What is the primary purpose of the Insurance Guaranty Association?

The primary purpose of the Insurance Guaranty Association is to protect policyholders by ensuring that they still receive benefits even if their insurance company is declared insolvent. This association pays authorized claims for liquidated life and health insurers, thereby providing a safety net for individuals who might otherwise lose their coverage or be unable to file claims due to the insurer's financial failure.

The role of the association is crucial in maintaining consumer confidence in the insurance market, as it prevents policies from becoming worthless in the event of insurer insolvency. Additionally, this protection allows for claims to be processed and fulfilled, safeguarding the financial interests of policyholders and ensuring continuity of care in life and health insurance situations.

In contrast, other options do not align with the primary role of the Insurance Guaranty Association. Providing loans to struggling insurance companies or offering subsidies for policyholders are not typical functions of these associations, as their focus is on claim payments rather than financial assistance or income support. Investigating insurance fraud falls outside their mandate, as there are dedicated entities and regulatory bodies focused on addressing fraudulent activities within the insurance industry.