Texas Life and Health Insurance Guaranty Association

Texas Life and Health Insurance Guaranty Association ("Association") is a product of the legislature of Texas, in a bid to make available protection to the residents of Texas in the face of insolvency or liquidation (TEXAS DEPARTMENT OF INSURANCE, 2020). The Association executes this mandate by providing for the funding or continued insurance coverage, the payment of claims, and/or the provision of funding to other insurance companies as they take over and retain the policies of the insured company should they have been liquidated for being insolvent. When an insurance company becomes insolvent, a receiver is appointed by the court and the court overseers the liquidation of assets and liabilities. The Association must handle the policies. Having paid policyholders for benefits and claims, the Association becomes a claimant against that estate. The Association might recover some of its expenses back to assure itself that policyholders are reimbursed as the insolvent insurance company's assets are sold or liquidated. In determining the money required for each insurance company to continue their practice of serving the clientele with such policies, the Board of Directors has the mandate to determine the amount needed. They would then bill (assessment) all other members of such insurance companies, which is about 1100 Texas-licensed insurance companies selling policies covered by the Association. According to the Texas Insurance Code Chapter 463 (2012), the Association is a legitimate entity and must work as such. The nine Directors of the Association are appointed by the Commissioner of Insurance (TX. INS. CODE § 463.012). Five Directors are appointed by the Commissioner of Insurance. Of the five, one of them must be from one of the top 50 premium writers in Texas. The remaining four Directors must not have any affiliation with the insurance industry (TX. INS. CODE § 463.012). The Board has been mandated to be meeting on a quarterly basis in Austin. However, special meetings are also allowed, and any notice concerning the meeting should be done and mailed in compliance with the Texas Open Meetings Act (TX. INS. CODE § 463.023). A Director does not receive any form of compensation for the meetings. Whatever expenses incurred while attending such meetings may be reimbursed. However, every Director must file such financial statement with the Texas Ethics Commission once in a year (TX. INS. CODE.§ 463.013). The Board being the representative of the Association must act within the set statutes governing the operation of the Association, its Plan of Operation, and the Bylaws.