Purpose of the Guaranty Corporation.
The Life and Health Insurance Guaranty Corporation protects policyholders when a licensed insurer becomes insolvent.
How the guaranty system is funded.
It is not funded by taxpayers.
It is not funded by policyholders directly.
Assessment mechanism.
Member insurers are assessed proportionally to cover obligations arising from insolvencies.
This spreads risk across the industry.
Why the other options are incorrect.
Raise premiums: Insurers may adjust pricing, but guaranty funding is not a premium increase mechanism.
State funds: No taxpayer funding.
Policyholders assessed: Consumers are protected, not charged.
Maryland solvency and good-faith relevance.
This structure supports consumer confidence and insurer accountability without burdening insureds.
Conclusion.
Guaranty Corporation funding comes from assessments on member insurers.
