual |
Aggregate Limits
- Maximum per individual: $300,000 for life insurance across all policies with one insurer
- May receive additional amounts for health coverage
What Is Covered
Covered Policies
- Individual life insurance
- Group life insurance (Florida residents)
- Annuities
- Health insurance
- Disability income insurance
- Long-term care insurance
- Medicare Supplement insurance
Not Covered
- Policies from insurers not licensed in Florida
- Policies from insurers not FLAHIGA members
- Self-funded employer plans
- Government programs
- Surplus lines policies
- Amounts above coverage limits
- Investment products that are not insurance
Funding
FLAHIGA is funded by assessments:
- Member insurers pay assessments
- Assessments based on premium volume
- May be recouped through policyholder surcharges
- Subject to annual limits
Producer Restrictions
Advertising Prohibition
Producers cannot:
- Use FLAHIGA coverage as a selling point
- Advertise guaranty association protection
- Imply policies are "guaranteed" by the association
- Compare FLAHIGA to FDIC insurance
- Make false statements about coverage
Violation Consequences
- License suspension or revocation
- Administrative fines
- Required corrective advertising
Required Information
When asked, producers must:
- Provide accurate information about coverage
- Not overstate coverage limits
- Not misrepresent what is covered
Exam Tip: Remember that producers CANNOT use guaranty association coverage as a selling point. This is frequently tested.
Claims Process
When an insurer becomes insolvent:
- Notice to policyholders from liquidator
- FLAHIGA assesses coverage for each policy
- Coverage transferred or continued within limits
- Claims processed according to policy terms
- Benefits paid up to statutory limits
What is the maximum death benefit coverage provided by FLAHIGA for a life insurance policy?
What is the maximum coverage for annuity present value under FLAHIGA?
Can a Florida insurance producer use FLAHIGA coverage as a selling point?
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