What Is the National Organization Of Life And Health Insurance Guaranty Associations (NOLHGA)?

The National Organization of Life and Health Insurance Guaranty Associations (NOLHGA) is a U.S. trade group made up of guaranty associations—organizations that protect policyholders and claimants in the event of an insurance company’s impairment or insolvency—in all 50 states and the District of Columbia. Founded in 1983, NOLHGA covers policyholders when a multistate life or health insurance company fails. 

Key Takeaways

  • The National Organization of Life and Health Insurance Guaranty Associations (NOLHGA) is an industry trade group made up of the life and health insurance guaranty associations of all 50 states and the District of Columbia.
  • NOLHGA pays policyholders' claims when an insolvent insurance company is unable to do so, helping to raise the needed funds from other insurance companies.
  • NOLHGA focuses on multistate insurers—companies doing business on a regional or national level.
  • NOLHGA also provides resources and technical expertise to the state guaranty associations.
  • Although it is a voluntary organization, virtually all state guaranty associations belong to NOLHGA.

Understanding the National Organization Of Life And Health Insurance Guaranty Associations (NOLHGA)

Based in Hendon, VA, the National Organization of Life and Health Insurance Guaranty Associations (NOLHGA) serves as a complementary or alternative resource to state guaranty associations. These state-sanctioned associations provide coverage, up to the limits established by law, to residents with policies from insurers licensed to do business in that state.

Insurance companies are required by law to be members of the guaranty association in states in which they are licensed to do business. But things can get complicated if an insurance company operates on a regional or nationwide level, as different states have different regulations and specify different amounts of coverage provided by the guaranty association. 

That's where NOLHGA steps in. Focusing on life or health insurance companies that operate in several states, NOLHGA can support and assist policyholders impacted by the insolvency of their insurer—that is, the company has insufficient assets to pay their claims.

Once a state's insurance commissioner's court order to liquidate a company that operates in multiple states is handed down, NOLHGA starts to work. It provides a coordinated, centralized resource to assist policyholders affected by these multistate insolvencies, while also supporting state guaranty associations.

If an insurer goes bankrupt, or can't meet its obligations, NOLHGA puts together a task force comprised of guaranty association officials and staff members. The task force monitors and evaluates the company’s interactions with policyholders, and ensures that claims are paid and coverage is switched to another insurer, when necessary and possible.

In effect, NOLHGA pays policyholders' claims when an insolvent insurance company is unable to do so. The organization raises the needed funds from other insurance companies in the states where the failed insurer was doing business. Each insurance company pays a special assessment in proportion to the amount of premiums it collects in that state.

Although joining NOLHGA is voluntary, all state guaranty associations are members of it.

Advantages of NOLHGA

NOLHGA has worked in conjunction with its member guaranty associations to guarantee more than $25.6 billion in coverage benefits to 2.61 policyholders of insolvent companies. They have served a critical role in resolving and addressing more than 100 multi-state insolvencies.

NOLHGA provides a valuable benefit to member guaranty associations because they do not have to invest the resources to hire their own team of legal or financial experts or create the infrastructure to handle these situations. Instead, they can call upon the team of experts and professionals that NOLHGA already has available.

$8.97 billion

The amount that NOLHGA and its member guaranty associations have contributed towards the fulfillment of insurer promises since 1983.

It translates to considerable cost savings for the member guaranty associations, which in turn means lower costs for their member companies. Because it already has all of the resources and processes in place, NOLHGA can also respond much more quickly when an unexpected situation happens. It can deploy a team immediately and can implement tested processes and systems that are already established.

NOLHGA also provides resources and technical expertise to the state guaranty associations, as well as a national forum for discussion of state guaranty association issues. It has testified before Congress on matters relating to the life and health insurance guaranty industry.