What is the purpose of the North Dakota Guaranty Association?

The North Dakota Guaranty Association is designed primarily to protect policyholders in the event that an insurance company becomes insolvent and cannot fulfill its contractual obligations. This association plays a critical role in maintaining stability within the insurance market by ensuring that consumers do not suffer financial losses due to the failure of their insurers. Specifically, if an insurer goes bankrupt, the Guaranty Association steps in to provide benefits up to certain limits, allowing policyholders to recover some of the benefits they would have otherwise lost.

In contrast, the other options focus on different aspects of insurance. Promoting insurance literacy involves educating consumers about various insurance products and their rights, which is not the primary function of the Guaranty Association. Regulating insurance rates is a responsibility typically handled by state insurance departments rather than the Guaranty Association, which does not set or control rates. Lastly, overseeing insurance claims processes is generally managed by insurance companies and regulatory bodies, not the Guaranty Association, whose focus is specifically on providing a safety net for insured individuals in cases of insolvency. Thus, the primary purpose of the North Dakota Guaranty Association is indeed to provide benefits to insureds whose insurers have become insolvent.