Which entity provides protection to policyholders when an insurer fails to meet its contractual obligations due to financial issues?

The Insurance Guaranty Association plays a critical role in safeguarding policyholders by providing financial protection in the event that an insurance company fails to fulfill its contractual obligations, such as when it becomes insolvent. This type of association is established at the state level and functions to ensure that individuals and businesses who have purchased insurance coverage will still receive benefits or compensation, despite the insurer's financial difficulties.

These associations are funded by mandatory assessments on insurance companies operating within the state, and they work to cover claims up to certain limits as determined by state law. This system helps maintain consumer confidence in the insurance market and provides a safety net for policyholders who might otherwise suffer significant losses due to an insurer's bankruptcy or financial collapse.

In contrast, the other entities listed do not specifically focus on the protection of policyholders in the event of an insurer's failure. The National Insurance Board and Insurance Regulatory Agency are more involved in overseeing the insurance industry and ensuring fair practices, while the Consumer Protection Agency typically deals with broader consumer rights issues rather than specifically addressing problems related to insurance insolvency.