Opinion ID: 1232987
Heading Depth: 1
Heading Rank: 2

Heading: The Guaranty Act

Text: The Association was created in 1972 when the legislature passed the South Carolina Life and Accident and Health Insurance Guaranty Act (the Act), codified at S.C.Code Ann. §§ 38-29-10, et seq. (Supp.1999). The Association guarantees, assumes or reinsures contractual obligations of insurers who become financially unable to meet their obligations. See S.C.Code Ann. § 38-29-70. To provide this protection, the Association assesses member insurers at rates based on the value of policies or contracts held by the respective insurer. [1] See S.C.Code Ann. § 38-29-80. Only certain policies come within the protection afforded by the Act. See S.C.Code Ann. § 38-29-40. The Act defines those policies as direct life insurance policies, accident and health policies, annuity contracts, and contracts supplemental to life and accident and health insurance policies and annuity contracts issued by persons authorized to transact business in this State.... Id. The Act's purpose is to maintain public confidence in the promises of insurers by providing a mechanism for protecting policy owners, insureds, beneficiaries, annuitants, payees, and assignees of [covered policies] against failure in the performance of contractual obligations due to impairment of the insurer issuing these policies or contracts. S.C.Code Ann. § 38-29-30. The Act is to be liberally construed. See S.C.Code Ann. § 38-29-200. The Association may [t]ake legal action to avoid payment of improper claims. S.C.Code Ann. § 38-29-70(11)(f). While the Act does not define annuity contracts, annuity is defined elsewhere in the insurance code as every contract or agreement to make periodic payments, whether in fixed or variable dollar amounts, or both, at specified intervals. S.C.Code Ann. § 38-1-20(6) (Supp.1999). The interpretation of this definition and the intent of the legislature in promulgating the Act are at the heart of the instant dispute. All rules of statutory construction are subservient to the one that the legislative intent must prevail if it can be reasonably discovered in the language used, and that language must be construed in the light of the intended purpose of the statute. Broadhurst v. City of Myrtle Beach Election Comm'n, Op. No. 25191, 342 S.C. 373, 380, 537 S.E.2d 543, 546 (2000).