240 
In such event, the Commissioner shall provide a written 
notice of the revocation to the affected associations and 
the relevant State insurance regulator, and the associa-
tions or the State insurance regulator may seek a review 
of the revocation under terms of section 706. 
(d) LIST
OF
QUALIFIED
AND
NONQUALIFIED 
STATES.—Not later than 6 months after the initial ap-
pointment and confirmation of the Commissioner, the 
Commissioner shall publish, in the Federal Register, a list 
of qualified and nonqualified States. 
(e) TEMPORARY STATUS.—In the event that a State 
ceases to satisfy the conditions set forth in subparagraph 
(A) or (B) of subsection (a)(1) because the Commissioner 
increases the benefits or coverage provided by the Cor-
poration pursuant to section 604 or 605, such State shall 
continue to be classified as a qualified State for a period 
of 24 months following the date of the Commissioner’s ac-
tion to increase the benefits or coverage. 
(f) NONQUALIFIED STATE.—For purposes of this 
title, any State that is not a qualified State is a ‘‘non- 
qualified State.’’ 
SEC. 603. ESTABLISHMENT OF THE NATIONAL INSURANCE 
GUARANTY CORPORATION. 
(a) ESTABLISHMENT OF THE CORPORATION.— 
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241 
(1) IN GENERAL.—There is established the Na-
tional Insurance Guaranty Corporation. 
(2) NONPROFIT AND SUCCESSION.—The Cor-
poration shall be a nonprofit corporation and shall 
have succession until dissolved by an Act of Con-
gress. 
(3) APPLICATION OF DISTRICT OF COLUMBIA 
NONPROFIT
CORPORATION
ACT.—The Corporation 
shall, except as otherwise provided in this title, be 
subject to, and have all the powers conferred upon 
a nonprofit corporation by the District of Columbia 
Nonprofit Corporation Act (D.C. Code, section 29– 
301.01 et seq.). 
(b) MEMBERSHIP IN THE CORPORATION.—The mem-
bership of the Corporation shall consist of all National In-
surers and State insurers doing business in 1 or more non-
qualified State. 
(c) CORPORATE GOVERNANCE.— 
(1) GOVERNING BODY.—The board of directors 
of the Corporation shall be the governing body of the 
Corporation and shall be vested with all powers nec-
essary for the management and administration of 
the affairs of the Corporation and the promotion of 
the Corporation’s purposes as authorized by this 
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242 
Act. The board of directors’ authority shall be speci-
fied in the bylaws of the Corporation. 
(2) ELECTION OR APPOINTMENT.—The initial 
board of directors of the Corporation shall be elected 
by the membership of the Corporation, provided that 
if the membership fails to elect the initial board of 
the Corporation on or before the chartering and li-
censing commencement date for National Insurers 
that is described in section 210, then the initial 
board shall be appointed by the Commissioner. 
Membership on the board of directors shall be fairly 
representative of members of differing size and lines 
of business written. 
(3) INITIAL BYLAWS AND RULES.—The Com-
missioner shall prescribe the initial bylaws and rules 
governing the Corporation, which shall set forth the 
composition of the board of directors, the term of 
board members, filling of board vacancies, board 
compensation, election of officers and procedures to 
call board meetings, and all matters necessary for 
the governance of the Corporation not addressed by 
the District of Columbia Nonprofit Corporation Act 
(D.C. Code, section 29–301.01 et seq.). 
(4) AMENDMENTS TO BYLAWS AND RULES.— 
An amendment to the bylaws and rules of the Cor-
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243 
poration following the establishment of the initial by-
laws and rules as provided in paragraph (3) shall be 
adopted by the board of directors of the Corporation 
following the approval of the amendment by the 
Commissioner. 
(d) RELATIONSHIP OF CORPORATION TO THE FED-
ERAL GOVERNMENT.— 
(1) SUPERVISION AND OVERSIGHT.—The Cor-
poration shall be subject to supervision and over-
sight by the Commissioner. 
(2) NOT AN AGENCY OR INSTRUMENTALITY OF 
THE
FEDERAL
GOVERNMENT.—The Corporation 
shall not be an agency or instrumentality of the 
United States Government. 
(3) FULL FAITH AND CREDIT.—The obligations 
of the Corporation shall not be backed, directly or 
indirectly, by the full faith and credit of the United 
States. The Corporation shall receive no financial as-
sistance from or have any authority to borrow from 
the United States. 
(4) FUNDS NOT INCLUDED IN THE FEDERAL 
BUDGET.—Funds held by or due to the Corporation 
shall not be included in the budget of the United 
States, nor may the United States borrow or pledge 
such funds. 
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244 
(e) CONTRACTING WITH PERSON TO ADMINISTER 
BENEFITS.—The Corporation may contract, with the ap-
proval of the Commissioner, with another person to ad-
minister the benefits to be provided by the Corporation 
under this title. 
(f) ACCOUNTS FOR ADMINISTRATION AND ASSESS-
MENTS.—For purposes of administration and assess-
ments, the Corporation shall establish and separately 
maintain 5 accounts as follows: 
(1) A life insurance account. 
(2) An annuity account. 
(3) A workers’ compensation account. 
(4) An automobile insurance account. 
(5) An account for all other lines of property/ 
casualty insurance to which this title applies. 
SEC. 604. BENEFITS FOR POLICY HOLDERS OF NATIONAL 
LIFE INSURERS. 
(a) IN GENERAL.—Subject to the provisions of this 
title, the Corporation shall provide benefits to the policy-
holders of a National Life Insurer that is doing business 
in a nonqualified State and is placed into receivership by 
the Commissioner for purposes of rehabilitation or liquida-
tion. 
(b) COVERED PERSONS.—Benefits shall be made 
available as follows: 
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245 
(1) To persons who, regardless of where the 
persons reside, are the beneficiaries, assignees, or 
payees of the persons covered under paragraph (2). 
(2) To persons who are owners of or certificate 
holders under the insurance policies (other than 
unallocated annuity contracts, and structured settle-
ment annuities) and in each case who are residents 
of a nonqualified State. 
(3) This title shall not provide coverage to a 
person who is a payee (or beneficiary) of a 
policyowner resident of a nonqualified State, if the 
payee (or beneficiary) is afforded any coverage by a 
qualified State’s association. 
(4) This title is intended to provide coverage to 
persons who are residents of a nonqualified State 
and, in special circumstances, to persons who are 
not a resident in a nonqualified State. In order to 
avoid duplicate coverage, if a person who would oth-
erwise receive coverage under this title is provided 
coverage under the laws of any State other than the 
non-qualified State, the person shall not be provided 
coverage under this title. In determining the applica-
tion of the provisions of this paragraph in situations 
where a person could be covered by the association 
of more than 1 qualifying or nonqualifying State, 
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246 
whether as a policyowner, payee, beneficiary, or as-
signee, this title shall be construed in conjunction 
with the laws of such States to result in coverage by 
only 1 association. 
(c) INSURANCE POLICIES COVERED AND COVERAGE 
LIMITS.— 
(1) REGULATION.—The Commissioner shall es-
tablish, by regulation, the lines of insurance covered, 
the scope of coverage, defenses, exclusions, and the 
coverage limits on benefits for policyholders. 
(2) NAIC MODEL.—The regulations described 
in paragraph (1) shall be based on the NAIC’s ‘‘Life 
and Health Insurance Guaranty Association Model 
Act’’ in effect on the date of enactment of this Act. 
(3) NAIC AMENDMENTS.—The Commissioner 
may, by regulation, specify that any amendment 
made by the NAIC to the lines of insurance covered 
in its ‘‘Life and Health Insurance Guaranty Associa-
tion Model Act’’ or the limits on the coverage for 
such policies shall apply, in whole or in part, to the 
Corporation. 
(4) ADJUSTMENTS BY THE COMMISSIONER.— 
The Commissioner may, by regulation, modify the 
lines of insurance covered by this section or increase 
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247 
the coverage limits for such insurance, as the Com-
missioner determines appropriate. 
(5) PAYMENT
OF
BENEFITS.—Payments for 
benefits under this section shall be made from the 
life insurance account or the annuity account, as ap-
propriate. 
SEC. 605. CLAIMS COVERED FOR POLICYHOLDERS OF NA-
TIONAL PROPERTY/CASUALTY INSURERS. 
(a) IN GENERAL.—Subject to the provisions of this 
title, the Corporation shall provide coverage for claims by 
policyholders of a National Property/Casualty Insurer that 
is doing business in a non-qualified State and is placed 
into receivership by the Commissioner for purposes of liq-
uidation. 
(b) INSURANCE POLICIES COVERED AND COVERAGE 
LIMITS.— 
(1) IN
GENERAL.—The Commissioner shall 
specify, by regulation, the lines of property/casualty 
insurance covered, the scope of coverage, defenses, 
exclusions, and the limits on covered claims. 
(2) NAIC MODEL.—The regulation described in 
paragraph (1) shall be based upon the NAIC’s 
‘‘Property/Casualty Guaranty Association Model 
Act’’ in effect on the date of enactment of this Act. 
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248 
(3) NAIC AMENDMENTS.—The Commissioner 
may, by regulation, specify that any amendment 
made by the NAIC to the lines of insurance covered 
or the coverage limits in the NAIC’s ‘‘Property/Cas-
ualty Guaranty Association Model Act’’ shall apply, 
in whole or in part, to coverage provided by the Cor-
poration. 
(4) ADJUSTMENTS BY THE COMMISSIONER.— 
The Commissioner may, by regulation, modify the 
lines of insurance covered or increase the coverage 
levels described in this subsection, as the Commis-
sioner determines appropriate. 
(c) PAYMENT OF BENEFITS.—Payments for claims 
under this section shall be made from the property and 
casualty account established pursuant to section 603. 
SEC. 606. POWERS AND DUTIES OF THE CORPORATION. 
(a) POWERS AND DUTIES RELATED TO NATIONAL 
LIFE INSURERS.— 
(1) NATIONAL INSURERS SUBJECT TO REHA-
BILITATION.—Subject to the provisions of this title, 
if a National Life Insurer is placed into receivership 
for purposes of rehabilitation, the Corporation may, 
in its discretion, and subject to any conditions im-
posed by the Corporation that do not impair the 
contractual obligations of the National Life Insurer, 
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249 
and that are approved by the Commissioner, do one 
of the following: 
(A) Guarantee, assume, or reinsure, or 
cause to be guaranteed, assumed or reinsured, 
any or all of the insurance policies of the Na-
tional Life Insurer. 
(B) Provide such monies, pledges, loans, 
notes, guarantees or other means as are proper 
to effectuate subparagraph (A) and assure pay-
ment of the contractual obligations of the Na-
tional Life Insurer pending action under sub-
paragraph (A). 
(2) NATIONAL
LIFE
INSURERS
SUBJECT
TO 
LIQUIDATION.—Subject to the provisions of this 
title, if a National Life Insurer is placed into receiv-
ership for purposes of liquidation, the Corporation 
shall, in its discretion, take either the actions speci-
fied in subparagraph (A) or the actions specified in 
subparagraph (B). 
(A) ASSUMPTION OF THE OBLIGATIONS OF 
THE NATIONAL LIFE INSURER.—The Corpora-
tion shall— 
(i)(I) guarantee, assume or reinsure, 
or cause to be guaranteed, assumed or re-
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250 
insured, the insurance policies of the Na-
tional Life Insurer; or 
(II) assure payment of the contractual 
obligations of the National Life Insurer; 
and 
(ii) provide monies, pledges, loans, 
notes, guarantees, or other means reason-
ably necessary to discharge the duties im-
posed by this section. 
(B) PROVISION OF BENEFITS TO POLICY-
HOLDERS.—The Corporation shall provide ben-
efits in accordance with the following provi-
sions: 
(i) ASSURE PAYMENT OF BENEFITS.— 
With respect to life insurance policies and 
annuities, the Corporation shall assure 
payment of benefits for premiums identical 
to the premiums and benefits (except for 
terms of conversion and renewability) that 
would have been payable under the insur-
ance policies of the National Life Insurer, 
for claims incurred— 
(I) with respect to group insur-
ance policies, not later than the ear-
lier of the next renewal date under 
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251 
those insurance policies or 45 days, 
but in no event less than 30 days, 
after the date on which the Corpora-
tion becomes obligated under this sec-
tion with respect to such policies; and 
(II) with respect to nongroup in-
surance policies, not later than the 
earlier of the next renewal date (if 
any) under the insurance policies or 1 
year, but in no event less than 30 
days, from the date on which the Cor-
poration becomes obligated under this 
section with respect to such policies. 
(ii) NOTICE.—The Corporation shall 
make diligent efforts to provide all known 
insured or annuitants (for non-group in-
surance policies), or group policyholders 
with respect to group insurance policies, 30 
days notice of the termination (pursuant to 
clause (i)) of the benefits provided. 
(iii) SUBSTITUTE
COVERAGE.—With 
respect to nongroup insurance policies cov-
ered by this title, the Corporation shall 
make available to each known insured or 
annuitant and to each individual formerly 
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252 
insured or formerly an annuitant under a 
group policy who is not eligible for replace-
ment group coverage, substitute coverage 
on an individual basis in accordance with 
the provisions of clause (iv), if the insured 
or annuitants had a right under law or the 
terminated policy or annuity to convert 
coverage to individual coverage or to con-
tinue an individual policy or annuity in 
force until a specified age or for a specified 
time, during which the National Life In-
surer had no right unilaterally to make 
changes in any provision of the policy or 
had a right only to make changes in pre-
mium by class. 
(iv) 
ALTERNATIVE
OR
REISSUED 
POLICIES.—In providing the substitute 
coverage required under clause (iii), the 
Corporation may offer either to reissue the 
terminated coverage or to issue an alter-
native policy. Alternative or reissued insur-
ance policies shall be offered without re-
quiring evidence of insurability, and shall 
not provide for any waiting period or ex-
clusion that would not have applied under 
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253 
the terminated policy. The Corporation 
may reinsure any alternative or reissued 
policy. 
(v) ALTERNATIVE
INSURANCE
POLI-
CIES.—Alternative 
policies 
adopted 
or 
issued by the Corporation shall be subject 
to approval by the Commissioner. 
(vi) TERMINATION
OF
BENEFITS.— 
Benefits under this title with respect to 
coverage under any policy of an insolvent 
National Life Insurer or under any re-
issued or alternative policy shall cease on 
the date the coverage or policy is replaced 
by another similar policy by the policy-
holder, the insured, or the Corporation. 
(3) TREATMENT OF PREMIUMS.— 
(A) NONPAYMENT
OF
PREMIUMS.—The 
nonpayment of premiums within 31 days after 
the date required under the terms of any guar-
anteed, assumed, alternative, or reissued policy 
or substitute coverage provided pursuant to 
paragraphs (1) or (2) shall terminate benefits 
under this title with respect to the policy, ex-
cept with respect to any claims incurred or any 
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254 
net cash surrender value that may be due in ac-
cordance with the provisions of this title. 
(B) PREMIUMS DUE AFTER LIQUIDATION 
INITIATED.—Premiums due for coverage under 
covered policies after the Commissioner has ini-
tiated the liquidation of a National Life Insurer 
shall belong to and be payable at the direction 
of the Corporation, and the Corporation shall 
be liable for unearned premiums due to the pol-
icyholders under the covered policies. 
(4) PERMANENT AND TEMPORARY LIENS.—In 
carrying out the duties under paragraph (2), the 
Corporation may, subject to the approval of the 
Commissioner— 
(A) impose permanent policy liens in con-
nection with a guarantee, assumption or rein-
surance contract, if the Corporation finds that 
the amounts which can be assessed under this 
title are less than the amounts needed to assure 
full and prompt performance of the protections 
provided under this title, or that the economic 
or financial conditions as they affect the insur-
ance industry are sufficiently adverse to render 
the imposition of such permanent policy liens to 
be in the public interest; or 
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255 
(B) impose temporary moratoriums or 
liens on payments of cash values and policy 
loans, or any other right to withdraw funds on 
payments of cash values and policy loans, or 
any other right to withdraw funds held in con-
junction with insurance policies, in addition to 
any contractual provisions for deferral of cash 
or policy loan value. 
(5) INDEXED
INSURANCE
POLICIES.—In car-
rying out its duties in connection with paragraphs 
(1) or (2), the Corporation may, subject to the ap-
proval of the Commissioner, issue substitute cov-
erage for an insurance policy that provides an inter-
est rate, crediting rate, or similar factor determined 
by use of an index or other external reference stated 
in the insurance policy employed in calculating re-
turns or changes in value by issuing an alternative 
insurance policy in accordance with the following 
provisions: 
(A) In lieu of the index or other external 
reference provided for in the original insurance 
policy, the alternative insurance policy provides 
for— 
(i) a fixed interest rate; 
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256 
(ii) payment of dividends with min-
imum guarantees; or 
(iii) a different method for calculating 
interest or changes in value. 
(B) There shall be no requirement for evi-
dence of insurability, waiting period, or other 
exclusion that would not have applied under the 
replaced insurance policy. 
(C) The alternative insurance policy is sub-
stantially similar to the replaced insurance pol-
icy in all other material terms. 
(b) POWERS AND DUTIES RELATED TO NATIONAL 
PROPERTY/CASUALTY INSURERS.—Subject to the terms 
of this title, when a National Property/Casualty Insurer 
is placed into receivership for purposes of liquidation, the 
Corporation shall exercise the powers and duties specified 
in this subsection. 
(1) ASSUME
OBLIGATIONS.—The Corporation 
shall be deemed the insurer to the extent of its obli-
gation on covered claims and to that extent shall 
have all rights, duties, and obligations of the insol-
vent National Property/Casualty Insurer as if such 
Insurer had not become insolvent, including but not 
limited to the right to pursue and retain salvage and 
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