What provides funding for the West Virginia Life and Health Guaranty?

The West Virginia Life and Health Guaranty Association is financed primarily through assessments levied against member insurance companies. This means that when an insurer becomes insolvent, the other member companies are responsible for contributing to the guaranty fund to ensure that policyholders of the bankrupt insurer receive their benefits. This system is designed to protect consumers and maintain stability in the insurance market.

The choice of member company assessments is correct because it reflects the collective responsibility of the insurance industry to safeguard policyholders' interests. In this way, when companies assess each other to build a fund, they are essentially pooling resources to help those affected by a company’s failure. This acts as a safety net for policyholders, ensuring they can still claim benefits even if their insurer cannot meet its obligations.

Other options such as government grants and individual contributions do not play a role in the funding of the Guaranty Association, as the model relies entirely on the insurance companies that are operating within the state. Policyholder premiums are collected for coverage but are not directly funneled into the Guaranty Association's fund for insolvencies. Thus, the model emphasizes solidarity among insurers through their assessments as the key funding mechanism.