What is the primary function of the Insurance Guaranty Association?

The primary function of the Insurance Guaranty Association is to protect consumers when insurers default. This organization acts as a safety net for policyholders by providing coverage in the event that an insurance company becomes insolvent and cannot fulfill its obligations to policyholders. Each state has its own Insurance Guaranty Association that ensures consumers are not left without financial recourse in the unfortunate event of a company's failure. This protection typically covers various lines of insurance, such as life, health, and property insurance, thus maintaining consumer confidence in the insurance system.

In contrast, the options concerning selling insurance policies, providing audits of insurance companies, and setting insurance rates represent different aspects of the insurance industry that are handled by insurance companies, state regulators, or independent auditors, rather than the function of the Guaranty Association. The focus of the Guaranty Association is specifically on consumer protection related to insurer defaults, which underscores its critical role in maintaining trust in the insurance market.