Download PDF - Goodmans

for portions of plan which were invested in four ELIC group annuity contracts,
arguing that participants were beneficial owners of the ELIC contracts, and thus
satisfied the Act’s prerequisite for ownership in order to obtain coverage.
Plaintiffs also alleged the ELIC contracts represented allocated annuities
because they guaranteed annuity benefits to an individual. The Association
prevailed on summary judgment arguing alternatively a statute of limitation
defense, and that the ELIC contracts were unallocated annuity contacts for
which the contract holder failed to meet the prerequisite of being an Alaska
resident.
Indiana
Bennett v. Indiana Life & Health Ins. Guar. Ass'n, 688 N.E.2d 171 (Ind. Ct. App.
1997). The trustee of a pension benefit plan holds the assets of the plan in trust
for the exclusive benefit of the plan participants, who are, in turn, the beneficial
or equitable owners of any contracts held in trust for their benefit. Resident
plan participants are residents to whom contractual obligations are owed under
Indiana guaranty association law. The term “life,” against which statutory
obligations and coverage limitations are measured, refers to the lives of resident
plan participants rather than the GIC contract holders who may be benefit plan
trustees.
New Mexico Krahling v. First Trust National Ass'n, 123 N.M. 685, 944 P.2d 914 (1997).
Executive Life GICs were not covered annuities within the meaning of New
Mexico’s statutory definition because payment was not dependent on the
continuation of human life. In construing the statute and the stated purpose for
which it was enacted, the New Mexico Court of Appeals held that any
construction must be reasonable and in accordance with the plain language of
the statute which was clear as it applied to GICs.
Oklahoma
Oklahoma Life & Health Ins. Guar. Ass’n v. Hilti Retirement Sav. Plan, 939 P.2d
1110 (Okla. 1997). Executive Life GICs were unallocated annuities under Model
Act definition and excluded from coverage in the Oklahoma Life and Health
Insurance Guaranty Association Act. The 1991 amendments excluding the
contracts applied to contracts issued before statutory effective date because
Executive Life’s insolvency, the operative event, occurred after amendments
became effective. Because the association acts in a similar capacity to a state
agency, its interpretation of the provisions of the guaranty association act
should be treated like that of an agency and given “highest respect” by the
courts.
Rhode Island Kachanis v. United States, 844 F. Supp. 877 (D.R.I 1994). “Covered claim”
includes claims for which the claimant has already received benefits under the
Federal Employee Compensation Act (“FECA”); guaranty association cannot
refuse claim, but can apply non‐duplication of coverage rules. United States lien
to recover FECA benefits was part of claim.
South Carolina
South Carolina Life and Accident and Health Ins. Guar. Ass'n v. Liberty Life Ins.
Co., 331 S.C. 268, 500 S.E.2d 193 (1998). Reserve deposit fund agreements were
not covered annuities under the South Carolina Life and Health Insurance
Guaranty Association Act because they did not specifically provide for periodic
payments to individuals. The option to purchase an annuity does not make the
funding agreements annuities, notwithstanding ten‐year guaranty of periodic
payment settlement option contained therein. Moreover, the reserve deposit
fund agreements are not eligible for coverage as supplemental contracts since
they are wholly independent of the life insurance policies issued.
Washington Unisys Corp. v. Senn, 99 Wash. App. 391, 994 P.2d 244 (2000). Plan
administrator and trustee filed suit against the Washington insurance
commissioner and the Washington Life and Disability Insurance Guaranty
Association seeking participant level coverage for the portions of the plan which